Health care shopping is made a little easier Coalitions help get better contracts for employees


It's been two years since Russell Long and Al Ankrum ditched their jobs and jumped into one of health care's curious trends.

Specifically, what the two did in 1994 was launch what's known as a business health care purchasing coalition -- a new version of that tried and true consumer standby, the co-op.

It seems that many these days, from big corporations to teachers' unions, are willing to join up to see if together they can get better employee health care contracts with the major managed care and health maintenance organizations.

The other goal of these alliances is to help get health care providers to pony up with data that will give employers a clear picture of how employees are using a plan and what that use is really costing. Small and medium-size employers often have difficulty gaining access to this information, experts say.

"If the care providers are banding together to create these megalopolies, then it makes a lot of sense for the consumers to get together, also," said Megan Vergare, member services coordinator for the National Business Coalition on Health, a Washington-based trade group.

Nationwide, the number of business coalitions has almost doubled in the last 18 months to about 140, representing about 7,000 businesses.

These groups are particularly popular in Ohio and Michigan and are only now taking root on the East Coast, say experts.

Among the newest coalitions in the country is the one Ankrum and Long helped found: MidAtlantic Healthcare Purchasing Coalition, based in Baltimore.

Like a majority of such coalitions in the United States, MidAtlantic is set up as a nonprofit.

Salaries and other costs to keep the coalition running are generated by charging members a per-head fee for each employee.

In MidAtlantic's case, the fee is 25 cents per employee each month, and the membership goal is 1 million. If the coalition can generate that many bodies, it might gain punch at the bargaining table.

Meanwhile, the rapidity with which Ankrum and Long have signed up some of the Baltimore-Washington area's biggest employers says something about the ripeness of the region for such a group, and highlights the growing interest in this alliance of businesses that otherwise might be competitors in the market, said Vergare at the National Business Coalition.

The Baltimore region is ripe for a business health care purchasing coalition, said Vergare, because it is home to many medium-size corporations.

On their own, these corporations may not have enough employees to get a health provider to bend in their favor.

"A company with 1,500 or 2,000 employees may sound like a lot, but a national health care company isn't going to do a whole lot to accommodate them," said Vergare. "But you put a couple of those size companies together, and they take notice."

So far, MidAtlantic has signed on about 20 companies, with about 20,000 employees covered by contracts it has brokered.

Members range from defense contractor AAI, which has a large facility in Cockeysville, to spice giant McCormick & Co., which has its headquarters in Hunt Valley, to Hechinger's, the Landover-based home-improvement chain.

MidAtlantic is one of just 40 or 50 coalitions in the country that help members get a better deal on their health care contracts by directly acting as a broker. (The others generally collect information and publish reports on health care plan costs and quality.)

John Erb, a Miami-based health care expert for A. Foster Higgins & Co, the national health care consultant, says that the success of a health care purchasing coalition rests in its ability to generate a large number of employees in its pool.

But even those that have been able to generate large memberships have had a tough time brokering contracts that resulted in significant cost savings, said Erb.

Also, the coalitions, especially if they are business-oriented like MidAtlantic, often face competition from industry trade groups, which often offer their members health care plans purchased at a large group rates, noted Erb.

Still, Ankrum and Long are confident that MidAtlantic will thrive.

"Our first objective is to go out and get a reasonable price for the products the employer is already getting," said Ankrum, MidAtlantic president and a 28-year veteran of the health care industry. The coalition does that by arranging for what are called "network managers" to help companies structure medical and dental plans they'd like, and then bartering with health providers for contracts that stabilize or save money and benefits.

Also, the coalition goes to bat if a health care company balks at offering a member a deal that the group believes is fair.

"Some of the health providers, especially some of the really big ones, are pretty arrogant about what they'll offer to an employer," said Long, a former health care consultant.

The coalition has the power to drop a health care plan if it is unwilling to bend on an individual company's needs and complaints, Long said.

For employees of coalition members, a coalition-brokered deal should mean that benefit co-payments won't rise and benefits aren't reduced, said Ankrum.

However, there is no national objective study that shows that's what happens in most cases.

Since January, when the first health care plans brokered by MidAtlantic took effect, members have saved an average of about 10 percent on health plan costs, said Long, vice president of the coalition.

The coalition's next objective -- other than continuing to sign up new business members -- is to begin measuring how well HMOs and managed care plans do their job, and what the real costs for those plans should be for area employers, said Ankrum.

And, said Long, the coalition hopes to publish periodic reports on care plans recommended by the coalition so employees can comparison shop when choosing a health provider.

"This is simply about balancing the tables for the consumer in the marketplace," said Long.

Pub Date: 8/01/96

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