Can Better Care Be Less Expensive?

A conventional view of healthcare cost containment is to seek out the lowest price consistent with an adequate level of quality care. At least one company is turning that idea on its head by showing that paying for top-level quality healthcare, like that provided at the Mayo Clinic, can be less expensive in the long run.

Three years ago, Foundation Coal Holdings, a Maryland-based coal producer, introduced an experimental program for employees at its mines in Wyoming. Under the program, employees are encouraged to seek surgical care at top-ranked hospitals, even if they are hundreds or thousands of miles away. The company picks up the cost of the procedure and may even pay for travel and lodging. Since it went into effect 3 years ago, this offbeat strategy has resulted in a 5% decrease in overall healthcare costs for mine employees, compared to a nationwide increase in healthcare spending of more than 7%. And although the Wyoming workforce has grown, the company’s healthcare costs have remained the same.

Company officials found that about two-thirds of the operations done at highly rated medical facilities were less expensive than those done at local hospitals. Even when the upfront costs are higher, they say, the program saves money because there are fewer diagnosis errors, post-procedure complications, and repeat surgeries.