BIOTECHNOLOGY : O.C. Firms Can Cut Costs of Providing Medical Insurance

Compiled by Leslie Berkman, Times staff writer

Some Orange County companies that have moved their manufacturing to the South and Southeast in search of cheaper labor may be missing an opportunity to cut their medical insurance costs as well, one local consultant says.

Rob Linn, an associate with William M. Mercer, a medical benefits consulting company in Orange, said his firm found that a client, Calsonic International Inc. in Irvine, was spending more than necessary to provide medical care for employees at its Shelbyville, Tenn., manufacturing plant.

Linn said Mercer discovered that the 1,500 Calsonic employees who make air conditioners for automobiles in that rural Tennessee community were spending slightly more time in hospitals than their counterparts in Orange County.

A more startling discovery, he said, came from a study that showed that Shelbyville residents use hospitals only half as often as Orange County residents. The reason, Linn reasons, is that doctors in rural communities are more judicious and cost-conscious than their urban counterparts.


Calsonic recently signed a contract with a Nashville firm, HealthChoice, which in January will review the cost-effectiveness of the medical care provided to Calsonic’s Tennessee workers and their dependents.

By hiring an outside company familiar with local medical practices to monitor health care costs, Linn estimates that Calsonic could save between $200,000 and $300,000 a year.