Principles Of Marketing
17th Edition
ISBN: 9780134492513
Author: Kotler, Philip, Armstrong, Gary (gary M.)
Publisher: Pearson Higher Education,
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What are the strengths and weaknesses of the company and relevant stakeholders (where relevant) and their relevance
Transcribed Image Text:and specialists throughout the United States, coinciding with the company's primary locations.
3. The insurance carrier would guarantee a high level of quality care to be provided to Polson's employees.
4. Unlike other health maintenance organization (HMO) plans, under the new Polson Plan employees would be able to
switch from managed care to a traditional indemnity plan at will, but they would pay extra for exercising this option.
"We sought to change the way health care was delivered to our employees," says Al Gesler, corporate director of HR
for Polson. "The net result was a hybrid program, taking into account the best features of HMOS and indemnity
plans and combining that with a partnership arrangement between Whiteffish, Polson and its employees." Whitefish
was chosen because it was a large and experienced insurance carrier and had a health-care network in place across
the United States that pretty well coincided with major locations where Polson had operations.
In March 2003, Polson signed a three-year agreement with Whitefish for a managed-care program that was
called "The Health Care Connection." This plan covered medical, dental, vision, and hearing care, as well as
prescription medications. It also included a well-care program covering such items as an annual physical exam and
prenatal care. An important feature of the plan was that Whitefish guaranteed annual premium increases of less
than 10 percent during each of the three contract years on the managed-care side of the program. No similar
guarantee was provided on the indemnity side. The actual figure would depend on the number of employees using
the indemnity portion of the program.
"We wanted a very strong gatekeeper system," says McGee. "For our employees to take advantage of the
extremely comprehensive benefits found on the in-network side of The Health-Care Connection program, as well as
the modest $20 copayment feature, they had to agree to choose a primary-care physician from within the closed
panel and visit specialists in hospitals only when referred by their primary-care physicians. That was the trade-off."
Where employees stayed in the network, the costs were very modest: a $20 copayment per office visit and $20 per
prescription (generic drug) and 35 percent of the cost of a brand-name drug. If employees chose to go outside the
network, they could switch to the indemnity side of the plan at any time for any particular illness or injury with no
restrictions. Those who did, however, paid an annual deductible equal to 1 percent of their annual salaries and then
were subject to an 80/20 copayment split (in other words, employees paid 20 percent of the medical care costs after
the deductible was met).
"The basic concept behind managed care is just that, managing it," says McGee. "By staying in the network,
everyone saves money. We felt this was a major effort aimed at limiting unnecessary care."
For its part, Whitefish is responsible for guaranteeing the quality of the managed-care side of the network. It is
responsible for using its buying power to ensure that hospitals in the plan attract an adequate supply of high-quality
physicians. It also means continual monitoring of employee usage of different types of medical care through
utilization studies.
Transcribed Image Text:Reducing Health-Care Costs
In the spring of 2006, Ron McGee, vice president of group insurance and labor relations at Polson Corporation, delivered
the bad news to top management. Medical-Insurance premiums for the following fiscal year were expected to increase
approximately 20 percent, up dramatically from the 8 percent increase of the previous year -and future cost projections
were equally grim. It was estimated that by 2010, the company's $555 million annual health-care bill would increase to
a staggering $813 million.
Polson is a large, high-technology, automotive and electronics product company that employs about 70,000
people in the United States. The company decided not to tinker with traditional remedies to escalating health-care
costs, such as increasing deductibles and shifting larger copayments to employees. Instead, it turned to managed health
11
care. It did so by contracting with Whitefish Corporation, a large employee-benefits company specializing in such
managed health-care plans.
A task force was formed in 2006 under the direction of McGee. The task force included HR executives from the
corporate office of Polson in Morristown, New Jersey. This group was given the challenge of developing a custom-
designed program that would hold down health-care premium costs to a reasonable level. The group decided that the
new program would be built on the following foundation:
1. The insurance carrier, Whitefish Corporation, would be a partner in the program and would carry a financial risk, not
merely be an administrator that paid the bills as they came in.
2. The insurance carrier would use its buying power to establish a network of highly qualified primary-care physicians
and specialists throughout the United States, coinciding with the company's primary locations.
3. The insurance carrier would guarantee a high level of quality care to be provided to Polson's employees.
4. Unlike other health maintenance organization (HMO) plans, under the new Polson Plan employees would be able to
switch from managed care to a traditional indemnity plan at will, but they would pay extra for exercising this option.
"We sought to change the way health care was delivered to our employees," says Al Gesler, corporate director of HR
for Polson. "The net result was a hybrid program, taking into account the best features of HMOS and indemnity
plans and combining that with a partnership arrangement between Whiteffish, Polson and its employees." Whitefish
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