Maverick Health Plan Ups Quality to Cut Cost

In the open-pit mines of the Powder River Basin, trucks and shovels the size of buildings work around the clock in a computer-choreographed ballet to move the coal that generates one-third of America’s electricity. It’s a grueling, hard-nosed business, with little room for dreamers.

Yet in this unlikely environment, retired surgeon David Crowder launched a small revolution about a year ago that could stand some conventional healthcare wisdom on its head.

His prescription for skyrocketing health insurance costs: Instead of focusing primarily on belt-tightening and gate-keeping, give employees the highest-quality medical treatment right from the start -- and reward providers for doing a superior job.

A droll, self-taught consultant operating in a world of MBAs, policy experts and national human-resources firms, Crowder, 59, says his approach can deliver better care at lower prices for employers and employees alike. What’s more, he believes that giving hospitals and doctors a financial incentive to get more effective as well as more efficient can help stem the rising tide of Americans priced out of health insurance.

So far, his strategy appears to be working for the two mining companies -- Foundation Coal West Inc. (until recently a subsidiary of RAG American Coal Holding Inc.) and Powder River Coal Co. -- that hired him to lower their health insurance costs and keep workers satisfied enough that they would not join a labor union.

Crowder’s focus on quality as a means to achieve savings is not entirely new. About 150 large corporations that make up the Leapfrog Group, for example, have been working almost four years to establish a system of objective standards and rewards that would improve the quality and affordability of healthcare.

But what Crowder and the coal companies are doing goes beyond such efforts, health policy experts say.

“How unique is this?” asks Len Nichols, vice president of the private, nonpartisan Center for Studying Health System Change. “Pretty darn.”

It’s a multilayered approach. Crowder and the mines give doctors and hospitals incentives to release information about their performance. Then they use the information to objectively identify the highest-quality healthcare providers. Following that, they give workers a financial incentive to use those providers. “This is critical,” Nichols says.

“That’s clearly 21st century, and most of the country is still in the 20th, if not the 19th,” says Nichols, who met Crowder this year at a health-policy conference in Washington, D.C.

Crowder, now based in Fort Collins, Colo., worked to facilitate mine-physician relations during his 20 years in private practice in Gillette.

Nichols says that in working with Crowder, the coal mines have something not all U.S. businesses can claim: credibility with their workers on benefits issues. In his two decades of private practice, Crowder often worked with mining companies to improve healthcare for their workers.

“Crowder is in a unique position because the miners trust him,” Nichols says. “They know he’s their agent in a way that the average American corporation is not.”

Miners value what Crowder has done to create a system in which they get quick access to highly qualified specialists, as well as his efforts to educate them about the healthcare system. On the other hand, company executives value Crowder for what he has begun to do for their bottom lines.

“If the company ever pushes price over quality, I’ll quit,” Crowder says. At the same time, he acknowledges, a primary concern for the company was “what was going to be the size of the check we wrote.”

On that critical measure, the early returns are promising.

Granted, the program is barely a year old and relatively small, covering 1,700 Wyoming miners who work for Foundation Coal and Powder River Coal, their 4,600 family members and about 600 retired miners and spouses in Utah, Indiana, Illinois and Pennsylvania.

Still, Nichols and others believe it has valuable lessons to offer as insurance costs put coverage out of the reach of increasing numbers of Americans and their employers.

The number of uninsured Americans has risen steadily to 43.6 million, while the proportion of Americans younger than 65 who have employer-provided health insurance has slipped from 67% in 2001 to 63% last year, according to a new report by the Center for Studying Health System Change.

Last year, American employers saw their health insurance costs per worker increase by about 10%. And that was after they tried to control spending by reducing benefits and requiring employees to share more of the costs.

Crowder’s clients tried the same things before bringing him on board. Foundation reduced its payment for employees’ healthcare premiums and bills from 100% to 80%. Later, it raised the family deductible on its basic health insurance plan, increased co-payments for prescription drugs and began promoting a catastrophic plan with a $6,000 family deductible.

Health costs climbed anyway. Last year, before Foundation Coal hired Crowder to work on a monthly retainer of $4,300 and fully implemented his strategy, the company’s per-employee health benefits costs rose 31% -- to $10,749.

This year, things have begun to turn around. Foundation has not pushed new increases in workers’ costs or trimmed its benefits, which are well above the national average.

It has increased the share it pays for miners and their families if they use hospitals designated as “centers of excellence,” yet its per-worker costs have inched down 2.5%.

Meanwhile, costs continue to rise nationwide by nearly 10% annually.

Powder River Coal declined to give details on its experience, but Crowder says it is following the same strategy as Foundation Coal and seeing similar results.

The heart of the Crowder’s reform program is, first, to identify what he calls centers of excellence, and then, with employers’ active support, to push employees to use those centers to get the best possible treatment from the beginning. Meantime, the companies push the centers to become more efficient and thus deliver higher quality for less money.

That may sound simple, even obvious, but as a practical matter it’s not.

