Chrysler Corp., which saved $58 million on employe health costs in 1984 by an innovative new cost-control program limited mainly to non-union workers, will extend the program to unionized personnel next year under its new contract with the United Auto Workers, Joseph A. Califano Jr. announced yesterday.
Califano, a former secretary of Health, Education and Welfare in the Carter Administration and now a Chrysler director, said the days are over when companies can passively pay the bill for whatever medical providers choose to charge, and for however many services they choose to order. Califano is chairman of Chrysler's committee on health care.
Califano said companies now must be tough, hardnosed buyers of services, scrutinizing bills carefully to see they aren't excessive and that the services don't far exceed what is needed for the health of the patient.
He said Chrysler hopes to cut costs for union workers without reducing the scope of health care by these steps:
*Requiring pre-screening before anyone can go to the hospital. "The need for admission will be certified in advance and a maximum length of stay determined." Prior approval must be obtained to extend the stay. Califano said pre-screening is a vital cost-cutting measure because analyses of Chrysler employe health costs several years ago had found that "two-thirds of the hospitalizations at the eight Detroit hospitals with the most admissions -- and 85 percent of the total hospital days (2,264 days out of 2,679 days) -- were inappropriate" medically. Three hospitals didn't have a single appropriate admission. "The admissions, it turned out, were largely for bed-rest, which is both safer and cheaper at home."
*Employes will be offered a preferred provider plan, under which, in effect, doctor groups and other providers of health services give discount rates to Chrysler in return for Chrysler channeling a large number of patients to them. This will help cut costs for Chrysler. Vision and podiatric care "will now be fully paid" only if the employe uses health-care providers with whom Chrysler has a service contract that specifies payment levels. If the employe wants to go elsewhere, he will be required to make a "substantial copayment."
*Chrysler will pay for outpatient lab tests only at the lab it has selected as a low-bidder.
*Dental HMOs, already available to workers in Michigan, Illinois and Indiana, will be extended to workers in Ohio, Missouri, Delaware, New York and Alabama.
*A joint union-management committee will develop preferred provider arrangements for psychiatric services, outpatient radiology, medical equipment and supplies, and substance abuse. It will also seek ways to avoid unnecessary emergency-room use.
*Chrysler and the union have agreed to try to cut health-care costs by 10 percent over the next three years, although the figure is not binding.
Califano said steps along these lines for non-union employes had helped chop Chrysler's anticipated $460 million health bill for 1984 to $402 million, "but even with our savings, Chrysler had to sell about 70,000 vehicles in 1984 just to pay its health care bills." Its health costs, including the Medicare payroll tax, came to $530 a car.