To improve the quality of colon cancer screening for employees of Caterpillar Inc, Dr. Mike Taylor decided to make doctors compete for its business.

The Peoria, Illinois-based, company, which is the world's biggest maker of construction and mining equipment, spends $650 million each year on healthcare in the United States.

Two years ago, the company met with doctors and hospitals in its two biggest markets in Illinois to improve the quality of screening for colon cancer, the second-biggest cancer killer in the United States behind lung cancer.

The effort is one of several by large U.S. companies to improve the health and productivity of their workers by using their own brand of health reform, even as the White House and Congress struggle to make changes on a national level.

U.S. supermarket chain Safeway Inc, for instance, offers employees incentives to stop smoking and lose weight, and postal equipment maker Pitney Bowes Inc, offers health education programs, drop-in health clinics and generic pricing on many brand name drugs.

Caterpillar has been focusing on the health of its employees since 2002, Taylor, Caterpillar's chief medical officer, told business leaders at an American Cancer Society conference this week in Chicago.

A PricewaterhouseCoopers survey released this week projects healthcare costs for U.S. companies to rise by 9 percent in 2010, after rising 9.2 percent in 2009, and 9.9 percent in 2008.

Chronic diseases like cancer make up the bulk of those costs. According to the American Cancer Society, U.S. companies spend more than $228 billion a year on healthcare expenses and lost productivity.

FREE TESTS

To catch cancers early, when they are easiest to treat, Caterpillar offers free screening for cervical, breast, prostate and colon cancer to its 44,961 U.S. employees.

To ensure Caterpillar employees got high-quality tests, Taylor called a meeting of doctors and hospitals in its two biggest markets in Illinois who do colon cancer screening and asked them to agree on a list of eight measures of a good quality colonoscopy.

"All of the colonoscopists in Decatur and Peoria agreed to do this," he said.

The company said it would cap the fee it pays at $1,000 per colonoscopy, a much lower rate than the $1,800 to $2,500 it had been paying. In exchange, it encouraged its workers to use only doctors in the program.

Taylor keeps track of which doctors meet all eight quality standards - which include using a stopwatch to track how long they spend looking for precancerous growths called polyps and ensuring patients who get screening tests are in otherwise good health.

"The interesting thing is, there is a huge range," Taylor said, with some doctors hitting all eight benchmarks 10 percent of the time and some 80 percent of the time.

The company shares this information back with the doctors, to encourage them to compete. "It helps them do better," he said. "We've found five cancers so far," Taylor said.

While initially just for Caterpillar employees, the program has caught on. "Once they got used to it, they decided to do it for everyone else. That has improved the quality of the colonoscopy for the entire community."