Employers Urged to be Health Care Activists

June 12, 2002 (PLANSPONSOR.com) - Employers shell out as much as $2,000 per covered worker per year for direct and indirect costs of poor quality health care - a deficiency for which employers are at least partly responsible, a study finds.

The report, Reducing the Costs of Poor-Quality Health Care through Responsible Purchasing Leadership, estimated that the total annual bill for health care marred by administrative inefficiencies, over and under use, and misuse of medical services was almost $400 billion yearly. That represents 30% of all US direct health care outlays.

“In spite of the technological advances of the 50 years, the quality of health care remains inadequate and highly variable, with errors occurring far to frequently and advances in clinical knowledge finding their way into practice far too slowly,” researchers wrote in the report.

Companies Somewhat Responsibility

Companies buying health-care services for their workers are partly to blame for not insisting on higher quality products and services from medical vendors, the report said.

The report was commissioned by the Chicago-based Midwest Business Group on Health (MBGH) in collaboration with the Juran Institute Inc., a research and training organization, and the Severyn Group Inc., a health care research and communications firm.

“The human and financial costs of quality problems are too high and employers are a part of the problem,” James Mortimer, president and founder of MBGH, a coalition of large employers, said in a statement. “It is time for employers to wake up to the danger and implement responsible health care purchasing policies that will help give every worker in America affordable, high-quality care.”


According to the report, the problems of the US health care system include:

  • overuse of surgeries, tests, medications, and treatments including hysterectomies, cardiac catheterizations, upper gastrointestinal endoscopies, antibiotics, tranquilizers and sedatives,
  • under use of diagnostic and therapeutic services including heart-attack treatments and services for diabetes and congestive heart failure patients,
  • misuse of medical services due to mistakes, and
  • a waste of medical services, primary because of excess administrative red tape

The report said that the monetary and human cost of the health-care weaknesses include:

  • drug misuse, resulting in more than 200,000 deaths annually;
  • overuse of antibiotics costing $5 billion in unnecessary expenditures; and
  • preventable hospital infections claiming 20,000 lives annually

To get maximum use of their leverage as health-care consumers, the report said employers should:

  • analyze current data to identify high-priority problems,
  • measure health providers’ performance and encourage participation in quality-improvement programs,
  • share health provider performance data with employees, and
  • reward high quality providers through direct incentives or sanctions

The full text of the report is available at the MBGH Web site .