Laitram Machinery, 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. It's 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 healthcare premium curve for employees that showed a 40% increase over six years,” said 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. 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, Marathon Health, Premise Health, and QuadMed. Health systems also have jumped into the market, operating about 18% of worksite clinics, according to benefits consultant Towers Watson, which surveyed firms with clinics this year. Downers Grove, Ill.-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 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 healthcare 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.