The rapidly escalating cost of health care, including the cost of providing health care benefits, is a significant concern for many employers. In this article, the authors examine a case study of an academic health center that undertook a complete redesign of its health benefit structure to control rising costs, encourage use of its own provider network, and support employee wellness. With the implementation in 2006 of a high-deductible health plan combined with health reimbursement arrangements and wellness incentives, the Penn State Hershey Medical Center (PSHMC) was able to realize significant cost savings and increase use of its own network while maintaining a high level of employee satisfaction. By contracting with a single third-party administrator for its self-insured plan, PSHMC reduced its administrative costs and simplified benefit choices for employees. In addition, indexing employee costs to salary ensured that this change was equitable for all employees, and the shift to a consumer-driven health plan led to greater employee awareness of health care costs. The new health benefit plan’s strong focus on employee wellness and preventive health has led to significant increases in the use of preventive health services, including health risk assessments, cancer screenings, and flu shots. PSHMC’s experience demonstrates the importance of clear and ongoing communication with employees throughout—before, during, and even after—the process of health benefit redesign.
Ms. Marshall is analyst, Huron Consulting Group, Chicago, Illinois. From July 2010 through June 2011, Ms. Marshall was an administrative fellow, Penn State Hershey Medical Center, Hershey, Pennsylvania.
Ms. Weaver is communications specialist, Office of the Chief Executive Officer and Dean, Penn State College of Medicine, Hershey, Pennsylvania.
Mr. Splaine is president, Spectrum Health Grand Rapids, Grand Rapids, Michigan. Mr. Splaine was previously chief strategy officer, Penn State Hershey Medical Center, Hershey, Pennsylvania, through June 2010.
Mr. Hefner is executive vice president, Clinical Affairs, Georgia Health Sciences Health System, and chief executive officer, MCG Health, Inc., Augusta, Georgia. Mr. Hefner was executive director and chief operating officer, Penn State Hershey Medical Center, Hershey, Pennsylvania, from July 2003 to March 2006.
Dr. Kirch is president and chief executive officer, Association of American Medical Colleges, Washington, DC. Dr. Kirch was chief executive officer, Penn State Hershey Medical Center, senior vice president for health affairs, Penn State, and dean, Penn State College of Medicine, Hershey, Pennsylvania, from January 2000 through April 2006.
Dr. Paz is chief executive officer, Penn State Hershey Medical Center, senior vice president for health affairs, Penn State, and dean, Penn State College of Medicine, Hershey, Pennsylvania.
Correspondence should be addressed to Dr. Paz, Office of the CEO and Dean, Penn State Milton S. Hershey Medical Center, Penn State College of Medicine, H162, 500 University Dr., Hershey, PA 17033-0850; telephone: (717) 531-8323; e-mail: email@example.com.