Cultivating Competition In a Rural Marketplace

At a glance
Vermont Employers Health Alliance
Burlington, Vt.

Goal: To empower employers to purchase cost-effective health care in a state with limited market options
Strategy: Leaves actual purchasing to employers, but is active with educational, lobbying and regulatory initiatives
Founded: 1982
President: Jeanne Keller, M.S., A.R.M.
Lives covered: 105,000

Back in 1982, when health care purchasing pioneer Willis Goldbeck was spreading the gospel of employer coalitions across the country, one of the first states in which his ideas found fertile soil was Vermont. Nearly 15 years later, the seed of that first missionary contact has grown into the Vermont Employers Health Alliance.

Unlike its burly urban cousins to the south and west, this employers’ health care coalition has no Fortune 500 headquarters in its domain, no oversupply of hospitals and health care providers to downsize and few health plans with which to negotiate. Just one-sixth of the state’s population of 600,000 is in managed care plans.

And unlike many business coalitions, the Vermont alliance leaves purchasing to its 100 member companies, which range in size from 25 employees to 7,500, with a median of about 300. Some members are actually local business units of large corporations based outside the state, but which the parent has freed to design their own health care strategies. They include IBM’s 6,500-employee plant in suburban Burlington and the B.F. Goodrich aerospace plant in Vergennes, the smallest incorporated city in America. Small is natural to Vermont. Even Montpelier, with only 8,000 residents, is the smallest state capital in the nation.

“We don’t have lots of giant, self-insured corporations,” says Jeanne Keller, the alliance’s president. “There are no big companies domiciled in Vermont,” she says, “except Ben & Jerry’s, the ice cream maker.” And that fact has directly influenced the Vermont alliance’s mission.

The state’s small scale and limited competition have caused the coalition to adopt a double role as educator and lobbyist. It aims to arm members with the latest nationwide health care data and then turn them loose. But aggressive lobbying in Montpelier is also a critical tactic for Keller, who, with a single administrative person, constitutes the alliance’s total staff.

It’s hardly a cakewalk. In the traditional Vermont business climate, even educating members can ruffle establishment feathers. For example, Blue Cross of Vermont was offended when the alliance held seminars on how to negotiate with the plan, saying, “We can teach our customers to negotiate with us,” she recalls.

“Fifty benefits managers signed up,” Keller adds. “That’s enough excuse for the seminar.”

Again, because none of her members are large, self-insured companies, they come under state regulatory guidelines–and that makes lobbying in Montpelier a key weapon in the alliance’s arsenal. “We get a lot more into regulatory stuff than most coalitions,” she says. That’s also because there just aren’t enough providers–there are only 13 hospitals in the state, and only four health plans. “A provider is a monopoly utility, like the power company.”

Last year, when Fletcher Allen Health Care applied for a $30 million authorization under the state’s strict certificate-of-need law for a new information system, Keller and the alliance were there as “intervenor” to question the need for such an investment. After 15 months of hard bargaining she wrung a concession from the provider to use the new system to produce data for a report card that included such items as patient satisfaction and quality measurements.

So far, the strategy seems to be working, at least in members’ eyes. At the alliance’s annual meeting in mid-September, there was only one nonrenewal. Says Keller, “That’s real loyalty.”

–Chuck Appleby

MANAGED CARE October 1996. ©1996 Stezzi Communications

Our most popular topics on