Success story: It pays to spend more on health care
October 28, 2009 by Christian SchappelPosted in: Health care, Money, Pay and benefits, Special Report - Benefits
Three advantages to spending more on health care: Reduced turnover, improved productivity and higher sales. Check out the healthcare strategy this business used to benefit from them all.
For years, Burgerville, a restaurant chain based in Vancouver, WA, offered limited health coverage to hourly employees.
Result: Just 3% of hourly workers were enrolled.
But when an employee survey showed health costs were employees’ No. 1 concern, the company decided to switch up its coverage and pay 90% of healthcare premiums for hourly employees who worked at least 20 hours per week.
Under this new plan, individual hourly workers can enroll in a health-maintenance organization for $15 per month with no deductible. A worker and spouse pay $30 per month, and family plans cost $90.
Result: Burgerville’s healthcare bill skyrocketed from $2.1 million per year to $4.1 million. But its turnover rate dropped to 52% from 128% in one year. And having to replace and train fewer workers led to huge cost savings. Now, 98% of the company’s eligible hourly employees are enrolled in the health plan.
Because employees must work 20 hours to qualify for the plan, they now work harder to qualify for more hours, which are assigned based on performance, Burgerville’s Chief Executive Jeff Harvey told the Wall Street Journal.
Result: Sales rose 11% in one year.
Tags: Burgerville, health-maintenance organization, healthcare, hourly employees, Jeff Harvey, premiums, Wall Street Journal
October 29th, 2009 at 12:16 pm
HMO being praised? Surprising, wonder how many claims are denied (not covered) in this plan?
Would be interesting to see the real numbers associated with turnover cost savings and increased sales compared to the 2 million in increased cost for health insurance.
Also cannot help but wonder if this plan would meet the ‘health care reform’ acceptable plan criteria. If no, and the bill passes, welcome back turnover costs, reduced sales and even more health care costs to enhance plan to meet new requirements or to pay the penalty fines to IRS.
October 29th, 2009 at 1:20 pm
We hear a lot of frustration expressed about HMO’s. Personally, I’ve had mostly good experiences. Typically I don’t use services other than the annual physical, but in 2007 and 2008 I did use a lot of services and had no trouble. Having said that, when two of my staff each had a rare condition in which there are few specialists, they had some difficulty accessing services. When there are only eight of a certain specialty in the entire West, and none in the medical group to which one belongs, that becomes problematic. So, they do have their limits in those cases. The point is, only the highest compensated individuals can afford a PPO these days. Our PPO premium is over $600 per month for an individual, add $700 plus for spouse and $1300 plus for family (that’s 1900 plus for employee plus family per month.) We have one participant on the PPO. As for the health care reform, we haven’t seen the final plan yet. However, everyone is free to send in suggestions and concerns to their representatives, perhaps with lots of signatures of other citizens attached.
October 29th, 2009 at 5:40 pm
I cover San Diego and Los Angeles markets. My client’s satisfaction with an HMO is directly related to the medical delivery system. If the medical group embraces the HMO system all is good. I have had clients within a group coverage model, change from PPO back to an HMO. If a client has specific medical issues requiring various specialists, I encourage them to choose a PPO for ease of access.