The Expanding Scope of On-site Health

Recent Towers Watson research finds many employers with on-site health centers are planning to add new centers and services in the next two years. Experts weigh in on what's driving this expansion, and how HR can help measure the return on the company's investment.

By Mark McGraw

It's safe to say that employers' interest and investment in the overall health and well-being of the workforce has greatly increased in the last decade or so.

New research from Towers Watson suggests employers are planning to double down on that investment in the near future.

The New York-based professional-services firm's 2015 Employer-Sponsored Health Care Centers Survey polled benefits professionals from United States-based employers, 105 of whom currently offer employer-sponsored health centers. Among those 105 organizations, 38 percent intend to add new centers in the next two years, and 66 percent plan to expand on or enhance the services they currently offer.

The goals these companies hope to achieve are fairly straightforward, says Allan Khoury, senior health management consultant at Towers Watson.

"We know that 75 percent of our respondents cited increasing productivity as an objective," says Khoury, noting that 74 percent indicated that they seek to reduce healthcare costs and 66 percent hope to improve employee access to healthcare services.

What's especially interesting, he says, is that "these companies are adding centers despite concerns around the Affordable Care Act and its excise tax, which [requires] that the cost of an on-site center has to be included in the cost of delivering healthcare to employees. If that cost goes too high, you violate the Cadillac tax. But we're still seeing great support for these clinics among employers."

Organizations with on-site health services already in place have begun to reap the rewards of a healthier and more productive workforce, which is helping to drive these plans for expansion, says Karen Marlo, vice president at the Washington-based National Business Group on Health.

"On-site clinics obviously offer multiple benefits," says Marlo. "It's partly a productivity issue. Depending on where you're located, going offsite to a physician's office takes time, for instance. That time away has a great impact on productivity."

Naturally, employee health and quality of life are also paramount, she adds. And, from a strictly practical standpoint, healthier employees naturally equate to cost savings for the organization.

"What we're hearing from employers is that there's a lot of focus on being able to catch [potential health concerns] before they become a big deal," says Marlo. "An on-site facility enables [healthcare providers] to sit down with an employee and treat not only acute issues, but chronic ones as well, and make sure they're adhering to medication," for example.

Oftentimes, she adds, a physician or healthcare professional at an on-site clinic "won't be the one to address an issue, but they can refer [a patient] to someone that can. That's one component of on-site health centers that we've heard employers say they're pleased with."

Employers have been in the on-site health arena for some time now, of course. Consider Mercer's 2012 National Survey of Employer-Sponsored Health Plans, which found 58 percent of large organizations with on-site clinics saying their facilities were more than five years old.

Many companies have learned from and been encouraged by these early adopters of on-site health services, says Polly Thomas, the director of employee benefit consulting and on-site clinics at Leawood, Kan.-based CBIZ Human Capital Services.

"There are many more positive examples of clinics that have been successfully implemented than there were several years ago," says Thomas. "There are more examples of measurable ROI." multiple-location employers initially implemented single clinics to test the concept, before making similar investments at all of their outposts, she continues.

Now, "other employers are expanding this solution to [include] other locations, because they see it as a more equitable benefits strategy, or a way to recruit and retain talent in more challenging geographic marketplaces."

Along with adding health facilities at multiple sites, many employers plan to broaden the scope of services they offer employees as well, according to Towers Watson.

For example, the aforementioned survey finds that half of employer-sponsored health centers now offer some type of pharmacy services, compared to the 38 percent of participants who said the same when Towers Watson conducted a similar study in 2012. Overall, more than one-third of respondents (35 percent) in 2015 said their on-site centers currently provide telemedicine services, with another 12 percent planning to add telemedicine in the next two years.

"From what I've seen, companies are looking to add the type of medical services that make life easier-X-rays, physical therapy, etc.-and can be done quicker and more efficiently on site," says Marlo.

From an HR perspective, offering on-site health services also "helps position them as a partner in human capital," she adds. "It's a great opportunity to help meet the physical and mental demands of employees, which leads workers to be more present on the job."

Historically, gauging how effective an on-site clinic is at helping employees meet these needs-and at helping employers reach its goals for on-site health-has been tough for many organizations, says Marlo.

"It's complicated," she says. "You have to figure out all the relevant factors and how to measure them. I've heard from HR professionals who say they can't use missed time as a metric, for instance. They say that assessing an on-site clinic has to be based on cost of care."

But it seems that a growing number of companies are overcoming that challenge, and are taking various approaches to determining what metrics to use in sizing up their on-site health facilities.

According to the Towers Watson survey, 75 percent of employers with on-site health centers calculate their return on investment. That number stood at 47 percent when Towers Watson conducted its 2012 healthcare centers poll. (Thirty-three percent of these companies use vendors to conduct their ROI analysis, while 30 percent rely on internal staff analysis and 12 percent have the analysis done by an independent third party.)

What they're calculating varies from company to company, says Thomas.

"Companies are measuring return on investment in a variety of ways," she says. "Medical and worker's compensation improvement, employee and patient satisfaction, employee retention, organizational productivity and improvement in health outcomes are examples. It really starts with what the company is looking to solve by implementing a clinic."

Gathering all this data, however, can be a time-consuming process that requires coordination between multiple data sources, says Thomas. 

"It typically requires data from a variety of vendors. So, HR must set the expectations upfront with each vendor partner for what data they will need to provide in order for the company to effectively measure return on investment."

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Jul 9, 2015
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