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Some Firms Find That In-House Clinics Are Just What the Doctor Ordered

March 20, 2011
Related Topics: Benefit Design and Communication, Health and Wellness, Featured Article, Compensation
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When Aurora Casket Co. opened a health clinic at its factory in the small town of Aurora, Indiana, in December 2009, Nyetta Niklas never expected it would mean so much to her and her family.

But the accounting assistant is convinced the clinic helped save her husband’s life last year by diagnosing a possible ministroke and then streamlining his admission to a nearby hospital after he fell ill again. “It probably helped him from having a major stroke,” Niklas says.

While employee health clinics are typically established to provide occupational health or primary-care services for organizations grappling with soaring medical costs, the clinics have helped save lives—by diagnosing cancer, heart disease and other conditions early on—while holding down medical costs.

“We want a happier, healthier workforce,” says Camille Healy, director of employee benefits and general counsel, at Aurora Casket. After a little more than a year, the clinic boasts a utilization rate of 60 to 70 percent, Healy says. Many visits are from employees who haven’t been to a doctor in years. With the clinic, she estimates, emergency room visits because of illness have dropped by 50 percent. On the financial side, “our goal is to break even. If we save money, great.”

On-site clinics aren’t brand new. Indeed, SAS Institute Inc., a software company in Cary, North Carolina, established a clinic 27 years ago. In the past couple of years, SAS has received an upsurge of calls from other employers interested in setting up on-site clinics. When organizations are debating whether to establish a clinic, a key question is: “How important are your employees to your bottom line?” says Gale Adcock, director of corporate health services at SAS. “It’s not just saving money today; it’s saving money tomorrow.” Getting an employee’s diabetes and hypertension under control now, she adds, may help stave off a heart attack down the road.

A 2009 survey by the consultancy Mercer found that 34 percent of employers with more than 500 workers offer on-site or near-site clinics. Most focus on occupational health services, while 13 percent offer primary-care services. “Health care reform has catalyzed many employers to pursue on-site clinics,” says Bruce Hochstadt, head of Mercer’s on-site clinic consulting group. Under the new health reform legislation, 30 million to 40 million more people will be covered for medical care. “It’s likely to strain an already stretched delivery system,” he says.

With health care costs increasing 10 to 15 percent annually and more claims translating into higher insurance premiums, the city of Clearwater, Florida, opened its own clinic July 1 to try to curb costs. Following a model used by many organizations, the city contracted with a third party, which is responsible for operating the clinic. Clearwater pays Care ATC of Tulsa, Oklahoma, a monthly administrative fee and covers all of the actual clinic costs, such as staff salaries, medications, equipment and office supplies.

Because the clinic opened at midyear, the city budgeted $750,000 for its operation in 2010. This year, its budget is $1.5 million. While it’s too early to see the return on investment, Clearwater eventually expects a return of 2 or 3 to 1. That means spending $1 million would ultimately save the city $2 million to $3 million. Such savings come from using the on-site clinics, rather than more expensive outside providers; treating problems early on before they become more severe; and reducing lost work time for medical appointments outside the workplace.

With doctor visits and medications free for the city’s 1,700 employees and their dependents who are on the city’s health plan, officials hope employees will be motivated to seek regular care. “Hopefully we prevent that catastrophic claim later,” says Joseph Roseto, human resources director for Clearwater.

On-site health clinics may reach employees who typically avoid seeking health care. “There are people who use the clinics that never would have used services out in the community,” says Patricia Berger-Friedman, a senior consultant with Towers Watson & Co. Because on-site doctors typically devote 15 or 30 minutes to each patient, the physician can have “a conversation more around the health of the individual,” rather than just focusing on the problem the employee is experiencing at the moment, Berger-Friedman says. For example, a chronic sore throat could be tied to smoking, and the company’s doctor might recommend a smoking cessation program offered in the workplace.

It’s also easier to monitor chronic conditions. Pat Sweet, medical clinics manager at Pitney Bowes Inc., a Stamford, Connecticut, mail and document services company, was able to keep one diabetic employee off medication for almost two years by providing advice and monitoring her condition every two weeks.

While many workplaces focus on primary care, Pitney Bowes has expanded its offerings over the years to include such services as skin cancer treatment; dental and vision screenings; mammograms; chair massages; and even immunizations for employees traveling abroad. But this is the exception to the rule. Most clinics offer primary care or focus on occupational health issues, and many don’t employ specialists.

Some clinic services are tailored for a particular employee population. Medcor Inc. in McHenry, Illinois, operates clinics for a variety of clients in locations ranging from office buildings to tourist attractions to construction sites. One of Medcor’s clients is Clark Construction Group, which is building a seven-story medical center in Las Vegas for the Department of Veterans Affairs. The clinic opened in March 2009, treating injuries incurred on the job or at home, says Matt Moody, Clark’s safety manager for the project. If an accident occurs, both Moody and clinic staff respond, and in serious cases, a Medcor employee accompanies the patient to the hospital. “It shows the patient that you actually care,” he says.

While some clinics, like Clark Construction’s, offer a typical facility, SAS, the software company, operates a top-of-the-line, 35,000-square-foot center, staffed by 56 employees and equipped with a full-service, on-site laboratory, as well as nutrition and tobacco cessation counseling and other services.

Last year it handled more than 37,000 patient visits. Adcock, the health services director at SAS, says the company’s return on investment reached $7 million last year when it compared the cost of services rendered by its clinic with the expense of an outside provider. The company also factored in the savings from less work time lost for off-site doctor visits.

SAS program manager Charlie Morlock says he initially appreciated the convenience of the clinic for himself and his family. Now he’s grateful for the quality of care. Four years ago his son, Charlie Jr., complained that his foot was sore. Morlock saw a bruise, thought the then-5-year-old had broken a bone in his foot, and took the youngster to the SAS clinic. Doctors immediately knew something was seriously wrong, conducted a blood test and within 45 minutes determined the boy had leukemia.

Two hours later Charlie Jr. was at a hospital starting treatment for the disease. Treatment ended last year, but he still gets his blood tested each month at SAS. Morlock says if he was offered a job elsewhere, the SAS clinic would “factor very heavily” in deciding whether he would leave the company.

Workforce Management, March 2011, p. 6-7 -- Subscribe Now!

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