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Creative health-cost cuts aired
Friday, September 05, 2008

When Westinghouse Electric recently conducted a health assessment of its employees, most of the highest risks related to food, specifically what and how much people were eating.

"We had some pretty serious weight issues," acknowledged Cheryl Melinchak, manager of health and welfare benefits. So Westinghouse revamped its food offerings, from vending machines to the cafeteria line, making sure employees had a selection of healthy foods to choose at no extra cost. Within a few months, granola bars and other healthy foods were outselling cheeseburgers.

Combined with other wellness efforts, the company hopes to see a $1 million savings in health costs.

Meanwhile, Marriott officials found that as pharmacy co-payments rose along with other health-care costs, employees stopped taking needed medications -- risking more serious illnesses and possible hospitalization. So they instituted a program called "value-based formulary," which halved the cost of brand-name medications and made generic drugs free.

The savings will come from fewer visits to the emergency room.

These were among the ideas shared at the annual Pittsburgh Business Group on Health symposium Downtown yesterday, as businesses everywhere look for ways to reduce -- or at least contain -- their health-care costs.

"Some small and midsized businesses are still really struggling with the steep increases in costs year after year," said Christine Whipple, PBGH executive director.

For sheer innovation, it would be tough to top the Hannaford Brothers Co. grocery chain of Portland, Maine.

When health costs spiraled upward, Hannaford went international, offering employees full coverage for knee replacements in Singapore, where a hospital charged $10,000, instead of U.S. hospitals where the cost typically ran $30,000.

Once the program was publicized, though, Hannaford Brothers started hearing from U.S. hospitals willing to match or beat what Singapore charged. Those negotiations are ongoing.

"The hope is that we never have to send anyone to Singapore," said Chris Washburn, employee benefits supervisor.

That doesn't mean companies won't continue to struggle.

Alcoa Inc. realized five years ago that it could not continue to cover families for $56 a month -- plans that included medical, dental, prescriptions and vision. In 2007, the family contribution jumped to $240 a month, which brings Alcoa in line with similar-sized Fortune 500 companies, said health benefits manager Scott Kovaloski.

In another cost-saving measure, he said, Alcoa performed an audit and found it was insuring about 4,000 divorced spouses, nieces, nephews and other ineligible recipients.

At the same time, Alcoa has increased coverage in some areas -- for instance, offering free generic medications when delivered by mail. But Mr. Kovaloski said it was "still too early" to know what the realized savings will be.

Steve Twedt can be reached at stwedt@post-gazette.com or 412-263-1963.
First published on September 5, 2008 at 12:00 am