Wirerope Works, Inc.
Innovations In Health Benefits
How One Manufacturing Firm Saved 36% on Health Benefits Costs.
About the Company
Wirerope Works, Inc. is a 130 year old American company that operates the world’s largest wire rope manufacturing plant. Its products are sold worldwide. Currently, the company employs several hundred people.
Would Rising Health Benefits Costs Bankrupt The Company?
Wirerope Works, Inc. faced an uncertain future because escalating benefits costs and foreign competition threatened the company’s financial health. Although years ago, management had decided to implement a self-funded managed care program because they believed they could reduce costs, the company continued to face yearly increases.
Will Double-Digit Cost Increases Become “The New Normal”?
For example, a $5.2 million health benefits expense in 2013 was estimated to jump the following year to $6.0 million, a potential increase of 15%.
At Last, A Solution For Reversing The Cost Increase Trend
With a $.8 million increase in costs looming, management realized that they needed a new health benefits paradigm. They decided to leave behind major health insurance carriers and adopt a reference-based pricing structure that year. As a result, costs were reduced by $1 million dollars, down to $4.2 million. In other words, the company saved $1.8 million compared to its renewal quote, due in large part to the implementation of reference-based pricing in their plan. Now, with Homestead Smart Health Plans, they discovered how they could do even better, using one of the most innovative and complete new programs in the industry. In the third year, the company implemented the Homestead program, including its reference-based pricing and customer-centric Claim Watcher services. Health benefits costs dropped to $3.8 million, a level the company continues to maintain the following years as well.