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Sick Over Health Care Costs, Companies Get Some Relief With On-Site Medical Centers

Employers find that in addition to saving money, the clinics also help promote recruitment and retention.

January 25, 2002
Related Topics: Health and Wellness, Compensation
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A growing number of companies, struggling to combat the escalating cost of health care, have reinvented the industrial clinics of decades ago. In place of nurses patching up on-the-job injuries, they’re opening state-of-the art, fully staffed medical centers on-site or near-site. The clinics provide services from pharmacies and primary care to chronic disease management. They often charge small co-pays or, in at least one case, no money at all.

    Among companies participating in this evolutionary trend are Sprint, Toyota, U.S. Steel and Goodyear Tire & Rubber Co. Some outfit and operate the clinics themselves. Others enlist vendors who hire the staff and run the clinics--and pay the malpractice insurance. In addition to the savings that companies realize, firms say the clinics promote recruitment, retention and improved health. And with the Health Insurance Portability and Accountability Act, they’ve found that employees raise few concerns about privacy.

    Driving the trend is the realization that today’s health care system is not going to change without fundamental restructuring, says James Hummer, president and CEO of Whole Health Management. The Cleveland-based company has provided on-site services to 5 million patients in the past 20 years. It has 27 clients today, most with large workforces, like Nissan.

    "The on-site clinics provide an opportunity to restructure the delivery of health care and align the interests of employers, employees and providers--if it’s done the right way. And that’s a quantum qualifier," Hummer says. "If it’s not done right, then it’s just more of the same. You have to make sure you don’t provide any incentives for the clinicians either to do more or do any less than is required."

    That’s the problem in the current system, he says. "Fee-for-service encourages providers to do more than is necessary." Managed care, on the other hand, gives people an incentive to do less than is necessary "because that’s how they get paid," Hummer says.

    Companies with on-site clinics that Whole Health Management operates generally can recover their investment within 12 to 24 months, including an average 8 percent savings in pharmacy costs, Hummer says. "We save a lot of time and money because people don’t have to leave work. We can deliver health care for less than in the community because we don’t have overhead; the companies make that investment. And the third item is savings in health care services that were avoided."

    Companies that run their own clinics say they see savings, too--even when services are free. "We’ve been able to determine how to keep people healthy and keep costs down," says Johnna Torsone, senior vice president and chief human resources officer at Pitney Bowes Inc., a Fortune 500 global provider of mail and document management solutions. "For every dollar we spend, we gain an additional dollar in health and productivity."

Gaining workers' trust
    Pitney Bowes operates five clinics in Connecticut, one in Spokane, Washington, and another in Appleton, Wisconsin. They’re run by contractors and provide care and generic drugs without charge. "No co-pays, no money exchanged," says Dr. Brent Pawlecki, associate medical director for Pitney Bowes. "Employee satisfaction has skyrocketed." Of the employees who visited the clinics, 96 percent ranked the experience as good to excellent, according to a company survey. Seventy-three percent with access to the clinics use them.

    Before the clinics opened two years ago, Torsone and her colleagues worried that one hurdle would be gaining employees’ trust. "We wondered if they would they be thinking, ‘If I visit a clinic, is this going to be used against me?’ But we really haven’t had that as an issue," she says. "Knock on wood."

    Physicians provide oversight, with physician assistants, nurses and nurse practitioners staffing the clinics. Without the busy scheduling constraints of HMO office visits, they have time to deal with the whole person, Pawlecki says. "I have this motto: Every clinic encounter is a teaching moment. It’s a chance to find out what’s going on in the employee’s life," he says.

    The Connecticut clinics see a total of 30,000 patients a year, Torsone says. "When we survey it, it repeatedly comes in as the No. 1 thing employees value."

    Excluding chronic diseases, the company’s annual cost of care at the clinics is $276 per employee, versus $645 in the community at large. The average number of lost-work hours each year is 10, compared with 21 in the community.

Healthy savings
    At Quad/Graphics, a privately held printing company with 11,000 employees nationally, its four clinics have had a major impact on the company’s cost of health care, says John Neuberger, director of business development. "It’s 18 percent less than the benchmark of companies in our market," he says. "We spend many millions on health care, so the savings are in the millions."

