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Are On-Site Clinics a Cure for Staggering Healthcare Costs?

In-house healthcare is growing, but successful on-site clinics require serious consideration.
By: | March 6, 2019 • 11 min read

A desire to keep employees happy, healthy and productive was the driver behind the construction of an on-site health clinic at Bendix Commercial Vehicle Systems in Huntington, Ind. The health center was built in 2013 in the main plant and serves employees and their family members (ages 6 and older) with acute and preventative services, biometric screenings and a limited prescription dispensary. Also included are health coaching and wellness programs.

“Offering an on-site health center provides easy access to quality care, promotes prevention and early detection, and allows ongoing disease-management efforts to improve the health conditions of our workforce,” says Gwen Scott, manager of benefits and work-life programs at Bendix.

Though the concept of on-site health clinics may seem novel, Bendix certainly isn’t alone. According to recent research from Mercer and the National Association of Worksite Health Centers, one-third of large employers (with 5,000 employees or more) have an on-site clinic for general medical care, up from just 17 percent in 2017. Occupational health remains the most popular offering (38 percent for large employers and 33 percent for those with 500 to 4,999 employees), while primary-care services are quickly gaining momentum. This growth will no doubt make on-site clinics a topic of conversation at the Health & Benefits Leadership Conference, running April 24 through April 26 in Las Vegas.

David Keyt, worksite clinics consulting group leader at Mercer, says the steady increase in on-site health clinics isn’t necessarily tied to any one factor—the reasons vary among companies and may include a shortage of primary-care providers, high emergency-department utilization and the goal of attracting and retaining employees. However, a common refrain is managing overall healthcare spend.

Research published in the Journal of Occupational Environmental Medicine and Journal of the American Association of Occupational Health Nurses found that the primary-care costs for patients seeking care at on-site health clinics were 42 percent and 66 percent (respectively) less expensive than for similar care provided off-site. Additionally, Mercer’s Worksite Medical Clinics 2018 Survey Report found that employers with on-site health clinics saw an ROI of 1.5 or higher (for every dollar spent, $1.50 is returned).

While there are barriers to opening an on-site clinic, when utilized in the right environment, experts say, on-site health clinics can not only help employers manage burgeoning healthcare spend but also enable them to be transparent about healthcare costs and diversify their business from others—all while increasing access to quality healthcare. Cheryl DeMars, president and CEO of The Alliance, a not-for-profit cooperative that works to control healthcare spend while increasing employee access to high-quality care, adds that better healthcare can contribute to increases in productivity, recruitment and retention—key in a tight labor market.

“On- or near-site clinics effectively control costs, but also effectively improve employee health and satisfaction,” she says. “It’s a win-win for employers and employees.”

A Brief History

On-site health clinics were first introduced to railroad and mining companies in the mid-1800s as a way to keep employees physically on the job. Services were usually limited to treating on-the-job injuries, and employees often had to pay for treatment.

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After World War II, when manufacturing was on the rise, on-site clinics became more popular. Popularity waned again in the 1970s and ’80s, but rebounded steadily.

Curtis Smith, executive vice president and chief marketing officer at Medcor, an on-site health-clinic vendor, says his company has offered on-site health-clinic services since 1984. Back then, he says, most services were for occupational health, but now general medical care is of interest to employers.

“Ever-rising healthcare costs are making healthcare unsustainable for employers,” says Smith. “Employers who are paying the bills are forced to look for alternative solutions to manage costs effectively.”

Another way on-site clinics have evolved from their earlier incarnations is through the use of technology. While clinics can be a great benefit for employees working on-site, our world is becoming increasingly mobile. Every year, more companies offer flexible-work arrangements and remote opportunities for employees across the globe, which means an on-site clinic has to mimic this mobility.

Mike Miesch, vice president of the health transformation team at Aon, says telemedicine will continue to spread care beyond a fixed location in order to reach smaller populations of employees who are unable to make it to an on-site clinic. Another recent trend is for on-site clinics to be integrated with broader wellbeing programs that the company offers.

Dr. Allan Khoury, senior health management consultant at Willis Towers Watson, says he saw an uptick in primary-care services being added to on-site clinics starting around 2005. Many employees didn’t have a primary-care physician, he says, and according to employee surveys, 40 percent of workers (more often males) weren’t interested or didn’t think they needed one.

“On-site health-clinic vendors are careful not to disrupt any existing primary-care physician-patient relationships, but so many people need a PCP that it’s become such a valuable service to add to on-site health centers,” says Khoury.

Bendix’s Scott says the company is currently evaluating the opportunity to expand on-site services to include behavioral health and/or physical therapy. Ellen Kelsay, chief strategy officer at the National Business Group on Health, says some on-site health clinics even offer dental care and full-service pharmacies.

