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Lowe's takes non-traditional path to reducing health care costs

http://66.225.205.104/SG20100308.mp3

Home improvement chain Lowe's has a new benefit for its employees with heart problems. The Mooresville-based chain has reached a 3-year agreement with the Cleveland Clinic. Employees who need heart surgery now have the option to have that work done at the famous Ohio hospital, and have all costs associated with it paid for by Lowe's. Or, they can use their local doctor and pay several thousand dollars out of pocket. To learn more, WFAE's Scott Graf spoke with Bob Ihrie, a senior vice president at Lowe's who helped negotiate the deal. Ihrie says his company will continue to monitor costs to see how well the agreement is working. And, he says, Lowe's is also looking at other types of procedures, like back surgeries, that might warrant a similar nationwide agreement. Bob Ihrie: For Lowe's, the positives were very clear. Number one was quality for employees - access to the best hospital in the United States for the types of surgeries that we've contracted for. And two, in the long run, we think the cost will be beneficial as well as a result of the Cleveland Clinic's outstanding record in terms of outcomes so that the reduced readmissions and that type of thing - we think getting it right the first time will be the ticket to long-term cost minimization. Scott: Now, if I'm an employee say in Mooresville at the Lowe's headquarters and perhaps I've got a heart condition and I've been working with a local doctor here in the Charlotte area, how should I react to this? Should I be excited, or maybe a little disappointed that I'll be losing that relationship here in Charlotte if I choose to take the company up on this offer? Bob Ihrie: Well, so far the reaction from our associates has been overwhelmingly positive, first of all that the company would offer this as a benefit, and second of all, obviously, they are responding I think to the enhanced benefit level that results in significantly less cost for the employee - if they elect to go to Cleveland. They can elect to stay in Charlotte with their current doctor and have the operation performed and paid under Lowe's medical plan just as it would have been previously, but if they go to Cleveland, they obviously have reduced costs on the order of, our most popular plan has a $500 deductible and a $4,000 out of pocket, so it is on the order of $5,000 that they may save, and for an employee - many of our employees are in the $15 an hour kind of category - that is a significant obvious savings, may indeed be the difference in being able to afford the operation and not. Scott: I'm sure the potential implications of this kind of agreement have not been lost on you. Have you thought about that, and how this potentially could change the healthcare system in America? Bob Ihrie: Well, I think one of our objectives was to disrupt the healthcare system a little bit and make sure that people knew that the competition is what we were looking sure, and that it is not just local. In the past, hospitals I think in particular have viewed their competition market area as a very local one. Certainly at this end of the spectrum, which is where the higher cost operations are, the competition can be much broader, and this agreement I think demonstrates exactly that. Scott: Was part of this talking to other clinics who offer heart services in not just the Charlotte area but across the country to kind of gauge their reaction or does that make any difference to you? Bob Ihrie: Well, what we did in terms of selecting the Cleveland Clinic, we actually looked at five different groups that represented high-quality organizations. What we came down to with Cleveland Clinic was we felt they were the best choice for us for several different reasons. One obviously is their outstanding record in terms of safety and outcomes, and the fact that they are willing to publish that publicly is very important to our people. The second thing I think is that they have a model where all their physicians on staff are salaried and they have no incentives to do procedures that aren't medically necessary, and that certainly was a huge positive to us, and we just believe we have gotten the right partner to give the best care in the long run to Lowe's employees.