High-quality, affordable healthcare in the United States--an achievable goal.

SUMMARY * We have evidence that quality and efficiency work together for better healthcare processes for patients while providing cost savings for employers. The complex processes and frequent disconnects among providers who care for the same patients are obviously an area of opportunity for improvement. By standardizing processes for care, we can begin to effectively measure quality and efficiency throughout the value chain. When we work as a team, focusing on quality and measurement, we can look to a future when the best possible care is efficiently and effectively delivered to patients. The future will also be brighter for employers dedicated to providing high-quality, competitive benefits for their valued employees and retirees while maintaining profitability. FOR MORE THAN 75 years, Caterpillar Inc. has been building the world's infrastructure and, in partnership with our dealers, is driving positive and sustainable change on every continent. With 2003 sales and revenues of US$22.70 billion, Caterpillar is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. The company is a technology leader in construction, transportation, mining, forestry, energy, logistics, electronics, financing, and electric power generation. Caterpillar spent more than half a billion dollars on U.S. healthcare in 2003, excluding administrative costs, in our commitment to provide quality benefits for our employees and retirees and their dependents. Our standard benefit plan ranks among the upper quartile of the comparator groups in the United States that Caterpillar has identified. Clearly, the well-being of Caterpillar employees and retirees and their families is a top priority. Caring for the people who make up our Caterpillar family through quality benefit plans is part of our corporate philosophy of social responsibility and allows us to maintain our competitive edge. Like other U.S. businesses, we are battling double-digit inflation in our healthcare costs again in 2004-an unacceptable trend. Caterpillar's healthcare costs have increased a staggering 47 percent since 1998. A recent study by the Business Roundtable shows that 44 percent of CEOs say healthcare costs represent the greatest cost pressure facing corporate America today (Business Roundtable 2003). We agree. Many U.S. businesses are slashing benefits or dropping employee and retiree coverage altogether to survive. Caterpillar is taking a proactive approach with aggressive cost-mitigation strategies that incorporate consumerism and process improvement to achieve high-quality and cost-effective outcomes. Our strategy is to ensure that the benefits we offer are sustainable for the long term. Lessons we have learned over the last few years, and the cost-mitigation and process-improvement initiatives we are incorporating into our long-term strategy, may hold the answers for other companies struggling with the U.S. healthcare cost crisis. Our strategy is simple and direct-we will focus on the appropriate cost-sharing level with our employees/retirees; emphasize prevention of disease; and partner with our providers and suppliers to ensure reasonable cost and quality care for our employees and retirees and their families. While Caterpillar has managed healthcare costs better than the industry as a whole and has maintained a quality benefit offering, we must continue to aggressively pursue cost containment as a long-term objective. But this requires challenging traditional thinking about what can and cannot be done to address this problem. Improving quality and efficiency throughout the value chain does not have to cost more, and it, in fact, can and should result in significant cost savings. Teamwork within the healthcare industry and in the legislative arena is critical to improving the quality and efficiency of healthcare delivery for all Americans. This teamwork will help make it possible for U. …