Employment-based health clinics are the latest casualty of the ongoing recession, as corporations push off plans to open on- and near-site clinics and some existing clinics are being considered for the chopping block, industry experts say.
A slowdown in employer-based clinics could further impede access to primary care, said Ted Epperly, M.D., president of the American Academy of Family Physicians who practices in Boise, Idaho.
Right now access is an issue because there arent enough primary-care physicians, Epperly says. In some ways these clinics may help with access. ... Its not so much about competition. Theres enough business, trust me, to go around.
The major sticking point that primary-care physicians have with workplace clinics, or for that matter, retail clinics, is continuity and integration of care. Redundancy and reduplication is what is killing us now in healthcare costs, Epperly says. The key piece for us as family docs is whatever is done for that person in a workplace clinic setting is transferred to the primary-care provider so there is integration and continuity of care.
On- and near-site clinics have become a hot emerging trend among large employersespecially the self-insuredas a way to reduce healthcare costs and improve worker productivity. These clinics typically offer primary-care, pharmacy and preventive services to employees and their families at the work site. Some offer radiology, vision and dental care and laboratory services as well.
But leading benefit-consulting firms that work with employers on planning and implementing these clinics say corporations are hitting the brakes as they seek ways to immediately cut costs.
Towers Perrin, a Stamford, Conn.-based benefit-consulting firm, is seeing a serious drop-off, says Jeffrey Dobro, senior care-management consultant at the firm. Out of the firms 12 active clinic projects, nine companies have frozen their plans. Of the three still moving forward, only one is on track. The two others have scaled down specifications or slowed the planning process, Dobro says. He declines to name the companies, citing confidentiality.
This really is a capital expenditure, and the approval process takes a very different route than say a disease-management or wellness program, Dobro says. The facilities and finance departments are very involved in the planning. Even when everyone was more flush, the attention to review was high.
Some large employers that have taken a financial beating are reassessing what to do with their clinics. Merrill Lynch & Co. has long been a leader in providing on-site healthcare to workers. But its sale to Bank of America has put that future in doubt, says Helen Darling, president of the National Business Group on Health. Officials from Merrill Lynch and Bank of America did not return phone calls.
We are seeing some closures, Dobro says, referring to the general climate.
Bruce Hochstadt, M.D., a principal at Mercer, another benefits consulting firm, agrees. Hochstadt heads Mercers on-site health consulting practice. Weve seen some slippage, he says. Theres an initial commitment, but then they make the decision to ride this recession out.
Committing funding upfront has been a big challenge says Dobro, whose firm has worked with more than 100 large companies on on-site clinic projects over the years. Starting a clinic from scratch can cost between $1.5 million and $2.5 million, he says.
Although not all employer-based clinics require bricks and mortar, a full-time, modestly sized clinic of between 500 square feet and 800 square feet has an annual operating cost of about $250,000, without the startup costs, Hochstadt says. And clinics require skilled staff and equipment.
In this economy, its not surprising employers are reassessing, Hochstadt says.
Some major employers are pushing ahead anyway, saying the advantages of cutting healthcare spending and improving productivity are so great that they are willing to put in the upfront expense of opening a clinic.
Caterpillar, based in Peoria, Ill., will open its first near-site clinic this year. The clinic will be near a Caterpillar engine manufacturing plant in the Midwest (the company declined to name the location), and will serve 2,000 employees and a total of 5,000 covered lives, says Steve Goldman, M.D., corporate medical director for Caterpillar. None of the plants workers are in a bargaining unit, so the company did not have to negotiate with unions to change the benefits structure.
The clinic will offer primary and urgent care, a pharmacy, radiology and specialist referrals. The clinic will not do occupational health. Workers will have a $15 copayment for services at the clinic but will still keep their health insurance and access to physicians and hospital care in the community, Goldman says. We are convinced better quality will bring us cost savings, he says.
These clinics arent just plug-and-play, however, said Eva Lynne Disbro, vice president of human resources at McKee Foods Corp. of Collegedale, Tenn., the maker of Little Debbie snack cakes and other foods. McKee Foods has 11 clinics at various locations, and has experienced mixed results. Some years, they didnt make a difference in healthcare costs, she says. Now the company is refocusing the design of the clinics on cost and convenience and has changed its operating vendor.
Paul Crowley, a consultant at Hewitt Associates, a benefits consulting firm, says he thinks the slowdown in employer-based clinics is temporary. Some capital expenditures have pulled back, but the number of requests for proposals submitted by employers looking to start on-site clinics are off the charts, he says.
Some employers are forging partnerships with retail health clinics nearby for preferred status instead of starting their own clinics, Hochstadt says. Employers are also linking up with one another on regional clinics for their workers. Caterpillar says it is partnering with another employer for its upcoming clinic to share costs, though it declines to name the partner.
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