U.S. News

CNBC's Burnett: Business Council Focuses on Healthcare

Erin Burnett

As the Business Council meeting in Florida was winding down Friday, the big topic CEOs were talking about was healthcare.

Steve Burd, CEO of Safeway, hosted this morning's event. The headline he gave me was startling and frightening: American companies will spend more on healthcare in 2008 than they earn on the bottom line.

That's a crisis.

Here's the Safeway solution: Safeway increased deductibles for it's non-union employees from $750 to $2,000. Instead, they gave employees a $1,000 tax-free account to use for health needs--which employees keep if they don't spend.

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Suddenly, the incentive switched from consuming healthcare without concern for cost or quality...to a focus on selecting efficient care and improving lifestyle to prevent major care events.

Burd says spending plunged.

In fact, he said that 74% of healthcare costs come from four diseases: cardiovascular (heart attacks), cancer, diabetes and problems stemming from obesity. His view: lifestyle changes could cause the incidence of those diseases to plunge.

And if Safeway employees exercise, eat better--well, then they'll spend less on healthcare. And remember, the employees get to KEEP every dollar of that $1,000 they don't spend.

This is just one example--and there will be other methods tested. But the bottom line is clear. The traditional employer healthcare system is damaged if not broken. (For those interested, see the recent Wal-Mart example where one of the nations largest unions stood together with Wal-Mart's CEO to advocate a joint effort to achieve universal healthcare).

Burd and I also spoke about CEO compensation. He echoed what every one of the 15 CEOs I asked about this topic said: his pay is linked to performance.

In fact, 80% of CEO pay in America on average IS linked to specific performance metrics like revenue or profit growth. There will be much more discussion on this topic--and likely significant change in the composition of CEO pay according to CEOs here.

But in general, here is how they feel: They've sacrificed quality of life, family time, sleep, and bet their careers on commitment to moving up in their organization. They are on call 24 hours a day. They work like dogs. And they feel they're paid fairly.

They are frustrated by the "bad apples" giving them all a bad name. They emphasized to me that the giant packages making headlines are exceptions.

Perhaps they should speak out more as they did on "Street Signs" Thursday to explain their view to the public.

It told a story beyond the headlines. It was worth hearing.