by David Williams
April 23, 2007 at 3:19 pm
· Filed under Employer CEOs, Consumer Engagement, Benefit Design, 4th WHCC
I missed the session with Steven Burd that Matthew Holt blogged on (Steven Burd, CEO Safeway…) but luckily Burd came down and repeated his speech at the Employer CEO/CFO track. Burd’s talk was the highlight of my morning. Burd believes that the health care crisis is a “very solvable problem.” Not only that, he believes that his company, Safeway has largely solved the problem. He presented a slide he drew up last year showing the potential to reduce health care costs by 24%; a year into Safeway’s initiative he now thinks the potential is even greater, maybe 35-40%. He went so far as to imply that we could get the country back to spending 7% of GDP on health care rather than 16% going to 20%.
Burd was very clear and direct on the problems and solutions, identifying root causes and linking the challenges of cost and coverage into what he referred to as simultaneous equations that could be solved. He believes in taking an active role: not just offering programs but providing incentives for their use.
Safeway expected cost savings after two or three years and was thrilled to see substantial cost reductions for the company and employees in the very first year (2006). Per employee costs declined 15% overall; the company’s bill went down 8% and costs by employees dropped 25-34%. Burd said costs would be flat in 2007 for reasons he didn’t completely explain.
I’m excited to hear what Safeway’s accomplished and I am hopeful that Burd’s bullishness will be borne out over the long term. I’m happy to hear about the Coalition for Healthcare Reform, which Burd says is signing up new members every week. This is the kind of employee-led effort could bear fruit.
Although it’s great news that costs dropped in year 1, it’s far too early to declare victory. Costs have a way of popping back up in health care in unexpected places.
I would like Burd to have said more about pharmacy benefit design. I asked him his views on that and he said transparency and incentives would do the trick.
I’d be interested to learn more about Burd’s view on the role of pharmacists in enabling consumerism, especially considering Safeway’s position as a leading pharmacy chain. (His views on mandatory mail order would also be interested.) Finally, I’d like to hear what Burd has to say about in-store clinics.
Permalink
I also saw Mr. Burd at the WCC and while I think he deserves tremendous credit for the substantial work he has put into the issue from the CEO’s office I think his projections are wildly optimistic.
My company is also very committed to health care reform and believes very much that consumer driven plans are the right direction for health care. We have 57% of our employees in these plans and have had solid success 3 years into this strategy but we are a long way from claiming anything close to what Mr. Burd is stating.
In seeing Safeway’s plan design I do not see any way that their numbers will hold up if I did not misunderstand something. Burd stated that Safeway moved from a $750 deductible plan to a $2,000 deductible plan with a $1,000 HRA. Under that design the majority of employees were receiving no benefit under the old plan since most employees in typical group plans have less than $1,000 in claims during the year. Therefore, all of those employees are now receiving a benefit (a good thing for insuring routine care etc) but it is extremely unlikely that this additional cost can be made up with the $1,000 corridor deductible. We have seen nothing like what Mr. Burd claims and my company moved off of a 100% POS plan where employees had very little skin in the game (as compared to Safeway’s previous $750 deductible).
Safeway may have seen good results in the first year but our experience shows that there is a substantial amount of confusion in the first year in moving to an HRA plan. There is some natural cost savings as employees are confused about the new plan and how it works resulting in reduced services. However, in year 2 they get comfortable and fully understand that they have $1,000 to spend and will go back to prior behaviors unless there is a substantial supplemental strategy focused on employee education, wellness, disease management and treatment decision support.
I hope Safeway has found the magic bullet. I also fully support Mr. Burd in all that he is doing. I just think he need to be careful in extrapolating from a very preliminary data set.
Does anybody recall how this program was initiated? I think it had to do with a strike and the aftermath of it. Safeway can hold out as long as it takes for its agendas to take place. Lets review
1. Union strikes based on healthcare and wages.
2. Companies band together and offset losses through colusion.
3. After over 100 days workers agree to terms on a contract that was worse than what was offered originally.
My opinion is that Steve Burd wanted them to strike, write the losses off and then settle with the unions for a lower price thus reducing coverage for thousands.
I know for a fact they are hiring people with big problems and it is manifesting itself now. They have no medical coverage for six months while they are paying union dues the entire time, thus creating a constant turnover of staff with no coverage. DO ANY OF YOU WANT TO HAVE THEIR FOOD HANDLED BY A CONSTANT INFLUX OF PEOPLE WITH LITTLE OR NO HEALTHCARE? I hope not because if this continues it will spread illness and disease throughout this country quicker than “free love”.
4. Co-payments have risen, gas has risen, milk skyrocketed, food and living exspenses have increased substantially over the past decade. As I perused through some old paystubs from Safeway, my wage has increased 3 dollars an hour in 10 years (33 cents/year) and I run a meat market. So if some of us aren’t running around like robots anticipating your needs or thanking you by last name please realize that the coorperate objective is not looking out for our best intrest, it is to minimize its risk for shareholder (corp. board) interests to maximize value of the stock. If this means firing, eliminating jobs etc., it will be done.
Just take a look at the pre-packed meat that is being forced into the stores. Did you know the packages are primarily infused with carbon-dioxide (toxin) to keep its color appeal? That package can stay in a 70 degree temperature for a day and still retain its color thus fooling the consumer its freshness. It is also probably being cut by an undocumented worker.
If people fail to realize the paths that their food makes its way to their tables it enables these types of companies to deflect blame elsewhere, and at that point who are you going to believe.
All working people deserve the care needed to be healthy yet it seems the HMO’s and others like it are all in it for a profit. I thought insurance companies were to break even and if there was a surpluss, refund participants fees. Instead we are all funding their FUN.
Wanda wrote @ November 14th, 2007 at 8:39 pm
There seems to be little current news of Safeway’s healthy incentive program. There is rumor that the program has been cancelled and everyone working on it was fired. Is that true?
Are other programs of the same type in trouble? It seems so logical an approach to stem the rise of healthcare costs.
HTML-Tags:
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>
