Health Care and Education 3

Avoiding High-Cost Health-Care

Locations Despite the fact that few companies say they are utilizing accurate measurements of health-care costs in comparing locations, 13 percent of responding corporate real estate executives do say their firms are avoiding certain areas in the U.S. because of what they perceive as "excessive health-care costs."

New York City and Chicago were two cities mentioned by respondents as areas their companies tend to avoid because of high health-care costs. States similarly singled out included California, Florida, Massachusetts, New Jersey and New York.

"If you’re looking at a high-cost area," says Wayne Mills, "generally you’re going to find high-cost medical health care." The areas corporate real estate professionals say their companies are "favoring as corporate locations because of...reasonable health-care costs" are heavily weighted toward the Southeast, Southwest and Midwest U.S. States frequently named by respondents as low-cost areas included Alabama, Arizona, Iowa, Kentucky, Mississippi, Nebraska, Tennessee, Texas, South Dakota and Utah. Companies with international operations are also avoiding some countries in their non-U.S. locations. "We generally avoid underdeveloped countries without sufficient health-care facilities to provide a good level of care for our employees," says Wayne Mills. "[Those places] "end up being high-cost healthcare areas because the care is just not available."

On the other hand, some countries outside the U.S. do offer a health-care system that takes less of a bite out of the corporate coffer. "America’s healthcare system is the world’s most expensive to administer," says former Health, Education and Welfare Secretary Joseph Califano. "We spend $100 per person in administrative costs, compared to $21 in Canada." Figures reveal that the $2,600 spent in the U.S. this year for every person in the U.S. is 50 percent more than that spent in Canada. Likewise, U.S. spending on health care is twice that spent per person in Japan and almost triple that in Great Britain.

And those lower health-care costs apparently don’t translate into lower health-care quality: Canada, Japan and Great Britain all have lower infant mortality rates than in the U.S. and enjoy similar longevity.