In December 1993, Harris Rosen was featured in a Florida Trend cover story about the healthcare plan he’d created for the employees of his hotel company. At the time, he owned five hotels in the Orlando area and employed about 1,500. Rosen, then 54, appeared on the magazine’s cover in sweatpants, fit, bare-chested, by the pool where he swam nearly every day.
The context for the story was the plan for national health coverage being developed at the time by the Clinton administration, with Hillary Clinton as its point person. Rosen was advancing his company’s plan, then 2 years old, as an alternative to what was emerging under Clinton. Rosen had self-insured his company and put together a plan centered around a company doctor and clinic that Florida Trend described as “part status quo, part innovation and part throwback to the old days of coal mine and hotel doctors.’’ Rosen’s employees got free doctor visits with no deductibles or co-payments, annual physicals and preventive, prenatal and well-baby care, along with dental and pharmacy benefits.
With some restrictions, along with an aggressive focus on preventive care and what’s now called disease management for chronic illness, Rosen’s plan had cut his per-employee health costs from $2,223 to about $850 a year; he calculated that the Clinton proposals, which ultimately came to naught, would have added at least $300 per employee to his costs — and would have produced lesser-quality care for his workers.
Fourteen years later, Rosen still swims or exercises almost every day. He now owns seven hotels in Orlando with nearly 5,000 employees. And his health plan, he says, continues to save the company money while providing good healthcare to its employees. The company’s clinic, housed at Rosen’s Quality Inn International on International Drive, now employs two full-time doctors and two nurse practitioners along with a support staff. The doctors are both U.S.-trained; the staff is multilingual — English, Spanish and Creole. There’s an onsite lab and X-ray facilities.
Coverage includes dental, mental and pharmacy benefits (with a $5, $10 or $20 co-pay per prescription) along with medical. Acute and specialist care continues to be provided through contracts with Florida Hospitals, piggybacking off the hospital’s own insurance plan. The plan is aggressively oriented toward preventive care and incorporates weight management, smoking cessation and other specialized aspects of healthcare directly into the primary care provided at the clinic. It’s also oriented toward making care accessible: No co-pays for physical therapy, for example.
Employees pay a $14.75 premium each week and a $5 co-pay each time they visit the clinic. (Dependent coverage is available — coverage for the employee plus two family members costs $48.25 a week.) The workers don’t have to clock out while they’re at the clinic, and the company provides transportation from the other hotels. “One of biggest issues in healthcare is access,” says Kenneth Aldridge, the administrator of the medical center for 10 years. “To get an appointment with a primary care doctor, the average is eight days. We can get you in that week, or that day if you’re sick.”
Rosen and Aldridge argue convincingly that the workers are getting good, personalized care in a setting that’s more familial and less bureaucratic. “We like to think we care more,” says Rosen, who, like Aldridge, uses the clinic himself.
However enlightened it may be, the company’s approach, of course, is not altruistic and has helped control three major costs. The company’s “cost per covered life” for health insurance has been flat for about five years at about $2,000 a year — less than half the $4,700 average for companies in Florida. At around 4,500 employees, that savings amounts to at least $12 million a year. Rosen says his per-life costs may actually go down this year.
By focusing on the 20% of cases that account for 80% of the healthcare costs, Rosen also saves on workers’ comp costs. His “experience modification factor,” a measure of claims experience on which workers’ comp insurers base a company’s future rates, is .69 — about half the hospitality industry average. Meanwhile, Rosen’s turnover, which in the hotel business can exceed 100% annually, is in the teens.
It’s worth noting that Rosen’s employees include many workers making around the minimum wage. In addition, about 40% come from either Haiti, Central or South America. It’s not unusual, says Aldridge, for the company’s doctors to encounter someone like a 56-year-old Haitian immigrant who’s never seen a doctor before and suffers from diabetes, high blood pressure, heart disease and sometimes HIV. This means, of course, that Rosen is having success controlling his healthcare costs even while providing care for a lot of people who typically aren’t insured and who are, in general, sicker, with more chronic illnesses, than a typical group of workers.
Rosen believes many large companies — or groups of small companies — could replicate his approach and has begun to actively market his plan through a company called Provinsure. “Does it require a certain amount of effort?” Rosen asks. “Yes, it does, but you have to be proactive in today’s world, and the rewards are quite extraordinary.”
Whether you believe that a company-clinic approach can be widely effective, the trends in healthcare are undeniable. Between 1999 and 2004, premiums increased at more than five times inflation and more than twice the growth of business income, according to the Center for Practical Health Care Reform. That’s unsustainable. The spiraling costs also are forcing increasing numbers of employers to drop health coverage and others to shift even more costs to employees. Between 1996 and 2004, as Florida grew by 3 million people, 130,000 Florida businesses dropped coverage, according to the center.
The Rosen plan’s focus on preventive care and the limits it imposes on choice are fundamental parts of how health coverage will have to evolve if we are to bring costs under control and make health insurance more available. Meanwhile, as the number of uninsured grows, the pressure for the federal government to tread further in the market will grow. The real question is whether the private sector can innovate fast enough to preserve the traditional employer-supplied healthcare that has made the American system the best in the world.