Employer- and insurer-sponsored primary healthcare centers continue to multiply, giving managed-care payers and health plan enrollees a convenient, lower-cost alternative to primary-care networks and HMOs.
In addition to the centers' convenience to employees who can receive basic care close to their work sites, advocates say the centers help restrain costs by controlling the entry point into the healthcare system.
At least one employer that has set up clinics-Moline, Ill.-based Deere & Co.-has opened them to other companies. Some other employers are considering doing so, putting corporations squarely in the healthcare business.
Last year the trend toward employer-sponsored clinics seemed to be reversing itself when Southern California Edison, which helped pioneer the company clinic, transferred its 55,000 employees to commercial HMOs and point-of-service plans. Rosemead, Calif.-based Edison said it made the move because HMOs had become sophisticated in delivering quality care at costs that the utility was hard pressed to match.
But Edison didn't abandon the company-clinic concept entirely. It arranged for Friendly Hills HealthCare Network of La Habra, Calif., to take over the clinics, which still operate at Edison sites (Jan. 30, p. 36).
Other employers continue to contract with healthcare-center designers and operators to quickly establish, equip and staff on-site primary-care centers.
"The business of providing directly contracted healthcare services to the business community is burgeoning. Those of us who do so are all very busy," said Michael J. Hardies, M.D., chairman and chief executive officer of Corporate Health Dimensions. Troy, N.Y.-based CHD designs and operates primary-care centers for about 20 major companies, he said.
The centers designed by CHD and other such companies typically include on-site physical therapy services as well as pharmacy, radiology and other laboratory services. They are staffed, in general, by the operators' physicians and support personnel. CHD and other firms also establish relationships with networks of specialists and hospitals near the centers. Employees also can be referred to specialists with an HMO or PPO selected by the employer.
At the same time that more employers are becoming interested in establishing primary-care centers, market restructuring has created an oversupply of hospitals and clinicians, prompting them to seek new markets.
"Providers are getting hungry" to serve employers at special sites tailored to companies' needs, said Richard Robinson, principal in Foster Higgins' mid-Atlantic region healthcare group.
Hospitals throughout the country are setting up clinics for injured workers around industrial sites. These clinics are gradually evolving into primary-care centers for employers, Robinson said.
Insurers also are establishing primary-care centers. After selecting a designer and operator last May-Reston, Va.-based PHP Healthcare Corp.-Blue Cross and Blue Shield of New Jersey opened 12 primary-care centers in the state.
The centers, either built from the ground up or created through renovations, were completed in as little as three months, said Daniel Draglin, president of HMO Blue, the New Jersey Blues' managed-care subsidiary. "We built them to fulfill the needs of purchasers that needed a very cost-effective health plan," Draglin said. "It probably costs us 30% or so less to deliver comprehensive care to our members through our centers" than through the Blues' regular physician network, he said.
That translates to a less expensive managed-care alternative for employers in the state. For a small business having 10 employees, a Blues HMO that directs enrollees to the primary-care centers would cost $49,000 a year. It would cost that employer $55,000 a year for the Blues' regular HMO, where enrollees have a choice of primary-care sites, including the centers, said a Blues spokesman.
Besides cost controls achieved through the primary-care-center concept, the Blues' centers also keep costs down through their totally automated medical records system. Physicians with laptop computers can access patient records from any center and make medical decisions more quickly, Draglin said.
Currently, the centers treat 23,000 enrollees in the Blues' managed-care plans and unspecified numbers from Blues indemnity plans and other insurers' plans, Draglin said. As soon as the volume grows, specialists will be added to the centers, he said. Currently, patients are referred to the Blues' networks of specialists.
Large employers like Deere, GTE Corp., Goodyear Tire & Rubber Co. and USX Steel Group have established primary healthcare centers at some of their locations (June 7, 1993, p. 24).
"Right now there isn't enough financial data available proving the financial viability" of employer-sponsored centers, said John Vlajkovic, a consultant with Hewitt Associates in Lincolnshire, Ill.
"GTE is one of the companies most actively involved in managing their healthcare dollar. If organizations like this are doing it," then it's certain that other corporations are watching their experiences, Vlajkovic said.
But some primary-care centers are showing strong financial returns.
GTE established primary-care centers in June 1993 in Tampa, Fla., and Clearwater, Fla., operated by PHP. In those areas, GTE had "a sufficient concentration of employees, retirees and their families-35,000 lives," said Bruce Bradley, GTE corporate manager of managed care. "We also lacked a better alternative" in those areas, he said. For example, there was a lack of primary-care practices. By contrast, "we wouldn't do it in Boston," he said, where there's no shortage of primary-care providers. GTE is based in Waltham, Mass.
"We also did a lot of research with our employees and retirees and conducted focus groups to see if there was an interest and a need" for primary-care centers.
The result? "We have been thrilled," Bradley said. The centers' use has "far exceeded our expectations. They're very popular with our employees and retirees," he said. Some 27% of eligible employees now use them on a regular basis, he said. The company had expected about 15%.
Because of larger-than-expected volume, the centers "already exceeded (financial) expectations and are operating in the black," Bradley said. "We're operating at a break-even level, using conservative assumptions, so I'm sure we're doing much better." No further financial details were available, he said.
Firms that operate the centers say their cost to employers and payers is more than made up through reduced healthcare costs. "We're required on an annual basis to demonstrate our cost-effectiveness" to clients, Hardies said. "This past year we will have been able to document well over $14 million in savings to our self-insured clients and demonstrated an enhanced accessibility" to care, he said.
Even beyond the centers' economic value is their "value in terms of employee relations," Bradley said. The centers get "excellent support" from GTE's union, he said.
Goodyear's four primary-care centers in Alabama, Oklahoma, Ohio and Texas also have proven their cost-effectiveness, said Mary Manley, a spokeswoman for the company, declining to give financial details.
Manley said Goodyear employees are happy with the service the centers offer. "They can leave work and go right there and get top-quality medical care." Goodyear may open other centers, she said.
Primary-care center operators say some of their clients are considering opening their facilities to other employers, which would follow in the footsteps of Deere, whose Iowa clinics are available to other companies.
Employers that have contracted with CHD "are beginning to say, `Why don't we market these centers to others?'*" Hardies said.
And smaller businesses in Nebraska and Ohio have formed coalitions to jointly establish their own primary-care centers with CHD, Hardies said.