Post-Health Care Reform, Onsite Clinics Yield ROI and Access

By Joanne Sammer Oct 5, 2012

As key elements of the Patient Protection and Affordable Care Act take hold, access to care and employers' return on investment (ROI) for health dollars spent will be key issues.

At the same time, employers will be focused on their outlay for health benefits coverage as the so-called "Cadillac" excise tax looms in 2018. This 40 percent nondeductible tax will be imposed on the annual value of employee health plans that cost $10,200 or more for single coverage and $27,500 or more for family coverage. Anything employers can do to keep those costs below the tax threshold will be important in the coming years.

These looming changes, plus the ongoing need to help employees maintain and improve their health, is leading more employers to revisit the idea of establishing an onsite health center for employees.

Onsite employer-provided health clinics can offer a range of services. Some are staffed with full-time medical staff and provide primary and preventive health care. Others offer more-limited services, such as biometric screening and wellness counseling.

Productivity and More

A 2012 survey of 74 employers that have established or are planning to establish onsite health centers, conducted by consultancy Towers Watson, found that key drivers behind providing this benefit included:

Enhancing employee productivity (cited by 62 percent of respondents).

Reducing medical costs (57 percent).

Ensuring access to quality health care (46 percent).

“Onsite health centers range from one step above the school nurse who provides basic first aid and very limited urgent care to a full primary care staff that provides everything from physical therapy to pharmacy services,” said Patti Friedman, senior consultant at Towers Watson. “Employers are getting a lot more traction by providing extended services, such as wellness coaching, blood draws for lab testing and pharmacy [benefits].”

The choices employers make about services provided will depend on the needs and size of the employee population, how much space the health center will have and its budget.

To identify what services will benefit employees most, employers can take a look at aggregated health insurance claims data to identify the risks in that population. In some cases, employers may need to implement targeted programs for specific populations. For example, if a site has a large number of claims related to diabetes, the health center could offer special blood glucose monitoring services and educational programs and dispense necessary supplies and drugs to that population.

Growing with the Company

When software and services company SAS Institute Inc. in Cary, N.C., established its onsite health center 28 years ago, the company had about 200 employees. Today, the company has about 5,000 employees and the health center handles more than 38,000 visits per year with a staff of 55 that offers a wide range of care, from physical exams to lab services to physical therapy at no cost to employees and their families.

Over the years, the health center has become critically important to saving money on health costs. In 2011, the health center’s costs were $4.8 million, but those expenditures allowed SAS to avoid health plan expenditures of $6.8 million if delivered by external doctors and labs. In other words, SAS was able to provide employees and their families with health care services at a cost $2 million less than the company would have paid out in reimbursement for those same services through the employee health plan.

In addition, the company has calculated that employees save an average of two hours per visit by using the health center rather than going offsite to a provider’s office, which is calculated at $3.9 million in additional productivity based on the cost of employees’ time.

A company does not have to be as large as SAS to develop an onsite health center. For smaller companies interested in providing some level of health care onsite, Gale Adcock, SAS’s chief health officer, suggests creating a model scalable to the current size of the company that can expand as the company grows. Size is less important than “the company’s cultural environment in making this work,” Adcock said. “If the company cares about employees, onsite health care is a way to invest in those employees.”

Although Friedman notes that many employers use a threshold of 1,000 to 1,500 employees to consider opening a health center at a given site, there are other options available for smaller employers. For example, employers with sites in an office park could band together with other local employers and the landlord to establish an onsite health center for employers. Friedman noted that employers with a cluster of employees in a heavily populated urban area could contract with a local primary care practice to handle employees on some sort of preferred basis. Another option is to invite a specialist onsite or to a specific location periodically to conduct screenings—for example, a dermatologist to screen for skin cancers or a cardiologist to screen for heart problems.

Employers interested in establishing an onsite health center can begin with an analysis to identify the staffing required to provide a certain type and level of services, as well as ongoing maintenance costs for the health center, day-to-day administration and so forth. With that information in hand, employers can move on to developing a five-year projection of the potential savings that could be realized through the health center, including any costs avoided and productivity gains for employees with ready and convenient access to care.

Overall, the long-term viability of any onsite health center will depend on employees’ willingness to use it for ongoing care. Friedman suggests that employers roll out new services periodically and conduct health care screenings on a regular basis to keep interest up. “Word-of-mouth is critical, so if people have a good or a bad experience [with the health center] that will spread very quickly,” she said.

It is important to note that employers that offer employees health savings accounts (HSAs) as part of their benefits options face specific issues with an onsite health center. Except for preventive services, these employers cannot offer care at no cost to employees with HSAs who have not spent up to their annual deductible. Instead, the employer must charge market rates for those services, which could add a layer of complexity to running the health center.

Joanne Sammeris a New Jersey-based business and financial writer.​

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