Golden oldies: striking a balance in retiree health care; geriatric clinics are Southern California Edison's method of providing quality care while containing retiree health costs

Golden oldies: Striking a balance in retiree health care

Escalating health care costs for retirees are a major concern to many United States companies, since nearly half of all full-time employees continue to be covered by health care plans after retirement. Employer contributions to health insurance plans have grown from $25.5 billion in 1975 to $104.7 billion in 1985, representing an increase from 3.1 to 5.3 percent of gross wages and salaries for the respective years. Recent estimates by the Health Research Institute, a public health reseach firm in Walnut Creek, Calif., indicate that the average Fortune 1000 company spends nearly $53 million, or 39 percent, of its net earnings per year on health care benefits; 11.2 percent of those costs are incurred for current retirees.

According to the American Association of Retired Persons, health benefit obligations to future retirees of the 500 largest U.S. industrial companies exceed $2 trillion.

Factors affecting cost

The projected increases in retiree health care costs are affected by demographic, medical, and health service utilization trends, including increased ratios of retirees to active employees, greater odds of surviving catastrophic illnesses, and better and more expensive medical technologies.

Another contributing factor to the rising cost of retiree health care is the changing ratio of employees to retirees. The workforce participation rate of those over 65 years of age has decreased markedly, from 45.8 percent in 1950 to only 16 percent in 1986. A further decline to 9.9 percent is projected by the year 2000. Some estimates project a ratio of 2.5 to 3.0 workers per retiree by the end of this century. These shifts in labor force participation and the increase in the numbers eligible for retiree benefits contribute to the upward spiral of retiree health care costs.

In view of these demographic realities and economic trends, American corporations must find ways to cope with the grim projections of health care cost increases. The challenge is to limit increases in retiree health care costs while maintaining the quality of health care services. One possible strategy is to incorporate recent developments in gerontology and geriatrics into the corporate health care system. Over the past year, Southern California Edison has done just that.

The SCE generation

Southern California Edison has launched an innovative program aimed at reducing health care costs without compromising the quality of health care services to its retirees. SCE, a 102-year old electric utility company serving 3.8 million central and southern California customers, has a unique corporate health care structure in that it is both a payer and direct provider of health care services.

SCE is self-insured, processes its own health care claims (350,000 annually), and negotiates contractual relationships with HMOs and with its own preferred provider network (7,500 MDs, 80 hospitals, and 155 pharmacies). It is, in effect, its own health insurance company. SCE also maintains its own primary care clinics, which log up to 100,000 patient visits annually.

Like many other companies, SCE has experienced a dramatic increase in health care costs. Between 1981 and 1987, employee health care costs rose at a rate of 21 percent per year, while the rate of growth in the total number of employees, retirees and dependents was only 4 percent per year. Projections based on these trends prompted the company to develop a geriatric clinics program called Generation. Pilot-tested by SCE in July, 1989, the goal is to provide efficient and effective health care for SCE retirees and dependents.

Considering the unique characteristics of the company's retirees and their dependents, and based on analyses of gerontological literature, Generation was designed to achieve the following objectives:

* improve health habits and physical health;

* improve mental health;

* improve social functioning; and

* decrease service utilization and health care claims.

To accomplish these objectives, Generation incorporates two major components from gerontology and geriatrics: an interdisciplinary geriatric team and a case management approach. An interdisciplinary geriatric team is a team of professionals--a physician, a nurse, and a social worker--trained in geriatrics. Because of their specialized training and collaborative team approach, they can better assess problems and design interventions appropriate for this population.

For example, a 65-year-old who suddenly complains of sleeping difficulties following the death of a spouse may benefit more from grief counseling and involvement in a support group than from medications. Such an intervention is more appropriate to the person's needs and represents a less costly alternative to traditional practice.

Recent gerontological research reveals that an interdisciplinary team approach to health care for older adults has the potential of producing results, such as better functional health, fewer hospital admissions, lower hospital costs, fewer nursing home admissions, lower nursing home costs, reduced medication utilization, lower mortality rates, and reduced overall health care costs. Use of an interdisciplinary geriatric team approach should lead to better assessment of problems of older patients, as well as to interventions that are more appropriate to their problems and concerns.

