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insurers and providers. Figure 6-1 places value-driven health care on this
continuum. Despite the emphasis on competition, we have included it as
an administered system because it is going to have to be buyer-driven at
the onset.

Figure 6–1 Modified stages of health care market power.

CONCLUSION
The health care marketplace is very complex. Many actors and many
alternatives merit consideration as the system tries to strike a balance
between overutilization and underutilization and as the commercial aspects
of health care become increasingly apparent.

Case 6 Global Medical Coverage

BACKGROUND
Blue Ridge Paper Products, Inc. (BRPP) in Canton, North Carolina, is a
paper company whose predominant product is food and beverage
packaging. It was the largest employer in Western North Carolina in
2006, with 1,300 covered employees in the state and 800 elsewhere.
Started as the Champion Paper plant in 1908, it was purchased by the
employees and their union (a United Steelworkers local) in May 1999
with the assistance of a venture capital firm. Today it operates under an
employee stock ownership plan (ESOP). To purchase the plant, the
employees agreed to a 15% wage cut and frozen wages and benefits for
7 years. From the buyout through the end of 2005, the company lost $92
million and paid out $107 million in health care claims. It became
profitable in 2006. Maintaining health benefits for members and retirees
is a very high priority with the employees and the union, although
retiree medical benefits have been eliminated for salaried employees
hired after March 1, 2005. The venture capital firm that financed the

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ESOP retained 55% ownership with 40% going to the employees and
5% to senior management. Profitability varied from year to year as the
company expanded capacity and improved productivity of its single-
serving drink carton lines and was caught up in a number of suits over
water pollution problems at its Canton, North Carolina, plant.

The majority of BRPP employees are male, older than age 48, and
have several health risk factors. Most employees work 12-hour, rotating
shifts, making it extremely difficult to manage health conditions or
improve lifestyle (Blackley, 2006). The ESOP has worked hard to
reduce its self-insured health care costs. Health insurance claims for
2006 had been estimated at $36 million, but appeared likely to hold near
$24 million, which is still 75% above the 2000 numbers. A volunteer
benefits task force composed of union and nonunion employees worked
to redesign a complex benefit system. After 2 years of 18% health care
cost increases, the rate of growth dropped to 2% in 2003. It was 5% in
2004 and –3% in 2005.

Programs initiated in 2001 included a plan offering free diabetic
medications and supplies in return for compliance, and a tobacco
cessation plan with cash rewards. In 2004, the company opened a full-
service pharmacy and medical center with a pharmacist, internist, and
nurses. In 2005, it began a population health management program.
Covered employees and spouses who completed a health risk
assessment were rewarded with $100 and assigned a “personal nurse
coach.” The nurse coach assisted those who were ready to change to set
individual health goals and to choose from among one or more of 14
available health programs, which included reduced copays on
medications, free self-help medical aids/equipment, and educational
materials.

Where BRPP could not seem to make headway was with the prices
paid to local providers. Community physicians refused deeper
discounts. Even banding together in a buying cooperative with other
companies could not move the local tertiary hospital to match discounts
offered to regionally dominant insurers. This hospital was not distressed
and had above-average operating margins.

Articles on “medical tourism” in the press and on television
attracted the attention of benefits management. Reports were of high-
quality care at 80% or less of U.S. prices with good outcomes. BRPP

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contacted a company offering services at hospitals in India,
IndUShealth in Raleigh, North Carolina, and began working on a plan
to make its services available to BRPP employees.

INDUSHEALTH
IndUShealth provides a complete package to its U.S. and Canadian
clients, including access to Indian superspecialty hospitals that are Joint
Commission International accredited and to specialists and supporting
physicians with U.S. or U.K. board certification. It arranges for
postoperative care in India and for travel, lodging, and meals for the
patient and an accompanying family member—all for a single package
price. For example, it represents the Wockhardt hospitals in India,
which are Joint Commission International accredited and affiliated with
Harvard Medical International. Other Indian hospitals boast affiliations
with the Johns Hopkins Medical Center and the Cleveland Clinic.

MITRAL VALVE REPLACEMENT
One of the first cases considered was a mitral valve replacement.
IndUShealth and BRPP sought package quotes from a number of
domestic medical centers and could get only one estimate. That quote,
from the University of Iowa academic medical center, was in the
$68,000 to $98,000 range. The quote from India was for $18,000 and
included travel, food, and lodging for the patient and one companion.
Testifying before the U.S. Senate Special Committee on Aging, Mr.
Rajesh Rao, IndUShealth’s CEO (2006), cited the following costs:

Procedure Typical U.S. Cost India Cost

Heart bypass surgery $55,000 to $86,000 $6,000

Angioplasty $33,000 to $49,000 $6,000

Hip replacement $31,000 to $44,000 $5,000

Spinal fusion $42,000 to $76,000 $8,000

EMPLOYEE PARTICIPATION
To encourage employee participation, BRPP prepared a DVD on its
medical tourism initiative, which it called Global Health Coverage. It

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outlined the opportunities and described the Indian facilities and
credentials. The next step was to be a trip by an employee “due
diligence” committee to India to inspect facilities and talk with doctors.
Then they would discuss how to handle the option in the next set of
union negotiations.

