This article was published on October 15, 2019 on MarketScreener.com written by Melanie Evans.
Employers are increasingly going the distance to control health spending, paying to send workers across the country to get medical care and bypassing local health-care providers.
One of the latest is Amazon.com Inc., which will pay travel costs for workers diagnosed with cancer who choose to see doctors at City of Hope, a Los Angeles-area health system. More than 380,000 of the Seattle-based company’s employees and families across the U.S. are eligible for the travel benefit.
Travel programs are winning over employers despite added costs for airfare, hotels and gasoline. Proponents say companies can get competitive prices and employees get better care — such as avoiding unnecessary treatment — by shopping around the country instead of always relying on local providers. Employer health plans, which cover roughly 153 million people in the U.S., struggle to command competitive prices and quality controls in some markets as health-care providers have consolidated and gained leverage in negotiations.
“If you’re able to look nationally, you’re just going to have more choices,” for top doctors, said Lee Lewis, chief strategy officer of the Health Transformation Alliance, an employer group aimed at holding down health spending. Still, travel programs require more work to run, he said, and employees can be reluctant to be away from home when ill or undergoing a procedure.
City of Hope began to contract with employers last year with multiple programs, including one through a program jointly run by the Pacific Business Group on Health and consultants Health Design Plus. An employer with 30,000 U.S. workers began to cover cancer-care travel costs in March, according to PBGH, an employer group. Four other employers signed on to its travel programs this year, including two large regional employers in the Midwest and Southeast that in January started to cover travel for spine and joint-replacement surgeries, the group said.
About 10% of those eligible to travel to City of Hope for cancer care are expected to do so, according to Health Design Plus. City of Hope declined to say how many Amazon workers have traveled to see its doctors since April, when that program was launched.
By paying employees’ way to travel for medical care, Amazon hopes to increase workers’ choices and curb health spending by getting workers to top specialists and reducing the chance of the wrong diagnosis or treatment, said Dene Sparrman, the company’s director of global benefits.
Workers who travel to City of Hope meet with specialists who review local doctors’ records and might seek additional information, such as genetic testing, to make treatment recommendations.
“Instead of waiting for patients to get the wrong care first, then reaching out to the expert, this model is designed so that the patient has access to expertise as early as possible to help ensure the correct care is delivered first,” Ms. Sparrman said.
Amazon has stepped up its focus on employee health care. The company last year announced a venture with Berkshire Hathaway Inc. and JPMorgan Chase & Co. to reduce health costs. The venture, named Haven, wasn’t involved in the launch of Amazon’s new travel benefit, Haven and Amazon officials said.
Travel benefits are one of many strategies by employers seeking to tamp down growth in health-benefit spending, which Labor Department data show has increased faster than wages, though not recently.
Employers typically cover about 70% of premium costs for workers’ health insurance, annual Kaiser Family Foundation data show. Premiums have increased an average of 7% a year in the past two decades, reaching about $20,500 for a family.
Some employers still balk at sending employees long distance for care, said Dr. Jeff Dobro, health and benefits strategy and innovation leader for consulting firm Mercer. That is changing with more data to compare price and quality for hospitals and doctors, he said. “Let’s accept the fact that there are some hospital systems and some doctors that do get better outcomes than others,” Dr. Dobro added.
Other employers have run travel programs for years. Published results are limited but suggest the programs save money and reduce unnecessary care. Walmart Inc., Lowe’s Cos. and McKesson Corp. saved an estimated total of $19.4 million in 2017 as workers who traveled to see spine and joint surgeons avoided unnecessary care, Walmart reported in the Harvard Business Review in April.
Walmart workers diagnosed with breast, lung or colorectal cancer can travel to the Mayo Clinic for evaluation. Of those who traveled to Mayo for cancer care since 2015, about 10% received a new diagnosis, the Bentonville, Ark., retailer’s data show.
City of Hope said doctors have recommended a new diagnosis or treatment for 84% of complex cancer patients in one of its employer programs.
Amazon previously paid for travel only when no treatment was available within 100 miles for life-threatening conditions, such as advanced heart surgery. The new travel benefit can be used for any cancer diagnosis, regardless of local options. Those who choose to remain home can meet with City of Hope doctors by videoconference, when state regulations allow.