Small businesses, hospitals eye workplace medical clinics

Workplace medical clinics were once a benefit reserved for employees at only the largest companies with the deepest pockets. But now some vendors are helping groups of small and midsize employers provide convenient primary care at shared clinics in hopes of tamping down medical spending.

Meanwhile, as employers of all sizes grapple with rising healthcare costs and consider workplace clinics as one remedy, hospital systems are signing up to staff those clinics to gain new patients or keep vendors from stealing existing ones.

Many employers find workplace clinics can help lower healthcare costs to the point they can put more money into paychecks. “If a clinic is well-run, staffed correctly so that providers are productive—that they're seeing your patients—and the providers are referring patients to specialists within the favored networks of the employer, it will help to save money,” said Dr. Allan Khoury, a senior health management consultant with Willis Towers Watson.

The International Brotherhood of Electrical Workers local in Cincinnati shares two such medical clinics with the local plumbers and pipefitters union. Rick Fischer, business manager of IBEW Local 212, said medical spending was eating up union members' pay raises each year, so he looked at the clinic as a way to curb those insurance costs and put more money into workers' wages and pensions.

The union pays $26 per person per month—for about 2,400 members and their dependents—to a company that is staffing the clinics, Activate Healthcare. About 60% of the union members are using the clinic, but their dependents are visiting less frequently. Fischer hasn't calculated a return yet, but he said younger union members who rarely went to the doctor are now using the clinic, which offers a wellness program that could help prevent conditions like high cholesterol and curb bad health behaviors early.

Local 212's health and welfare fund shouldered the cost of building a clinic at its union hall in Sharonville, Ohio, but Activate employs the clinicians who staff it. Fischer said sharing access to the plumbers and pipefitters' clinic about 30 miles away in Erlanger, Ky., allows Local 212 to reach more members with the benefit.

While smaller employers are getting into the game, large companies are still more likely to offer their employees access to a medical clinic on-site or nearby. A third of organizations with 5,000 or more workers provided an on-site or near-site general medical clinic in 2017, up from 24% in 2012, according to a survey by consultancy Mercer and the National Association of Worksite Health Centers. Among employers with 500 to 4,999 employees, 16% said they provided a medical clinic in 2017, compared with 14% in 2007. Nearly a third of all the employers offering a medical clinic shared it with other companies in the area.

Most who have calculated a return on investment said the clinics are providing positive returns, the survey showed.

Activate says healthcare spending can drop sharply, with cost savings of 15% to 35% possible by managing workers' health holistically instead of addressing just the concerns they bring to the clinic, said Debra Geihsler, a principal at the company.

Building a clinic requires capital that small employers often don't have. Smaller employers also lack enough patients to make use of a full-time clinician.

But in the past several years, about 30 third-party vendors that operate workplace clinics have popped up, and many of them promote clinics that local employers can share with little upfront investment, said Larry Boress, executive director of the National Association of Worksite Health Centers, which was formed by the Midwest Business Group on Health to support public and private employers in getting results from their on-site clinics.

Activate's clinics are staffed by a salaried physician, advanced practitioner and two medical assistants, a team that can manage 2,500 to 3,000 patients.

Companies with as few as five employees come together to share the clinic. And because the teams have adequate time, they can pinpoint the root cause of patients' conditions, make sure they understand their medications, follow up on referrals and manage chronic conditions. Geihsler said Activate produces a return on investment for all of its employers.

“If we were in a community practice, the minute the patient leaves the door they're really not our responsibility anymore,” said Geihsler, who previously served as CEO of the Harvard Vanguard Medical Group in Boston and Advocate Medical Group in the Chicago area. “In our practice, everything that patient does is our responsibility when it relates to their health.”

Patients don't have copayments or deductibles to visit the clinic, which encourages them to engage with the care team, and providers earn bonuses based on patient satisfaction, participation and outcomes. Activate also dispenses generic drugs at wholesale prices, so there's no markup from a pharmacy benefit manager.

Like Activate, employer clinic operators One Medical, Paladina Health and Crossover Health promise to help employers cut healthcare costs and improve worker productivity.

And private equity investors are betting that the vendors have what it takes: Private equity firm the Carlyle Group in August invested $350 million into San Francisco-based One Medical. Also that month, Denver-based Paladina Health raised $165 million in funding from a group of investors led by New Enterprise Associates, which acquired Paladina from DaVita a couple of months earlier.

Hospital systems afraid of losing patients to these third-party vendors are also striking up partnerships with local employers to staff their workplace clinics, though often mostly with larger employers.

For several years, Nashville-based Vanderbilt Health has partnered with Metro Nashville Public Schools to provide teachers and other employees convenient access to primary-care clinics so they can be more effective in the classroom. Employees can visit any of the five exclusive healthcare centers available at no cost. Four of the clinics are located in repurposed mobile classrooms at different locations in the metropolitan Nashville area.

The advanced nurse practitioners who staff the clinics provide primary-care services and help patients manage chronic diseases. The school district added a 26,000-square-foot brick-and-mortar clinic and fitness center last year, where employees can access more services including physical therapy, behavioral health and a pharmacy.

David Hines, executive director of benefits for the school district, said the clinics see 500 patients a week and are the medical home for about 35% of active employees. The district pays the entire cost of operations, plus a negotiated percentage as Vanderbilt's earnings for the services provided, he explained. So far, the clinics have produced savings.

A RAND Corp. study of the school district clinics published in June found that teachers who used the clinics instead of a community-based provider had lower total healthcare costs and were less likely to be admitted to the hospital. On average, the use of the work site clinics saved the district $62 per teacher per month in healthcare costs, according to the study.

David Posch, executive vice president for population health at Vanderbilt, said partnering with employers enables the provider to take a proactive approach to keeping patients healthy and managing chronic conditions.

In return, Vanderbilt develops relationships and fosters loyalty among the employer and staff to use its health system. The clinics, which use the same electronic health record as the rest of Vanderbilt, are able to keep patients in the system by making referrals to Vanderbilt specialists when necessary.

Posch said Vanderbilt is experiencing growing demand among employers for on-site clinics and other arrangements.

“We continue to redesign our healthcare delivery system to achieve value,” Posch said. “On-site clinics and partnerships with employers are part of that effort to look at how we improve healthcare value for the patient and the payers.”