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DaimlerChrysler Looking for 'Cure' to Rising Health Care Costs

7 August 1999

DaimlerChrysler Looking for 'Cure' to Rising Health Care Costs

    TRAVERSE CITY, Mich., Aug. 6 -- Seven percent of the cost of
a new DaimlerChrysler vehicle (average price of $18,600) is spent
on health care services for the company's 122,000 employees, retirees, and
dependents living in the United States.  The total tab for health care for
1998 was $1.3 billion, that's up from $979 million in 1995.
    "We are in the business of building vehicles, yet we pay our health care
suppliers more money than any other vendor.  These costs are out of control,"
said Kathleen Oswald, Senior Vice President of Human Resources for
DaimlerChrysler.  "The national health care crisis is certainly not unique to
DaimlerChrysler, but it is a focus of discussion and action within our
company."
    In response to this national issue, last year DaimlerChrysler began
working with its health care suppliers in Continuous Improvement Workshops
(CIW).  The focus of CIW is part of the corporation's Extended Enterprise(R)
philosophy.  The workshops have a clear goal, which is to streamline health
care practices in a way that not only benefits DaimlerChrysler, but also
health care providers, suppliers and employees.  It calls for the Company,
hospitals, doctors and suppliers to collaborate and implement ways to save
money and improve care quality and customer satisfaction at the same time.
    "At least once a week, over the last year, we facilitated 40 one-week
workshops with our first, second and third tier health care suppliers and many
of the results have been fantastic," said Oswald.
    One recent example is in the area of patient referral.  Through the CIW
process seven Michigan based managed care companies now use one standardized
referral form for hundreds of locations, and any doctor approved by the
DaimlerChrysler insurance plan.  "Not only has this reduced costs, but it has
reduced unnecessary redundancy, confusion and gets employees faster access to
medical care, in some cases by two to three weeks," said Oswald.
    Mercy Health Services is another example of the success of
DaimlerChrysler's system.  "Officials were so impressed after a CIW review of
one of their hospital's emergency services operations, they have adopted the
CIW system for all 21 of their hospitals.  The hospital averaged an eight hour
Emergency Room wait time.  After the one-week workshop hospital administrators
eliminated six hours from the patient wait time," said Oswald.  "By partnering
together and improving processes, we can offer better, more affordable and
faster access to medical services to our employees."
    Oswald made remarks at the 1999 University of Michigan Management Briefing
Seminars at Traverse City.