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Company doctoring: More employers offer on-site clinics

Posted On: Dec. 8, 2015 12:00 AM CST

Laitram Machinery Inc., the world's largest manufacturer of shrimp-peeling machines, sits along the Mississippi River under the Huey P. Long Bridge, just outside of New Orleans — a suitable location for a company associated with a food product that's central to southern Louisiana's celebrated Creole and Cajun cuisine.

But there's a health downside to that rich culture. “In New Orleans, you can find ways to not eat well and not drink well,” said Franck LaBiche, the company's human resources director.

Letting les bons temps rouler wasn't just bad for the company's workers. It also was rough on its finances. “We were looking at a monthly health care premium curve for employees that showed a 40% increase over six years,” said Mr. LaBiche, whose company has a self-insured health plan.

In 2012, Laitram joined a growing list of large U.S. employers that have opened on-site health clinics in an effort to control the rising costs of their health benefit programs. Nearly 30% of companies with more than 5,000 workers now have on-site or near-site clinics offering some type of primary care, up from 24% in 2013, according to a survey this year by benefits consultant Mercer L.L.C. In addition to serving employees, some clinics also treat workers' families. Many of these facilities include fitness centers with exercise equipment. These services often are provided without charge to employees.

This has produced a growth market for companies that operate clinics for employers, including Healthstat Inc., Marathon Health, Premise Health Holding Corp. and QuadMed L.L.C. Health systems also have jumped into the market, operating about 18% of worksite clinics, according to benefits consultant Towers Watson & Co., which surveyed firms with clinics this year. Downers Grove, Illinois-based Advocate Medical Group has a division called Advocate at Work that operates worksite clinics for about 120 companies, including financial services firm Northern Trust Corp. and the Chicago Tribune.

“Being the largest integrated delivery system in the area, it was a natural fit for us to figure out how to leverage our expertise for the benefit of these companies,” said Dr. Prentiss Taylor Jr., Advocate At Work's corporate medical director.

According to Towers Watson, 64% of employers with an on-site clinic contract the work to a vendor, while 23% are operated directly by the employer.

Employers say these clinics provide primary and preventive care, and encourage exercise, thus keeping workers healthier, reducing absenteeism and cutting benefit costs. They say the on-site centers reduce the amount of time workers spend away from work visiting off-site health care providers. In addition, the centers can help companies identify occupational health and safety risks, such as poorly designed workstations that result in back and neck problems.

Because they believe in the cost-saving potential of on-site clinics, many employers plan to continue investing in them even though the cost will likely be included in calculating the Affordable Care Act's Cadillac tax on high-value health plans starting in 2018. Earlier this year, the Internal Revenue Service said spending on on-site clinics would be considered in the tax calculation unless the clinics offered only “de minimis” care.

Two-thirds of large employers with on-site health facilities say they plan to expand such facilities, according to the Towers Watson survey. “That's validation of their belief that the clinics are reducing cost,” said Allan Khoury, senior health management consultant at Towers Watson.

But Vivian Ho, a Baylor University health economist, questioned whether these clinics will yield significant cost savings. The employees most likely to use the clinics are those who already are the most health conscious, while the unhealthiest and most expensive employees will still be unlikely to get needed preventive care, she said. Beyond that, the payoff from preventive medicine often comes years later, perhaps after the employees have left the company.

In addition, she said employees may be reluctant to use workplace clinics because of concerns about privacy. Many employees already fear their employers will use their health information against them. “I think these are legitimate worries,” she said.

Workplace clinics are actually an old concept. Decades ago, some industries with high occupational injury rates employed company doctors and nurses to treat workers. Kaiser Permanente grew out of employer-sponsored clinics to provide care for workers in shipyards and steel mills before World War II.

In more recent years, rising costs have prompted employers to look beyond traditional occupational health to offer broader primary care for office and industrial workers, said Larry Boress, executive director of the National Association of Worksite Health Centers and CEO of the Midwest Business Group on Health.

These newer employer-sponsored clinics typically have nurse practitioners or physician assistants on staff, though some also have full-time or part-time physicians. Some feature specialty providers such as physical therapists and nutritionists. About half offer pharmacy service. The on-site health clinic at Facebook Inc.'s corporate headquarters in Menlo Park, California, has a chiropractor. Many also include fitness centers.

