Secretary of Health, Education and Welfare Joseph A. Califano Jr. appealed to executives from 600 of the nation's largest corporations and labor unions here yesterday to help reduce health care costs by supporting potentially money-saving health maintenance organizations.
Califano, the luncheon speaker at a day-long conference he convened to sell prepaid health plans to business and labor, in his speech cited potential savings to businesses in a combination of hard-headed dollars and cents and old-fashioned patriotism.
"This is not just another conference." Califano said. "It's a request that you take the problem-solving genius of the private sector and put it to work in your self-interest and in the interest of your government."
Executives from more than 200 labor unions and from more than 340 of the country's largest corporation - companies like Allied Chemical, IBM, Litton Industries, Minnesota Mining and Manufacturing and Xerox - heard endorsements and discussions of health maintenance organizations from AFL-CIO President Gorge Meany, Goodyear Tire Chairman Charles J. Pilliod Jr. and General Mills Executive Vice President Paul L. Parker.
Parker, whose company has headquarters in Minnesota, described how the health maintenance organization - or HMO - his company helped sponsor had reduced health care costs by drastically cutting hospitalization.
General Mills employes who belonged to the HMO had less than half the number of hospitalization days annually per 1,000 employes than workers with conventional health insurance, Parker said.
The most popular form of HMO, the prepaid group practice plan, is distinguished from conventional health insurance chiefly in the way physicians are paid - at the outset of the process rather than at the end. Physicians, who are either employed with it are customarily paid a salary rather than receiving a fee for the services they perform.
As employes or contractors with the plan, physicians have a stake in holding down costly procedures and unnecessary hospitalization or seeing the plan - and hence their incomes - suffer.
Large HMOs, like the giant, primarily West Coast Kaiser-Permanente Medical Care Program, with 3 million members and $1 billion in revenues last year, offer members comprehensive medical services at rates substantially lower than conventional insurance. In addition, Kaiser members virtually have no out-of-pocket medical expenses.