2002-07-15 Special Called Regular Meeting and Workshop Meeting

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• The Welch Company Two Memorial City Plaza June 26, 2002 820 Lessner, Suite 1470 Houston, Texas 77024 T: 713.827.8755 F: 713.461.5788 To: City Council, City of LaPorte www.thewelchco.com From: Neal W. Welch, Healthcare Consultant Subject: Downstream Healthcare Action Plan In preparation for the City Council Workshop on JulylSth, I have assembled a package of information designed to encourage your consideration of new initiatives tied to the continued operation of the City of LaPorte medical plan. These initiatives are focused on improving the health of plan participants as the most realistic long range remedial action against double digit medical inflation. Only by improving the general health of the participants can we ever realistically expect to manage the heahh care costs of the plan. To this end there are a great many new ideas in the market place that point us in the proper direction. If we're willing to embrace some new concepts, our long term outlook for healthcare costs should become more manageable. The first set of graphs illustrates the "hockey stick" curve. Although, we'll spend more time with these graphs during the workshop, I think they speak for themselves in describing healthcare utilization patterns in the City's plan. The graphs also help us to understand where and how to approach health care guidance for plan participants. We will discuss in greater detail the concepts shown on illustration 6. Over the past few years in response to client requests, our firm developed a "Model for Health Plan Review". We believe this model gives a Plan Sponsor the proper roadmap to review each segment of their plan. Armed with the proper data, the administration and consultant should be able to target areas where cost or illness abnormalities exist, prioritized these abnormality categories, and subsequently install appropriate remedial action /programs. Now is the time to drill down into the actual medical data contained within the plan and develop a user friendly yet disciplined healthcare program for at least the next three years. We look forward to creating a City of LaPorte downstream plan based on this outline and your guidance. We would then propose to return with that plan and its applicable timetable for your approval. Ahhough there is no guarantee that each action will produce a measurable outcome, it is fair to assume that without this proactive if not somewhat methodical agenda, we have little hope of overcoming the medical inflation experienced by our plan in the last few years. We look forward to your thoughts and the Workshop on the 15th. Cc: Mr. Bob Herrera Ms. Carol Bottler