    Quad/Graphics opened its first clinic in 1990 with one doctor and one nurse. Today it operates clinics for employees and their families in the Wisconsin cities of West Allis, Sussex and Lomira as well as in Saratoga Springs, New York.

    Previously, the company provided free care, but it decided to ask employees to pick up a nominal part of the cost--a co-pay of $5, including dental care. Employees pay 20 percent for prescriptions after a deductible. The clinics--some offering family practices, obstetrics and pediatrics--log 65,000 annual visits.

   "Our job is to keep people healthy," Neuberger says. "On the one hand, we invest a great deal. On the other, the savings on the back end are considerable."

    Sprint’s recently opened clinic at its world headquarters in Overland Park, Kansas, serves 13,500 employees there along with others in the Kansas City area. The motivation was "to provide Sprint employees with high-quality, convenient and affordable health care while saving the company a significant amount of money," says media relations manager Jennifer Bosshardt.

    The staff includes a board-certified physician, nurses, nurse practitioners and X-ray technicians. Employees enrolled in Sprint’s medical plans have $10 co-pays at the clinic, which is operated by Whole Health Management.

    The operation will save the Fortune 100 communications company at least $750,000 annually, Bosshardt says. "At the same time, Sprint expects the clinic to save another $750,000 in increased employee productivity," she adds.

    Fieldale Farms, a private poultry processing company with 4,800 employees, anticipates that savings will come in two years. In January it leased an office for a clinic in a professional park three miles from its main office in Baldwin, Georgia, and one mile from its biggest plant. An internist, a family practitioner, two medical assistants and an office manager staff it.

    "In addition to the savings, we feel we’re reducing absenteeism," says Denise Ivester, group health and wellness manager. "Our employees will get care quicker--before issues become urgent."

    They’ll also protect their income. Hourly production line workers would routinely lose up to a half-day of pay when they visited outside doctors’ offices. Fieldale Farms’ clinic gets workers in and out in less than an hour, Ivester says. Each day, the clinic operated by CHD Meridian, which has merged with I-trax, a health management company, treats 25 people at co-pays of $10.

    Stuart Clark, executive vice president of on-site health care services at I-trax, headquartered in Chadds Ford, Pennsylvania, advises against providing services without charge. "People then abuse it," he says. "They’re less likely to be compliant. Even Doctors Without Borders will tell you, ‘At least charge a seashell.’ "

An ailing system
    Echoing Hummer at Whole Health, Clark says the beleaguered state of today’s health care system is one reason for companies to open on-site clinics. "Managed care has utterly failed employees, offering neither quality nor cost control. Good people are made bad patients in a broken health care system," he says, citing frequent difficulty in accessing specialists, prohibitive drug costs and the resulting lack of patient compliance.

    Clark, based in Nashville, Tennessee, understandably believes that services can run the clinics better than companies themselves. "Health care isn’t their core competency," he says. "They make tires. They make steel. We provide the right care at the right price at the time."

    I-trax has grown from three clients in 1991 to 95 clients in 30 states today. "I have never in 14 years imagined we would have had the demand," Clark says. Startup costs range from $500,000 to $2.5 million.

    Many companies face 8 percent to 15 percent annual increases in health care insurance, Clark says. "Our customers have 2 to 6 percent increases," he notes. The usual annual pharmacy increases of 15 percent to 18 percent are 2 percent to less than 8 percent for I-trax clients, Clark says. "And none of our customers has been successfully sued," he adds. "We indemnify our customers."

    Companies with at least 1,000 employees in a single location benefit most from the service, he says. "If they’re self-insured, they realize savings dollar for dollar."

    The biggest challenge they face is communicating the clinics’ attributes to employees, Clark says. "They need to do a very regimented public relations plan."

    Dr. Pawlecki at Pitney Bowes cautions against being overly ambitious. "Don’t try to do too much. Figure out your population and who you’re trying to serve," he says. "Know sometimes you have to invest. People tend to think only in the short term.

    Employees are going to be with you for years and years. We have to invest in them."

Workforce Management, May 2005, pp. 82-83 -- Subscribe Now!

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