A Carrot for Vendors

Vendors hoping to land business with Baptist Health South Florida will find a new question on their request-for-proposal paperwork this year: “Does your company offer health insurance options for its employees?”

Baptist Health, a five-hospital nonprofit system serving the Miami-Dade region, has implemented a new policy giving preferential consideration to vendors who provide health insurance for their workers. “It’s a philosophical statement,” says Brian Keeley, president and chief executive officer. “The message is that if you want to do business with Baptist, you ought to seriously consider getting health insurance, because otherwise there is a very good chance that you are not going to do business with us.”

The problem of the uninsured is particularly acute in south Florida, where nearly 30 percent of the population lacks health insurance—one of the highest rates in the nation. The region has a huge and growing population of both legal and illegal immigrants, many of whom do not understand how the healthcare system works. And the area’s economy is largely powered by service-oriented businesses and mom-and-pop operations, rather than the large corporations and industries that have traditionally provided health insurance to employees, Keeley says. “We are one of the largest private employers down here, so we thought we could use a little bit of economic leverage.”

In fiscal 2005, Baptist recorded $112 million in charity care and another $398 million in uncompensated care. Those figures rose to $121 million and $455 million, respectively, in fiscal 2006. While some of the increase is attributable to the hospital’s aggressive community outreach for charity care, the rising number of uninsured residents is another significant factor, Keeley says.

“We do not have a sustainable system in the United States, and this system will continue to deteriorate. There is no way it is going to self-correct,” he says. “The insurance pool continues to diminish, and we’re going to have many more have-nots than haves in the next few years.”

The idea of giving preference to vendors who provide health insurance for their workers originated with Robert DerHagopian, M.D., a breast surgeon who has seen firsthand in his charity work at Baptist the dire impact that a lack of access to health insurance can have on public health.

“We have people who use the emergency room as their primary-care provider, so they have very little preventive care,” DerHagopian said. “They come in with catastrophic illnesses, large breast cancers, and that is from not having colonoscopies or routine physical examinations. Society pays more for those patients than it does for people who have well-care.”

Heartened by former Massachusetts Gov. Mitt Romney’s efforts in 2006 to mandate employer-sponsored health insurance in that state, DerHagopian considered what Baptist could do. “I said to myself, ‘Why not encourage employers to have health insurance for their employees by doing business with those people?’” he says. The Baptist board embraced DerHagopian’s idea and voted unanimously in November to favor vendors providing health insurance.

Baptist may be on the leading edge of a growing trend, says Rick Wade, senior vice president of the American Hospital Association. Wade says that a few other faith-based hospitals have created similar initiatives, although the AHA hasn’t tracked specific numbers. “In an era where we are seeing the number of un-insured increase by leaps and bounds, you may see more hospitals making similar statements,” he says.

The effects of Baptist’s new policy could be widespread. In fiscal 2006, Baptist purchased $212 million in supplies, from aspirin to X-ray machines, and awarded $117 million in service contracts for everything from coding consultants to lawn maintenance. Frank Fernandez, Baptist’s assistant vice president and corporate director of materials management, sorts through the hospital system’s RFPs and contracts with approximately 10,000 vendors, noting those who provide health insurance and those who do not.

“It is something that is very new to us. We are learning through the process of putting it together,” he says. “In a close situation it won’t be the only criteria we use, but it will be one of the criteria we use when we make a decision.”

Fernandez says Baptist may encounter problems with smaller locally owned service providers such as window washing and lawn maintenance companies that often have only a handful of employees and may not offer access to health insurance. “It’s going to be a challenge,” he says. “But the important thing here is the message that it sends out to the community. This is what we believe in.”

The burden of providing health insurance won’t put smaller companies at a disadvantage, especially as health plans offer more innovative consumer-driven products, Keeley says. “They shift copays and deductibles to the employees, but the premiums are significantly lower than they have been over the last several years. They are very accommodating to the smaller employers.”

John Commins is editor of HealthLeaders Florida Healthflash. He may be reached at jcommins@healthleadersmedia.com.