SENATE HEARINGS
On June 27, 2006, the U.S. Senate Special Committee on Aging held
hearings titled “The Globalization of Health Care: Can Medical
Tourism Reduce Health Care Costs?” Both BRPP and IndUShealth
testified for the committee. When testifying to the Senate
subcommittee, Bonnie Grissom Blackley, benefits director for BRPP,
concluded:

Should I need a surgical procedure, provide me and my spouse with an all expense-
paid trip to a Joint Commission International-approved hospital, that compares to a
5-star hotel, a surgeon educated and credentialed in the U.S., no hospital staph
infections, a registered nurse around the clock, no one pushing me out of the
hospital after 2 or 3 days, a several-day recovery period at a beach resort, email
access, cell phone, great food, touring, etc., etc. for 25% of the savings up to
$10,000 and I won’t be able to get out my passport fast enough.

BLUE RIDGE PAPER PRODUCT’S TEST
CASE
The test case under the new arrangement was a volunteer, Carl Garrett,
a 60-year-old BRPP paper-making technician who needed a gallbladder
removal and a shoulder repair. He reportedly was looking forward to
the trip in September 2006, accompanied by his fiancée. A 40-year
employee approaching retirement, he would be the first company-
sponsored U.S. worker to receive health care in India. The two
operations would have cost $100,000 in the United States, but would
cost only $20,000 in India. The arrangement was that the company
would pay for the entire thing, waive the 20% copayment, give Garrett
about a $10,000 incentive, and still save $50,000.

However, the United Steel Workers Union (USW) national office
objected strongly to the whole idea and threatened to file for an
injunction. The local district representative commented, “We made it
clear that if healthcare was going to be resolved, it would be resolved
by modifying the system in the U.S., not by offshoring or exporting our

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own people.” USW President Leo Gerard said, “No U.S. citizen should
be exposed to the risk involved in travel internationally for health care
services.” The USW sent a letter to members of Congress that included
the following (Parks, 2006):

Our members, along with thousands of unrepresented workers, are now being
confronted with proposals to literally export themselves to have certain “expensive”
medical procedures provided in India.

With companies now proposing to send their own American employees abroad
for less expensive health care services, there can be no doubt that the U.S. health
care system is in immediate need of massive reform.

The right to safe, secure, and dependable health care in one’s own country
should not be surrendered for any reason, certainly not to fatten the profit margins
of corporate investors.

The union also cited the lack of comparable malpractice coverage in
other countries. The company agreed to find a domestic source of care
for Mr. Garrett, but may continue the experiment with its salaried, non-
union employees. Carl Garrett responded unhappily. “The company
dropped the ball … people have given me so much encouragement,” he
said, “so much positive response, and they’re devastated. A lot of
people were waiting for me to report back on how it went and perhaps
go themselves. This leaves them in limbo too” (Jonsson, 2006, p. 2).

Discussion Questions
1. What difference did it probably make that BRPP is an ESOP owned

by the union members or that the national union is busy recruiting
health care workers as members?

2. What are the ethical implications of a reward of up to $10,000 for the
employee to go to India for a major procedure?

3. If you were a hospital administrator, how would you react when a
number of patients and companies began to ask to bargain about
prices, including presenting price quotes from companies like
IndUShealth?

4. What would be the difference in the bargaining position of an
academic medical center and a large tertiary community hospital
system?

5. How might state and national governments respond to this
increasingly popular phenomenon?

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NO APA FORMAT NEEDED FOR THIS ASSIGNMENT

Policy adoption can be very challenging to healthcare leaders. Many organizations employ consultants to assist with the implementation of new policies. There have been significant changes to health policies over the past few years that have forced providers to institute implementation strategies, ensuring that they remain competitive and profitable. Review the “Global Medical Coverage” case
ATTACHMENT INCLUDED
and discuss the following questions in 250 words:

· Does Blue Ridge Paper Products’ (BRPP) policy differ from a traditional employee stock ownership plan (ESOP)? What are the implications?

· Are there any ethical concerns in the case? Why? Why not?

· Did the case present a buyer-dominant or a seller-dominant approach?

· What important lesson(s) are learned from this case study? How would you apply this to practice?

REFERENCE FOR ARTICLE

McLaughlin, C. P., & McLaughlin, C. D. (2014). Health Policy Analysis: An interdisciplinary approach (2nd ed.). Sudbury, MA: Jones and Bartlett Publishers. Print ISBN: 978128403777