Both behavioral health and physical therapy make sense for on-site clinics to offer, says DeMars, as does chronic-condition management—which she’s seeing more of.

“Diabetes or hypertension, once diagnosed, require continuous management, which is much easier to do when care is convenient,” she says.

Joe McErlane, founder and CEO of NeoPath Health, an on-site health-clinic-management company, recalls a story from one of his clients that illustrated the trickle-down effect of the on-site-clinic approach.

A mother came into the clinic to seek assistance with quitting smoking. The physician got her on the right path and helped her kick the habit. Shortly thereafter, her husband came in because he wanted to quit smoking, too, and was impressed with his wife’s progress. Eventually, the husband, wife and their 9-year-old son started visiting for routine physicals.

“Their little boy no longer needs asthma medication because both of his parents stopped smoking,” he says. “I ask my clients to ‘ROI that.’ Employers have a role to play that extends down to families, and they sometimes forget that.”

While these clinics may seem like a boon for any company looking to contain costs and support a healthy workforce, there are serious costs and other limitations associated with them. Employers need to weigh the pros and cons carefully before jumping headfirst into on-site care.

Considering the Barriers

Experts agree that one of the biggest challenges to launching an on-site health clinic is the initial cost. Willis Towers Watson’s Khoury says the size of the clinic directly impacts cost. If it’s using existing space and the clinic will be small, he says, a company may be able to build it for less than $500,000. But if there isn’t any existing room (or the clinic is on the fancier side), it could cost a company millions. Another driver of cost is who runs the clinic. Khoury says nearly 80 percent of on-site health clinics are run by an outside national vendor.

If an on-site clinic is set up and managed improperly, it could lead to a negative ROI or increased medical costs, adds Mercer’s Keyt. He suggests business leaders work with a consultant who knows the ins and outs of building and running a successful clinic. Smith gives an example of a company investing in a beautiful, state-of-the-art clinic … with carpets.

“You don’t want carpet in your clinics—OSHA has strict cleaning requirements, particularly if blood and other body fluids spill,” says Smith. “You need the right flooring from the beginning and will only know this with the help of an engaged, reliable consultant.”

Employee comfort level is also key. They may not want to be seen entering the clinic, so a separate entrance may need to be added (consider this, too, if dependents can access the clinic). Employers need to place a high priority on privacy, not only for employee ease, but to comply with HIPPA rules and regulations.

Employers should also determine whom the clinic will serve—is it open only to employees or the entire community in which it’s located? If children will be seen, employers must ensure vendors supply a pediatric physician. The population being served will, in part, determine the level of care provided, which can range from registered nurses to specialists. What about the hours of operation—will the clinic open during standard business hours, or will it also be accessible on weekends or a part-time basis?

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After a clinic is built, the people staffing it play a huge role in its success or failure. Poorly managed clinics are often subject to high turnover rates, which can lead to staffing problems, which could increase employee wait times and overall satisfaction (and use) of the clinic. If staff members have poor bedside manners, employees may also be less inclined to visit the clinic.

Bendix’s Scott says the company spent 18 to 24 months pre-planning the clinic, time that was nearly evenly split between construction considerations and selection of the health-center provider. They whittled their list from 12 vendors to three finalists, before deciding on Marathon Health.

“It was critical that the organization we selected fit with us, both from a wellness philosophy as well as their technical expertise and their ability to serve the needs of our workforce,” says Scott. “This has developed into a true partnership, with Marathon Health sharing in the workload to bring the health center to life.”

Finally, a big piece in clinic success is how the effort is communicated to employees and their dependents. Khoury says it’s inevitable that some critics may question the validity of a clinic. A concern may be that the clinic will be a way for employers to access private medical information and use it against employees.

“Employers don’t want to know any of that information, especially because of HIPAA regulations,” says Khoury. “[Employers] aren’t mean-spirited or evil, but there will always be early adopters and naysayers.”

It’s up to employers to ensure that they leverage all communication channels to share information about the clinic, such as on the company intranet. DeMars adds that employees who have positive experiences with the clinic “can become the ambassadors to help spread awareness of the clinic and encourage utilization.”

Keyt adds that, for an on-site clinic to be successful, employers must first understand the problem they’re trying to solve. From there, it’s projecting the impact on the organization and figuring out how to measure success by analyzing what value will look like.

The experts caution, however, that building an on-site clinic is part of a strategy, not a silver-bullet solution.

“The goal of a clinic shouldn’t just be controlling healthcare costs,” says DeMars. “Rather, what should be realized is that business results are tied directly to the health of your employees—keeping them healthy means business success.”

This year’s Health & Benefits Leadership Conference will be held April 24 through April 26 at ARIA Resort & Casino in Las Vegas.

Danielle Westermann King received her bachelor’s degree in English from Temple University. She has written and edited articles for various print and online healthcare publications.

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