Under-budget and highly effective aren't two words commonly used in discussions about healthcare these days, but they're apt descriptors of the City of Savannah's healthcare system.
The City's wellness program, the Healthy Savannah Initiative and its participation in a co-operative purchasing plan have all reaped the benefits of considerable savings and quality.
At a budget workshop at the end of last month, Assistant City Manager Chris Morrill gave a presentation updating the City's healthcare costs through the middle of the year. Almost counter-intuitive to the national dialogue, the report showed that the City is projected to come in under budget on its annual healthcare costs, which currently hover around $20 million per year.
In a time when many employers and families are watching their health insurance costs skyrocket, the City has managed to create a comprehensive approach to healthcare management that has slowed cost increases to an impressive four or five percent per year, as opposed to nine or ten percent seen elsewhere.
The City of Savannah's healthcare costs are 21 percent lower than the average set by other public sector organizations. The City spends about $7,000 per employee, while the average organization is paying closer to $9,000.
"We're saving 59 percent off of charges," says Beth Robinson, the HR Director for the City.
One of the major factors contributing to the City's healthcare stewardship is its membership in the Savannah Business Group, a coalition of large, local employers who self-fund their healthcare, buying care in bulk from networks of hospitals and physicians rather than paying premiums to a health insurance company.
"Insurance companies in Georgia - all insurance companies now in the state - are for profit except the employers," explains Gary Rost, the Executive Director of the SBG.
Employers who self-fund their healthcare, essentially becoming their own Preferred Provider Organization (PPO), are able to cut out taxes, profits and commissions that are built into the premiums charged by insurance companies.
"Believe it or not, when you unbundle that service from the insurance company, you're able to get better pricing," Rost says. "Self-funded employers across the United States actually have lower annual premiums than employers of equal size who are using insurance companies."
There are currently 28 companies who are members of the SBG, which insures healthcare for about 50,000 people in Chatham County, more than 20 percent of the total population.
The practice of large employers self-insuring their employees is fairly common across the country. According to Rost, 60-65 percent of Americans have healthcare through their employer, and of those ensured through their employer, 80 percent are through self-funded employers, similar to the City and other SBG members like JCB, Gulfstream and SCAD.
The SBG's co-operative healthcare purchasing does translate to savings - essentially by buying in bulk, like Sam's Club - the real difference between the SBG members and other self-funded employers is that the size of the community allows an ongoing relationship to be developed with a hospital system's Care Network, which helps with negotiations of price, as well as monitoring the overall quality of care.
"If the care has a lot of overuse and a lot of misuse, then you're going to be spending a lot of dollars on waste," Rost explains. "About 30 percent of healthcare dollars are just waste. We have to eliminate that waste from the system and you do that by increasing the efficiency and effectiveness."
Rost warns, however, that self-funded direct purchasing through a healthcare system works well in Savannah, and other smaller communities, because of the ability to negotiate, but that the system is not an over-arching solution because it doesn't work well in larger cities, with the exception of Las Vegas, where the service union runs a similar program.
There is only so much flexibility allowed by negotiating price and ensuring efficiency though, and at a certain point a care provider will reach their true bottom line.
"At some point the doctors are gonna say ok that's the least amount of money I can accept for an office visit," says Robinson. "The other side, which I think is equally important, is what we're doing to make our employees healthier."
Although wellness programs and preventative medicine have become a major part of the national healthcare dialogue, the City of Savannah was an early adopter of such concepts, and had an early manifestation of a wellness program starting in the early 1990s.
"The City of Savannah has always demonstrated leadership around the area of health in our community," says Liz Ann Roberts, a former employee health director for the City, who is currently a member of the Healthy Savannah Initiative's steering committee. "They had had a ‘wellness program' about three or four years before I got there, and in the early 90s that was a relatively new concept for a lot of organizations."
The City's wellness program started simply with pre-employment physicals and an aerobics program, but has now grown into a comprehensive program focused on preventative medicine and early detection.
"We've moved forward ten-fold in terms of what the emphasis is on everything from disease management to weight loss, nutrition and fitness programs," Beth Robinson says. "It's a more strategic approach to tackling issues of an employee's health and how that impacts the workplace."
Employees are getting the message to, and in the last several years, the level of enrollment in the City's healthcare has increased from over 70 percent to over 90 percent currently.
By focusing on prevention, the City has been able to help employees and their families monitor their health more effectively, they have seen dramatic improvements in blood sugar levels (a trigger for diabetes), cholesterol, and other health indicators. The City's smoking cessation program has also been widely recommended as a model for other organizations by Center for Disease Control.
Having improved the overall health within the City organization, now, through the Healthy Savannah Initiative, which was spearheaded by Mayor Johnson after recovering from his heart attack in 2007, the City will begin to look at the health and wellness of the community as a whole.
The HSI is a unique program designed to look at the accessibility of healthy lifestyle choices, like proper nutrition, across the city. Consisting of over 100 members, along with a close to 30 member steering committee, the group is generating some excitement in the ranks.
"After being in the field of public health for 20 years, this is probably the most exciting thing I've ever been in, in terms of the impact it could have on thousands and thousands of people," says Liz Ann Roberts.
Last week, the HSI and the City sponsored a public meeting with Mari Gallagher, a nationally recognized expert in nutrition accessibility who has previously worked with cities like Chicago, Detroit, Nashville and Los Angeles.
Gallagher did what is called a Level 1 survey of Savannah, highlighting areas known as ‘food deserts' where access to nutritional foods like fresh fruits and vegetables are limited or non-existent.
The results of the study will help direct discussions of policy and development in a way where food choices can be made more balanced throughout the city.
"What we know about people and behavior is that people will often go toward food sources that are readily available," Roberts says. "If people have access to fruits and vegetables, they will tend to buy more fruits and vegetables then if they don't have access to them."
While it will take time to enact change of this magnitude, HSI's plans could represent a major shift of strategy in the ongoing war against the epidemics of obesity and diabetes that seriously affect the community. Although soon we could all be a little further down the road to wellness.
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