Human Resources News & Insights

The future of controlling health costs? Employer teams up with hospital

To keep healthcare costs under control, you may want to steal this company’s idea.

PepsiCo has signed a deal with Johns Hopkins Hospital in Baltimore that will send the soda giant’s workers and dependents to the hospital for cardiac or complex joint surgeries, reported The Baltimore Sun.

Pepsi will pay for its nearly 250,000 health plan participants from across the country to travel to Baltimore and cover their deductibles and coinsurance for qualified procedures performed at Johns Hopkins.

The potential benefits for Pepsi are twofold:

  • By sending employees to Johns Hopkins, a hospital rated very highly in the areas of cardiac care and joint surgeries, Pepsi is hoping to improve the quality of care for its employees. Pepsi believes this will reduce the likelihood of complications that could land employees back in the hospital, which could cut long-term costs. Also, it may help employees return to work faster.
  • Because the hospital has agreements with insurance companies and third-party administrators to bundle fees into a single cost, Pepsi will be charged a set rate for procedures. So the company, which has a self-funded medical plan, will be able to more accurately predict what its medical costs will be.

What’s in it for the hospital? Guaranteed business and further recognition of its expertise.

The only hiccup for the program so far: Employees appear to be a little intimidated by the thought of taking a trip to another city for medical care, according to The Baltimore Sun. It’s estimated only about 25% to 30% of eligible employees have taken advantage of the program.

This suggests that arrangements with hospitals in close proximity to an employer’s business may spark more participation. That’s something to keep in mind if you think you may consider implementing a program similar to Pepsi’s in the future.

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