The second component of the program, case management, refers to the coordination of services and resources for the elderly, most often done by social workers. Its purpose is to overcome information gaps and barriers that may exist in accessing services.

Through coordination, case managers ensure more efficient use of both clinic and community resources. For example, instead of prescribing heavy dosages of medication to a post-menopausal woman suffering from stress, the team recommended referral to counseling. A specialist on hormone replacement was also consulted, and the result was reduced medications coupled with ongoing family counseling, thereby reducing the cost of care and providing for a better quality of life for the retiree and her family.

In addition to individualized treatment delivered by an expert geriatric team, Generation differs from traditional corporate medical care in that it includes the following features:

* Comprehensive geriatric assessment. Patients' physical health, mental health, social health, and health habits are assessed by a team of professionals. Based on this assessment, a comprehensive care plan is developed.

* Complete medication review and evaluation. All medicines taken by the patient are analyzed by a physician and a pharmacist. Dosages, side effects, and patient's reasons for usage are evaluated and recommendations for changes are made.

* Retiree advisor assistance. Former SCE employees assist the retirees and their dependents in a variety of ways, such as orienting them to the clinic, arranging for transportation, and providing assistance to the professional staff.

* Health maintenance and wellness programs. Lectures and workshops are offered at the clinic in several areas of interest, such as coping with vision and hearing changes, choosing long-term care insurance, and avoiding back problems.

* A patient care tracking system. A management information system tracks patient care and formulates evaluation plans, including referrals to community resources.

* Program evaluation. Each patient's health is systematically assessed once a year. The resulting data are then analyzed to evaluate the program's effectiveness in achieving its goals.

The pilot program

SCE's health care clinic in Santa Ana was chosen to pilot Generation. All company retirees and their dependents aged 55 or older who reside within ten miles of the clinic were given the opportunity to enroll. Of the 750 SCE retirees and dependents living in the target area, 175 enrolled in the program. Gender representation was almost equal, with 52 percent men and 48 percent women. Almost one-quarter (22.3 percent) were ages 55 to 64, almost one-half (49.9 percent) were ages 65 to 74, and about one-quarter (27.8 percent) were 75 years or older. The average age was 70.

The majority of the enrollees were married (83 percent), Caucasian (98 percent), had at least some college (69 percent), and had monthly incomes ranging between $2000 and $4000 (51 percent). Only 14.3 percent reported living alone.

Medicine bag

Prior to an initial clinic appointment, each retiree is mailed a comprehensive health assessment questionnaire covering a variety of aspects of the person's physical and social functioning, including health risk behaviors such as smoking, alcohol abuse, and overeating.

A medicine bag, in which to bring all prescription and over-the-counter medications to the first clinic visit, is also included in the mailing. By being able to review all of an enrollee's Rx and OTC medicines, the clinical team can identify any problems that may exist with adverse drug combinations and side effects.

Following an orientation to the program conducted by a retiree advisor at the clinic site, the retiree is interviewed by a case manager and an in-depth psychosocial history is taken.

The information gathered in the assessment process revealed that the most common health risk areas for program participants were:

* the presence of multiple chronic health conditions (nearly 50 percent);

* obesity (over 50 percent); and

* alcohol use (20 percent).

Risk factor assessment served the dual purpose of directing the design of individual patient treatment plans as well as indicating areas for health education classes and workshops.

Generation information

Generation is the first reported corporate-sponsored program delivering health services to retirees and their dependents that features comprehensive assessment, an interdisciplinary team, and case management. The program addresses areas of functioning not usually addressed in traditional health care, including drug interactions, interpersonal relationship problems, and sexual concerns.

Ongoing research that examines health status, social support, and service utilization of program participants will generate valuable information on the most effective and cost efficient methods of health care service delivery in corporate settings. The most important effects of Generation will most likely take at least two years to become evident. Programs such as Generation have the potential to meet the challenge of delivering quality care while containing costs to both companies and retirees.

COPYRIGHT 1991 A Thomson Healthcare Company
COPYRIGHT 2004 Gale Group