The scope of services offered varies, with most offering at least urgent care but many providing broader services. Many offer flu shots, and some can even take X-rays. Some offer healthy cooking classes. United Airlines, which has clinics for its employees at airports in Chicago, Houston and Newark, has doctors and physical therapists at each, in addition to nurse practitioners and physician assistants.

For some employees, the on-site clinics may provide their only regular health care. For workers who do have a regular provider, employers want the workplace clinic to complement rather than replace those providers. At Laitram, for example, employees can sign a consent form allowing the on-site clinic to share medical records with outside clinicians.

One concern for employers opening on-site clinics, particularly in smaller communities, is upsetting independent physicians and other providers in the community who may worry about losing patients to worksite providers. But Mr. Boress said 40% to 60% of people who go to on-site clinics don't have a personal doctor. Laitram's Mr. LaBiche said that the company clinic sometimes sends patients to a local health system with which it has an agreement, and that the system may end up getting more patients.

Some clinics, such as Laitram's, provide services without charge to employees covered by the company's health plan. Those who aren't covered pay a fee. Sometimes the fitness centers also are free, though some charge a small membership fee on the belief that people who pay for a gym membership are more likely to use it.

Mr. LaBiche said the company's health clinic, operated by Winooski, Vermont-based Marathon Health, and its fitness and nutrition center, run by LifeStart Wellness Network, are improving employee health and reducing the company's health benefit costs. Employee visits to hospital emergency rooms have dropped 26% since 2010, and nearly 8 in 10 workers have seen improvement on at least one measure of health, such as blood pressure, cholesterol or body fat percentage, he said. The company's health benefit costs were flat between 2012 and 2014, though they increased about 5% this year.

Still, there's not much hard data on return on investment for employers, aside from anecdotal information from companies such as Laitram. Towers Watson's survey found that more employers are now measuring ROI, though only 12% have commissioned independent analyses. Mr. Khoury said the ACA's Cadillac tax will force employers to take a harder financial look at the clinics. “The excise tax will put a lot of focus on whether they actually are reducing cost,” he said.

Advocates of workplace clinics say they can be useful in improving occupational health and safety for a company's workforce. If a significant number of workers are reporting back and neck pain, the company can conduct an ergonomics assessment of employees' desk and seating arrangements and make modifications, said Daniel Lord, a chiropractor who heads physical medicine at Facebook's health center.

United Airlines uses data on the types of injuries the clinics are treating to spot trends and improve its safety training. “We can see what body parts to focus on out on the ramp,” said Terry Werber, the airline's manager for the on-site clinics.

More than a dozen companies have started worksite clinics for employers. Marathon Health now operates 140 on-site clinics in 38 states. Another large firm in this niche is Brentwood, Tennessee-based Premise Health, created last year by the merger of Walgreens' Take Care Employer Solutions division and CHS Health Services. It operates more than 500 on-site health clinics, pharmacies and fitness centers in 46 states. Charlotte, North Carolina-based Healthstat has more than 300 facilities in 32 states. Another company, Sussex, Wisconsin-based QuadMed, runs more than 100 clinics in 20 states.

Hospitals and health systems have taken notice of the industry's growth and have launched initiatives. Advocate Medical Group's Advocate at Work operates worksite clinics for about 120 companies, and serves the 32,000 employees of its parent company, Advocate Health Care. Mr. Taylor said being part of a large health system such as Advocate extends the value of the clinic, because it can help patients navigate the broader health care maze, including specialist referrals. “We interact with the entire health care system for the benefit of the employee,” he said.

One worker who attests to the value of an on-site clinic is Gregg Schenck, an information technology developer at Laitram. He said having the health care providers and fitness and nutrition specialists at his workplace and getting to know them made it easier for him to seek care.

Mr. Schenck weighed 350 pounds when he went in for a health consultation and a weight-loss program. He worked with staff at the fitness center, which he started using regularly since it was so convenient. He was motivated by the support of co-workers, who praised his progress as he lost 110 pounds.

“The doctor has taken me off the diabetes medication, the acid reflux has gone away, and my blood pressure has come down,” Mr. Schenck said. “I really see it as a saving grace.”

David Royse writes for Modern Healthcare, a sister publication of Business Insurance.