BIOMEDICINE : Huntington Beach Firm Unveils Plan to Cut Employers’ Costs of Health Care

On April 1, Cost Care Inc., a medical cost-management firm in Huntington Beach, will launch the marketing of a new national health-care network geared at helping employers harness the dramatically rising cost of treating mental illness and drug abuse.

Lawrence Goelman, president and chief executive of Cost Care, said that for about a year the firm has been putting together a new division called PsychNet that will offer hospital-utilization review, case management and a nationwide network of facilities that have agreed to treat patients at discount rates.

Goelman said PsychNet’s “step-down” program advocates greater use of residential treatment centers and other alternatives to more expensive acute care hospitals.

Goelman said a recent pilot test of the PsychNet program that involved 12 employers and 100,000 employees resulted in a 30% to 50% reduction in treatment costs. Goelman said he hopes to have an additional 100,000 to 200,000 employees enrolled in the program by the end of 1990.