At its Silicon Valley headquarters, network gear maker Cisco Systems Inc is going to unusual lengths to take control of the relentless increase in its U.S. healthcare costs.
According to Reuters, the company is among a handful of large American employers who are getting more deeply involved in managing their workers’ health instead of looking to insurers to do it. Cisco last year began offering its employees a plan it negotiated directly with nearby Stanford Health medical system.
Under the plan, physicians are supposed to keep costs down by closely tracking about a dozen health indicators to prevent expensive emergencies, and keep Cisco workers happy with their care. If they meet these goals, Stanford gets a bonus. If they fail, Stanford pays Cisco a penalty.
Cisco said costs for Stanford plan patients are 10 percent lower than conventional coverage still used by most of its employees. Chipmaker Intel Corp told Reuters it is saving 17 percent on its workers enrolled in a similar plan, known as Connected Care. Aircraft manufacturer Boeing Co and Walmart Inc, the world’s largest retailer, have likewise hammered out health plans directly with providers.
The movement is small, just a few very large U.S. corporations that have signed up tens of thousands of workers so far. Their early efforts show the challenges of changing behaviors among patients and doctors.
But they speak volumes about corporate America’s frustration with inexorably rising medical costs and the traditional insurers that sell them coverage.
Corporations help pay for healthcare for more than 170 million Americans, in most cases working with an insurer to handle everything from the price of treatments to medical claims.
These employers will spend an estimated $738 billion on health benefits in 2018, a figure that has been rising about 5 percent annually in recent years, according to federal data.
Other big firms are watching closely. Amazon.com Inc, JPMorgan Chase & Co and Berkshire Hathaway Inc said in January they will form an independent company to improve healthcare for their roughly 750,000 U.S. employees, prompting speculation that they would displace health insurers and other industry “middlemen”.
To boost enrollment, all three companies have dangled sweeteners such as extra money for health savings accounts or lower monthly premiums and co-pays. The approach also requires employers to take a more hands-on role.
Cisco’s experiment began in 2008 when it opened the campus clinic for all of its employees there. Designed like a spa, the facility offered primary care in new-age sounding treatment areas: body, mind, heart and spirit.
The savings were notable: about 30 percent compared to an offsite doctor’s office. Cisco later brought in Stanford to develop a full-blown medical plan, which took effect in 2017. Stanford operates the clinic and provides more specialized services through Stanford University’s medical system.