Buy this Article for $10.95

Have a coupon or promotional code? Enter it here:

When you buy this you'll get access to the ePub version, a downloadable PDF, and the ability to print the full article.


customer service, health benefits purchasing, health care quality, Fortune 500



  1. Maxwell, James
  2. Temin, Peter


As large companies move their employees into managed care, they must concern themselves with the quality and price of their employees' health care. Based on a survey of Fortune 500 companies, we show that most are integrating several aspects of quality into their purchasing and contracting decisions by focusing on three dimensions-customer service, network composition, and clinical quality. Companies focus on the customer service dimension while the medical community emphasizes clinical quality.


Large employers have transformed their purchasing of health care during the last decade by conducting intensive price negotiations with health plans and using financial incentives to encourage employees to shift from indemnity to managed care coverage.1 The movement to managed care has prompted serious concerns about the quality of care among consumers and the media.2 Consumers have voiced complaints and filed lawsuits against managed care plans alleging that they denied access to necessary treatments.


Quality concerns in the health care system extend beyond managed care. The Institute of Medicine (IOM) recently announced the existence of a quality chasm "between the health care we have and the care we could have."3(p.1) According to the IOM, the existing health care system harms too frequently, resulting in millions of medical errors and thousands of preventable deaths each year. It also frequently fails to deliver potential benefits to consumers. In response, the IOM has called upon public and private purchasers to "examine their current payment methods to remove barriers that currently impede quality improvement, and to build stronger incentives for quality enhancement."3(p. 182)


We examined the role of Fortune 500 employers in quality management based upon evidence from a recently completed survey of health care purchasing among the nation's largest public companies. Our findings confirmed that a transformation has occurred in the way companies manage health care quality. We found that companies are integrating several aspects of quality into their purchasing and contracting decisions. We focus on three dimensions of quality-customer service, network composition, and clinical quality. We found that large employers emphasize different dimensions of quality than their counterparts in the health care sector, focusing on customer service rather than clinical quality. Large companies are collecting more data on consumer satisfaction and customer service and less on clinical quality. Their preference for service-based measures is also evident in their purchasing decisions. When contracting with health plans nearly twice as many companies require improvement in customer service as clinical quality. We explore some of the factors that may lead companies to focus more on customer service than clinical quality.


Understanding quality management activities among Fortune 500 companies is important for many reasons. Providing coverage for 20 million employees and many more dependents and retirees, Fortune 500 companies are crucial to the country's economy and are influential models for other purchasers of health care. If Fortune 500 companies pioneer approaches to quality management, other small and medium firms may follow. Large companies' purchasing will greatly affect any attempts to overcome the quality chasm in the health care delivery system. The article begins by describing the literature on quality measurement and management among large employers. We then present the methods and measures used in our survey of the Fortune 500. We use the results of this survey to describe the central tendencies of these companies. These quantitative results are compared with qualitative results from extensive interviews with some innovative companies that are actively managing the clinical quality of care. Finally, we conclude with an explanation of these results.