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Employers Contract Directly With Health Care Systems to Cut Costs

In late June, Boeing announced that it would contract directly with southern California’s MemorialCare Health System for employee benefits, making the company the first in the state of California to do so. The announcement followed earlier direct contracting arrangements between other Boeing sites and health systems in Seattle, WA; St Louis, MO; and Charleston, SC.

Direct contracting allows employers to side-step health insurance companies and work directly with health systems to provide care for their employees, in order to control costs and remove potential barriers to care. In a press release, Boeing said that the partnership will allow the company to “improve health, enhance the patient experience, and make health care more affordable for Boeing and those employees who choose it.”

The 5-year contract between Boeing and MemorialCare, an accountable care organization, will give employees access to 9 hospitals; 71 surgery centers, urgent care facilities, and clinics; and 2400 clinicians. Employees will be able to select in-network specialists without a referral.


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According to the press release: “MemorialCare will be directly accountable for providing high-quality, coordinated health care services, and an exceptional customer experience for eligible Boeing employees and their families. These help ensure convenient and timely patient appointments while maintaining the highest level of quality, safety, and satisfaction; reduce readmissions to hospitals after treatments; and effectively manage chronic conditions like diabetes and heart disease.”

Boeing will continue to offer employees the option of participating in existing options, such as Kaiser Permanente HMO, but will provide incentives to encourage enrollment, including no copays for primary care visits, 100% coverage of generic drugs, and increased contributions to their health savings accounts.

According to Healthcare DIVE, other major companies have recently contracted directly with health care providers, including Intel Corp, which has a direct contract with Presbyterian Healthcare Services, in New Mexico; and Walmart and Lowes, which have negotiated bundled payments contracts to cover certain procedures at major hospitals throughout the US at no cost to their employees.

Janet Coffman, associate professor of health policy at UC San Francisco, told the Los Angeles Times that direct contracting is likely to become more common in response to rising health insurance costs, although they are only beneficial for larger, self-insured employers. Boeing has about 15,000 employees and 22,000 dependents in California, most of those in the Southern California region, according to the press release.—Kara Rosania

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