MEDICAL COSTS ARE ANALYZED; AREA EMPLOYERS LEARN ABOUT PPOS

CAPE GIRARDEAU -- In an effort to deal with ever-increasing health care costs, several major Cape Girardeau employers are looking at discount health care programs as an option.

Healthlink, a St. Louis-based Preferred Provider Organization that offers such discounts, is scheduled to hold two informational seminars here today.

About 22 major employers and business groups are expected to be represented at the seminars, which will be held at 8:30 and 11:30 a.m. at Drury Lodge.

Health care expenditures nationwide are projected to total $765 billion this year, up from $675 billion last year, said Joe Eschbacher, sales manager for Healthlink.

"That's like a 12 percent increase," he noted. Eschbacher said it's predicted that health care spending will continue to climb by a similar percentage annually through 1995.

But discount programs can help keep health care costs down for businesses, said Eschbacher and Mary Niemeyer, Healthlink senior marketing representative.

Eschbacher estimated that PPO programs can bring annual health care cost reductions of 5 to 10 percent for businesses.

"It's a new concept in terms of the Cape Girardeau area," said Niemeyer, noting that doctors and hospitals here are not participating in the program.

"What we do is go out and contract for services with hospitals and physicians to perform services at reduced rates," explained Niemeyer.

Healthlink, which is owned by eight St. Louis hospitals, has 300,000 members in two-states. The PPO, formed in 1985, covers businesses and organizations in central and eastern Missouri and central and southern Illinois, Niemeyer said.

Healthlink currently has contracts with 65 hospitals and ambulatory care facilities and 3,000 doctors in the two-state area.

"There's a couple of reasons that a provider is going to join the network," said Niemeyer. "You want to do it either to increase your volume or maintain it and to facilitate your cash flow because we guarantee payment within 30 days."

She said the PPO serves as a broker of medical services and provides "managed care."

The company processes claims of member companies and tracks their health-insurance costs, she said.

Eschbacher said there are a number of reasons for rising health care costs, including the high cost of medical technology.

Consumers, he added, are partly to blame. "The consumers, by and large, have not made well informed purchasing decisions when it comes to medical services that they need.

"They typically spend a lot more time investigating a major purchase of a house or car than they do major surgery," he said.

Eschbacher said PPOs can help businesses cope with the substantial health care costs, but they can't solve the whole problem.

In many areas, major employers have joined together in health care groups in an effort to hold down their health care costs.

A group of 16 major employers, including Procter & Gamble and Southeast Missouri State University, formed the Cape Girardeau Area Business Health Care Group last year.

The organization is seeking ways to control health costs, said Bob Cranmer, employee relations manager at P&G and president of the health care group.

Cranmer said he plans to attend today's seminar in order to learn more about PPOs.

The group has had some discussions with representatives of the local hospitals.

"We're looking at all the options," said Cranmer. "I really believe the key lies in businesses and providers working together."

Combined, the 16 businesses in the health group have about 5,000 employees, and with family medical coverage those businesses are dealing with health coverage for a total of 20,000 people, he noted.

Businesses spend millions of dollars each year on health care costs, he noted.

Corporate medical bills rose 21.6 percent in 1990 after a 20.4 percent jump in 1989, according to a national survey of nearly 2,000 employers.

At an average of $3,161 per employee, health-benefit costs amounted to 26 percent of corporate earnings in 1990, the report said.

Cranmer said business coalitions can be successful in holding down costs. He cited the case of a Memphis, Tenn., group that saved its member companies $6 in health care costs in 1987 for every $1 invested.

Gary Johnson, regional manager for Blue Cross Blue Shield of Missouri, said his company has PPO plans in many areas, including Perryville, Ste. Genevieve and Poplar Bluff.

He said the company, which is the largest health care insurer in Missouri, provides coverage for an estimated 60 percent of Cape Girardeau area businesses.

Most of them participate in a PPO plan and realize the benefits of discounted costs in regards to employees who receive medical services from the PPO's network of hospitals and doctors.

Currently, however, Cape Girardeau businesses are unable to take full advantage of the PPO system because local doctors and the two Cape Girardeau hospitals don't participate in the network.

But Johnson said he believes the demand of employers to rein in health care costs will eventually force the local medical community to participate in PPOs.

PPOs provide a system to better manage health care costs, he maintained. Hospitals and doctors are not limited to a single PPO, but can participate in as many as they choose.

Such a system forces hospitals to become more efficient, he said. "It is happening in St. Louis because all of them (the hospitals) are participating in managed care."

As a result, many St. Louis area hospitals have ended duplication of services and are specializing in different areas, he said.