Editor's Note: This is the second in a two-part series exploring healthcare cost and quality issues for expanding businesses. The first part outlined how the Midwest states dominated in the 2007 Healthcare Cost Quotient (HCCQ); eight of the ten five-star finishers are Midwestern states. States were ranked in five major categories for the HCCQ: healthcare facilities, healthcare providers, health insurance costs, healthcare provider visit costs, and malpractice costs. Cost-related factors were given the greatest weight in the HCCQ. See also the first part of this series: Healthcare Expenses Are A Key Site Location Factor.

Business leaders looking for the best place to expand their companies need to do their homework when they add healthcare costs, quality, and availability to the site location equation.

One organization that is working to minimize healthcare cost hikes is the National Business Coalition on Health (NBCH). This group has about 80 employer-based healthcare coalitions as members. NBCH and its member-coalitions advocate value-based purchasing of healthcare services by public and private employers.

The 2007 Healthcare Cost Quotient included state-by-state counts of NBCH coalitions in its calculations, since these groups play a critical role in controlling the healthcare cost spiral.

How important are these business-health groups? "Through the negotiations of our coalition, the Employers Health Purchasing Corporation of Ohio, a smaller self-insured employer, with say, 150 workers, can get the same rates on prescription benefits that even the largest coalition members receive; it's a way for the smaller businesses to reap the purchasing power of a Fortune 500 company," says Ken Braun of Republic Engineered Products.

2007 HCCQ Rank
Here is the 50-state ranking for the 2007 Healthcare Cost Quotient.

2007 Healthcare Cost Quotient

State Rating
Alabama *****
Alaska *
Arizona **
Arkansas ***
California ****
Colorado **
Connecticut *
Delaware **
Florida ***
Georgia *
Hawaii **
Idaho **
Illinois ****
Indiana *****
Iowa ****
Kansas *****
Kentucky ***
Louisiana ****
Maine ****
Maryland **
Massachusetts **
Michigan *****
Minnesota *****
Mississippi ****
Missouri *****
Montana ***
Nebraska *****
Nevada *
New Hampshire **
New Jersey *
New Mexico *
New York ***
North Carolina **
North Dakota *****
Ohio ****
Oklahoma ***
Oregon *
Pennsylvania *****
Rhode Island **
South Carolina ***
South Dakota ****
Tennessee ****
Texas ***
Utah ****
Vermont ***
Virginia ****
Washington **
West Virginia *
Wisconsin *****
Wyoming *
For a complete listing of specific category rankings in .pdf format click here.
Adds Mickeisha Armstrong, who is manager, benefits administration at Mitsubishi Motors North America (Normal, Ill.): "As major purchasers of healthcare services, employers can realize significant economies of scale by working together in conjunction with a local coalition. By combining efforts to work toward value-based purchasing, while implementing various health/wellness-related initiatives at the community level, employers can increase productivity and have healthier employees." Mitsubishi's North American manufacturing operations can produce 135,000 vehicles each year.

For the 2007 HCCQ, we tried to answer the broad question most employers ask themselves: Are the healthcare facilities adequate at a prospective location for their workforce?

In addition to considering such basic data as the number of hospital beds per 100,000 population, and number of community hospitals per state, we also considered the number of top-notch healthcare facilities from U.S. News & World Reports' Best Hospitals 2006 list.

Having a robust cluster of healthcare facilities may be crucial for communities hoping to attract a corporate headquarters relocation, says John H. Boyd, founder and president of The Boyd Company Inc.: "A city offering superior healthcare at an affordable cost contributes greatly to our clients' ability to retain top management talent in the initial move, and be in a superior position to attract similar talent in the years ahead." Boyd's firm, based in Princeton, N.J., provides independent site selection counsel to leading North American and overseas corporations.

Expanding businesses may want to look beyond the healthcare network in a community and consider incorporating wellness facilities into their new operations. While only 16% of multinationals currently offer some type of wellness program to promote healthy living among employees, 28% plan to launch such an offering in the next two years, according to Watson Wyatt Worldwide, the human resource consultants.

Lincoln Plating, a metals finishing company in Lincoln, Neb., will have a wellness center as part of a 40,000-square-foot pipe fabrication expansion that is currently under construction at Lincoln's headquarters. The new fabrication operation will employ 100. Five sites in and around Lincoln were considered for the expansion.

"If you are trying to kick off a wellness initiative in your organization, it may make sense to start the program at your company's new location. That way the business climate begins with wellness as a front runner," says Tonya Vyhlidal, Lincoln's wellness/health enhancement manager.

Lincoln requires each of its 450 employees to undergo a quarterly health evaluation of such things as blood pressure, body weight and body fat percentages and flexibility. Each employee gets a personalized wellness goal based on the assessment.

As business executives assess healthcare facilities, providers, and options at prospective sites, they may decide to have an on-site healthcare facility at the new location. "Start planning early if your company is considering having a full-service clinic at a prospective site," says Sara Crate, who is vice president of business development at Whole Health Management (Cleveland). "You want to make sure that you've got the space available, and that the clinic is located in the right place where it's convenient for the employees to access, such as next to the cafeteria, or the fitness center."

Whole Health develops and operates on-site clinics for large, self-insured organizations, such as Sprint, Harrah's and Scotts Miracle-Gro Company. Whole Health manages about 70 clinics in 20 states; the clinics serve more than 300,000 employees.

Results from past Expansion Management Healthcare Cost Quotients may be sinking in among corporate chieftains. At least one group of executives, corporate CFOs, is becoming healthcare-focused. Reducing healthcare costs should be one of Congress' top priorities, said a whopping 47% of the CFOs polled in the November 2006 Duke University/CFO Magazine Business Outlook survey.

Additional information can be found here.

Michael Keating is a senior research editor for Expansion Management. He can be reached at mkeating@penton.com