Health Care Expenses ARE An Important Site Location Factor -- Part 2

April 25, 2006
Businesses need to take a healthy interest in health care costs, quality and availability in the expansion and site location process.

Editor's Note: This is the second in a two-part series exploring health care issues for expanding businesses. The first part outlined how Louisiana, Nebraska, Pennsylvania, and Wisconsin were the top finishers among the states in Expansion Management Magazine's 2006 Health Care Cost Quotient (HCCQ). States were ranked in five major categories for the HCCQ: health care facilities, health care providers, health insurance costs, health care provider visit costs, and malpractice costs. Cost-related factors were given the greatest weight in the HCCQ. Click here for the first part of this series.

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

One organization worth contacting is the National Business Coalition on Health (NBCH, This group has about 90 employer-based health care coalitions as members. NBCH and its member-groups advocate value-based purchasing of health care services by public and private employers, and works to control the health care cost spiral. One of the measures used in the Health Care Cost Quotient ranking: state-by-state counts of NBCH coalitions.

How important are business-health coalitions? Brian Peterson, CFO at Liebovich Brothers, explains: "Our health plan is consistently viewed as being very important in attracting and retaining our valued employees. Unfortunately, with the competitive nature of not only ours but most businesses, the cost of providing this benefit must be controlled like any other. Long term, I feel that the only way to truly control health care costs is to focus on its quality, and empower our employees to make choices that reflect upon that quality. Our local Employers Coalition on Health (ECOH, Rockford, IL) has that as its objective. When a business community can come together with its health care facilities and providers towards this common goal, it creates an economic environment which is positive not only for the existing employers, but also for prospective new employers as well."

Membership in the ECOH includes more than 120 northern Illinois companies, representing nearly 60,000 covered individuals.

Another executive who sees the value of business-health coalitions is Jack Alonge, director of Human Resources at Outokumpu American Brass in Buffalo, NY. Alonge, who serves on the board of the Niagara Health Quality Coalition (NHQC), urges businesses planning to expand to consult with business-health coalitions at prospective sites. He explains: "The NHQC and its New York State Hospital Report Card can give a business a good flavor of not only what's available from a supply point of view, but also the level and quality of care. And it keeps these providers, including hospitals, MDs, and health insurers, on their toes." Outokumpu American Brass employs 650 at its Buffalo operation.

Alonge also urges that expanding businesses make certain that a prospective site has a robust health care system: "Find a location where you have a wealth of providers. In Buffalo, not only do we have some special expertise with our Roswell Park Cancer Institute, but we have an abundance of health care providers, so there's some good competitive pressure that keeps prices relatively reasonable."

To get an overall feel for the availability of health care providers, Expansion Management's Health Care Cost Quotient looked at such yardsticks as the number of active non-federal physicians and nurses per 100,000 population. We also examined the number of hospital beds per 100,000 population, number of community hospitals per state, and we factored in the number of top-notch health care facilities from U.S. News & World Reports' Best Hospitals list.

Find out about health care facilities at a prospective site, urges George Metzger, vice president of human resources and benefits at Textron. "When assessing potential sites, assessment of community infrastructure is frequently undervalued in the decision making process. Failure to assess cost, access and quality of healthcare frequently results in systemic issues impacting employee retention and operating costs."

Metzger explains: "Mitigation of health care costs and employee dissatisfaction can be achieved by evaluating access to healthcare providers by practice specialty, hospital surgical units, bed utilization, trauma centers proximity, and the diversity of the provider community. This evaluation is relatively easy, and quantitative data is readily available."

Besides getting quality measures from groups like the National Committee for Quality Assurance (NCQA) and its Health Plan Employer Data and Information Set (HEDIS) and the Leapfrog Group, Metzger urges contacts with other companies at a prospective site: "Perhaps the most reliable measure of perceived quality can be obtained during the site due diligence process by talking with other employers and getting their assessment of the cost and quality of health care in the community, and what their assessment is of the health care community's ability to absorb additional patients."

Textron, based in Providence R.I., has five operating segments, including Bell Helicopter, Fastening Systems, and Cessna, which makes business jets and turboprops. Textron employs 44,000.

Health provider information is key, says Paul Shoemaker, who is president and chief executive officer of American Hospital Directory, Inc. (Louisville, KY,, an Internet service that provides hospital information from public and private data sources. "The big initiative we are seeing right now are efforts by businesses to make usable information available to their employees when one of them is faced with needing to access medical care."

North Dakota, which finished a strong number seven in the 2006 Health Care Cost Quotient, is the home to many healthy workers, says Shane Goettle, commissioner of the North Dakota Department of Commerce: "Our low health care costs are consistent with North Dakota's overall strong health rankings. We were ranked the sixth healthiest state in United Health Foundation's annual America's Health Rankings report (issued December, 2005). Good health certainly contributes to our state's low absenteeism rates, and lessens the overall cost of health care for North Dakota businesses."

And for business executives in North Dakota and elsewhere, health care costs, quality, and availability continue to be important factors in the expansion and site location process.

Michael Keating is senior research editor for Expansion Management. He can be reached at [email protected] You can visit the Expansion Management Web site at

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