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North Bay Business Journal

Monday, November 23, 2009, 10:48 am

Safeway develops way to improve health, save money

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    Ken Shachmut would have just two words for the authors of the 2,000-page-plus health care bills being disgorged from the houses of Congress: behavior and transparency.

    Mr. Shachmut is executive vice president of Safeway Health LLC, the latest corporate entity created by grocery giant Safeway Inc.

    Safeway Health LLC is the product of the company’s very successful 2005 foray into a new approach to employee health coverage.

     ”At Safeway we have transformed our approach to delivering health care to our employees and families – creating market-like mechanisms and establishing healthy behavior as currency that earns financial rewards as well as improved personal health,” said Mr. Shachmut, the keynote speaker at the Business Journal’s Nov. 11 health care conference in Santa Rosa.

    The Safeway program – which has caught the attention of some officials in Washington, D.C. – returns significant premium dollars back to employees and members as a reward for meeting health behavioral goals around, for instance, weight loss, cholesterol or smoking cessation.

    On the need for transparency in health care costs, Safeway has surveyed rates for procedures for, say, a routine colonoscopy. It found alarming variation in what different providers charged for the same procedure and chose those for its plan that could deliver the highest quality at the best price.

    The reward for all this: Safeway has essentially flat-lined its health care costs for about 30,000 non-union employees and dependents from 2005 to 2009 at the same time costs for health insurance increased by nearly 40 percent in the broader market.

    Employee satisfaction with the program runs very high, Mr. Shachmut said, because of its direct financial rewards and improved health. No one is penalized for health conditions out of their control.

    Mr. Shachmut said Safeway Health is now replicating the plan with other employers and is researching a model that would work for groups of small employers.

    Let’s hope Washington is truly paying attention.

                              ***

    Last word: Presenters at the Business Journal’s Nov. 11 health care conference recommended two places for further research on health care, particularly the vast variation in cost. Those are the June 1 New Yorker article, “The Cost Conundrum,” and the Dartmouth Atlas of Health Care at www.dartmouthatlas.org.

    In addition, Mr. Shachmut’s slideshow presentation is available on the Resources page of the Business Journal Web site, www.northbaybusinessjournal.com

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    Brad Bollinger is Business Journal editor in chief and associate publisher. He can be reached at 707-521-4251 or bollinger@busjrnl.com.

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