Information about the comparative expertise and efficiency of specific medical facilities is seldom easy to obtain. And even if patients could identify the best treatment center for a particular problem, many patients might be deterred from using it because of travel and other problems.

But Crowder and the coal companies have persevered to obtain hard-to-get information about the quality and cost of care. Among other things, they found that some medical facilities close to home ranked lower on quality measures and cost more than more distant facilities.

For example, microdiscectomy, a type of surgery to relieve lower-back problems that can plague miners, costs about $20,000 at the 90-bed Campbell County Memorial Hospital in Gillette.

The bill for the same surgery is just $9,000 at Poudre Valley Health System in Fort Collins, which, according to U.S. News & World Report, has the country’s 38th-best hospital for orthopedic care.

Supplied with such information, Crowder and his clients designated four hospitals centers of excellence -- Poudre Valley for orthopedics and spine care; St. Joseph Hospital in Denver for cardiac care; the University of Texas M.D. Anderson Cancer Center in Houston; and the Mayo Clinic in Rochester, Minn., for difficult diagnoses.

They hope to broaden the program to include care for more general conditions at a larger number of hospitals.

Numerous studies show that higher-quality healthcare yields fewer mistakes, complications and “re-dos,” as well as shorter recovery times and hospital stays. The result: lower medical bills.

An Oklahoma-born, Mayo Clinic-trained physician who says he spent his whole life trying to heal people, Crowder tells miners the challenge now is “healing the healthcare system.”

To encourage employees to use the approved hospitals, Foundation Coal offers significant incentives: For those who do so, it increases its cost-sharing from 80% to 90%, waives the employee’s deductible and reimburses employees for some food, travel and lodging costs.

Even so, the company has saved about $11,000 on care for 10 individuals, says Mike Meyer, human resources director at Foundation’s Belle Ayr mine.

Looking at the raw numbers for the first time recently, Meyer concluded that it “looks like an effective program.” Though he had hoped the savings would be a little higher, he says, “it’s a start.”

Crowder believes the real savings -- in complications that don’t develop, procedures that don’t have to be redone and surgeries that aren’t performed in the first place -- are significantly greater.

Wendy Dougherty, 23, a blade operator, is a case in point. Dougherty says she was in tears after a Gillette doctor said she needed surgery for a herniated disk in her neck and would have to quit her job.

Another employee at the Belle Ayr mine who had a similar condition told her about a neurosurgeon at Poudre Valley who had helped him. When she saw that physician, he concluded that Dougherty did not have a herniated disk. She says the doctor prescribed exercises to improve her upper-body strength. Following his advice, she said, she feels better and is still working.

Glen Leisy, 47, the employee who told Dougherty about the neurosurgeon, said he learned the value of quality care from painful experience. Leisy was taking 18 to 24 ibuprofen tablets a day so he could keep working despite excruciating pain in his lower back. Finally, the pain drove him to the local emergency room last year. A surgeon at Campbell County Memorial Hospital wanted to fuse four of his vertebrae; a surgeon in Rapid City, S.D., gave him epidural injections and told him he would never work again. Desperate, he called officials at the mine. They referred him to Crowder, who got Leisy an appointment with a neurosurgeon in Fort Collins four days later.

“I was treated like royalty,” Leisy remembers. After surgery to repair his herniated disks, nurses from the hospital called regularly to check on him.

“If I can get treated better for enough cheaper to have the company pay for my gas, my hotel, my meals and my spouse’s, something’s got to be wrong with our system,” Leisy says, a navy-blue neoprene brace supporting his lower back as he climbs onto his “dozer” at the mine.

Crowder’s “better care is cheaper” theme has injected old-fashioned, capitalist competition into the local healthcare system. At the Wyoming Medical Center in Casper, directors, administrators, physicians and nurses working to win Crowder’s seal of approval “tried to uncover anything that could be improved,” says Sharon F. Miracle, the regional hospital’s vice president for development and planning.

In one year, Wyoming Medical examined and revised its operating systems, sent one heart-lung surgeon and an operating-room team to the top-ranked Cleveland Clinic for months of intensive training and instituted a monthly meeting for doctors to compare notes and improve care. Now, the hospital’s one-star rating for cardiac care has been elevated to five stars, the highest.

“How unique,” says hospital President and Chief Executive Pam Fulks. “To partner with the people who are going to bring you the patients, to partner with the doctors who provide the care to make it better and cut costs at the same time? Wouldn’t that be cool?”

Crowder says he is waiting only for additional documentation of Wyoming Medical’s cost-cutting efforts and fee structure before making it Foundation’s fifth center of excellence.

Still, no one at Foundation Coal expects Crowder’s program to make more than a modest dent in health benefits costs right away.

“We’re probably not going to make huge strides for another three to five years,” says Jean M. Marshall, Foundation’s former director of compensation and benefits and a consultant to the program.

“But it’s going to make a difference. And if we can give employees some tools” to improve and protect their health, “we’ll be ahead of the game.”