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Published: Winter, 2006; Vol 8, Num 1

Getting the Bad Apples Out of the Barrel…
In Las Vegas

Successful health care cost containment efforts in Las Vegas set conditions for the first significant wage increase in three years for the members of culinary workers local union 226, part of Unite HERE.

Las Vegas is one of the fastest-growing communities in North America, an entertainment mecca in the southwest desert that attracts millions of visitors annually. Most visitors are serviced at the city’s hotels and casinos by members of local 226. In 1987, the local had 10,000 members. Today, it has more than 50,000. Its Culinary Health Fund provides health care coverage to these members and their 70,000 family members. It is the largest health fund in the Las Vegas area.

Noting that American health care costs have risen three times faster than salaries over the past 15 years, Jerry Reeves, the fund’s administrator, says, “Access to affordable health insurance has become a primary reason to join a union.”

Reeves employed aggressive tactics to investigate the drivers behind the sharp increase in his fund’s cost of physician services. The fund examined variations in physician costs not only by price per unit of service, but also by the number of units of service per episode of care. “For instance,” Reeves explains, “a bronchitis episode might include payments for the physician’s professional services, a chest x-ray and blood tests, antibiotics and, perhaps, for hospitalization.”

The comparisons showed no differences in outcome but spectacular differences in cost.

After extensive internal discussion, the fund decided to discontinue contracts with three percent of the most expensive physicians among its 800 approved providers. As a result, the fund reduced costs by ten percent and saved $67 million over 24 months. In addition, because of ripple effects on other providers in its network, the annual rate of increase in the fund’s cost of physician services declined from 4.2 to 0.2 percent. As a result of these savings, local 226 and its signature employers were able to negotiate the first wage increase in three years.

A key to the success of this aggressive intervention has been the fund’s strongly developing member outreach and communications program. “Perhaps the most daunting challenge to prevailing illness and complications is getting participants’ attention and building their confidence that they can improve their health,” says Reeves. “Information tools, frequent touches and relevant incentives are engaging more and more of our participants in sustained care improvement interventions.”

More information about Unite HERE’s Vegas cost management initiative is at http://www.culinaryhealthfund.org/employers/home_employers.asp.