32BJ Health Fund Fights High Cost of Care at a New York Hospital

Like other healthcare purchasers, the 32BJ Health Fund is not immune to the forces causing healthcare costs to rise. What’s different is the way the Health Fund responds. While many payers choose to raise premiums, co-pays, deductibles, and other out of pocket expenses—and shift costs from employers to employees—the Health Fund does everything possible to avoid passing those costs onto members. The 32BJ Health Fund knows that all too often, high costs serve as a barrier to people getting necessary treatments. In an effort to control costs, the 32BJ Health Fund developed a robust data analytics team to analyze millions of rows of claims data the Health Fund receives from its vendors. By analyzing the Health Fund’s claims data, it found major variations in the prices it pays for standard high-volume procedures at New York City hospitals. For example, the Health Fund paid more than $80,000 for hip replacement surgery at one hospital, as opposed to a median price of $53,000 elsewhere. There were similar price disparities for having a baby, knee replacements, and many other kinds of in-patient and out-patient care. There was no evidence of quality differences to support the higher prices.

While the 32BJ Health Fund wants to find long-term strategies to lower the price of hospital care, it wanted to pursue an interim strategy of implementing a new network design. Based on its analysis, the Health Fund wanted members to pay more for planned care at the most expensive hospitals and pay less for such care at the other hospitals. However, the Health Fund was contractually prohibited from implementing this kind of cost-saving network.

The 32BJ Health Fund, working with both union and management representatives, participated in a campaign to call attention to the large disparities in the cost of care at different providers by drawing on its analysis of aggregate claims data. A campaign included advertising in local business papers, New York City Council hearings, as well as outreach to business leaders, local elected officials and journalists to call attention to the lack of transparency in the healthcare market. The campaign demonstrated the effects of hospital prices on working people and their employers and gave New Yorkers a window into the hidden world of hospital pricing. As a result, the 6 Health Fund was able to secure the changes necessary to implement a new network design and encourage members to use lower-cost providers.