Denver suburb provides its own primary care clinics to cut health costs

What's the antidote for escalating health benefits costs? The City of Arvada, Colorado, is betting on a whopping dose of primary care medicine.

Arvada opened two clinics this year, each staffed by a full-time salaried doctor, through a direct contract with Paladina Health L.L.C.

Denver-based Paladina, a unit of kidney dialysis provider DaVita HealthCare Partners Inc., works with self-insured employers to operate medical home health care operations.

Switching to a self-insured model, effective at the start of the year, was Arvada's first big decision, said Karen Smiddy, the city's benefits specialist.

Arvada pays Paladina a monthly fee per member, which is $100 for adults and $60 for children, for primary and urgent care services such as cholesterol tests, sick visits, stitches and skin biopsies.

So far, about 700 of the 1,500 employees and dependents covered by the city's health plan have signed up to receive services at the clinics, only a tad below the originally projected 750.

“You have to do the math” before adding a clinic, said Donna Marshall, executive director of the Colorado Business Group on Health. The initial investment will be offset by lower health care costs — if chronic conditions are more carefully managed, she said.

Arvada's early results look promising. Based on six months of data, medical plan costs are trending at roughly $8.2 million, a savings of about $1.5 million over the past two years, and the city's health plan reserves are growing, Ms. Smiddy said.

“Just by bypassing our health plan and going to the clinic — that in itself is really helping shore up that reserve in our self-funded plan,” she said.