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An Emerging Vision for Employee Health

An Emerging Vision for Employee Health | Human Resource Executive Online
The business of offering on-site corporate medical clinics as the new hub for healthcare-cost containment is growing as employers challenge the traditional managed-care business model. If corporations were reticent in the past about hiring outside contractors to manage their clinics, such does not seem to be the case any longer.

Wednesday, April 22, 2009
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Regis Corporation is the empire of hair salons, with 13,400 of them. Its customers and its salon staff focus on recreating the long, wavy, free-flowing hair of Sarah Jessica Parker.

Back at the home office in Minneapolis, the scene is decidedly more mundane as the company thinks of ways to absorb the swells of employee health and benefits costs.

Compared with other large employers, Regis has done well. It's managed to compress into just a few years a health and benefits strategy that has taken other companies more than a decade to perfect.

Owner of such recognizable names as Supercuts, Hair Express and Vidal Sassoon, Regis offered its employees more health insurance, launched aggressive wellness programs and, for the home office, opened two on-site health clinics.

Though Regis has done this relatively smoothly, it isn't alone. Many other employers have been stepping up their involvement in employee health and weaving financial incentives and wellness with the delivery of on-site medical care to keep employees healthy.

As a result, health clinics at some of the nation's largest companies including Regis are turning into full-fledged primary-care centers.

Allison Brown, director of health and welfare benefits for Regis, says the new strategy appeared to be working to control healthcare costs.

Health benefits costs at Regis declined by 1 percent in 2007, says Brown, which she points out is a noteworthy statistic in an ocean of health insurance price increases. Employer-sponsored health benefits costs rose by an average of 6 percent in 2007.

Brown, whose office is next door to the fitness center, says the wellness plan was put into place in 2006-2007, a time when the company was adding about 1,000 salons to its portfolio every year and simply "bolting" on the benefits programs to the parent company.

But as the company blossomed, so did the inflation in employee benefits costs, and when Brown arrived at Regis, the company had 56 separate medical plans. The time had come for Brown and her team to act.

Part of the answer to the company's soaring health inflation lay in opening two on-site medical clinics in the firm's corporate headquarters to serve as hubs for the company to contain employee healthcare costs.

"We needed to structure a plan for all employees to have major medical benefits access," Brown recalls.

She arranged for a national PPO plan to cover the far-flung retail workforce, and Regis also began to self-insure the home office divisions, which covered about 1,000 employees.

Like many other large employers, Regis increased the copayments and deductibles, knowing that it could only go so far before employees would rebel. Then, in 2006 and 2007, came the revelation.

"This whole thing about wellness and clinics came about," says Brown. "It was hard to turn away from it just because it was too cutting edge."

"We started a wellness program--flu shots, annual health fairs and some wellness screenings," she says. "We gave employees the chance to reduce their insurance deductibles when they hit annual targets in four major screenings: cholesterol, blood pressure, nonsmoking and body mass index."

If an employee met one of the four targets, Regis lowered the employee's insurance plan deductible by $250. Employees meeting all four targets enjoyed a deductible reduction of $1,000.

The challenge now is for Regis to export its wellness program to its immense base of individual beauty salons, all within the next three years.

As for the two clinics, a physician assistant and an aide staffs them, and they sit in nondescript office space on the corporate campus. The clinics allow for face-to-face coaching of patients to help them obtain their credits.

"We wanted to drive change through the clinics," says Brown. Visits are free, and the clinics dispense prescription drugs. "If you are forwarded to your doctor for additional services, then our physician assistant can work with your doctor," she says.

Convinced that the benefits of on-site clinics are worth the risk, Regis is looking to staff both clinics full-time, giving employees' spouses and children access to the clinics as well, according to Brown.

Employers have been chastened by the failure of managed care, which, despite early success, has not delivered on the long-term promise of better, less expensive healthcare, and so some have decided to take it upon themselves to offer healthcare instead of relying on the traditional managed care model.

"Some employers are coming to the point where they feel they can only get quality care by providing the service themselves," says Tim McDonald, director of health management consulting at Ingenix, an Eden Prairie, Minn.-based healthcare information and research company providing a line of clinical and cost-management solutions.

The jury's still out as to just how much on-site clinics can contribute to slowing the increase in health care costs, and just which economic model is best for the size of a given employer is open to question.

Worksites with more than 1,000 persons can economically support a doctor-run clinic, and smaller worksites, down to 250 persons, can justify clinics staffed full or part time by a physician's assistant or a nurse practitioner.

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There are about 4,000 worksites in the country that harbor at least 1,000 employees. These worksites are themselves controlled by 1,500 employers, who are the target market for companies who specialize in managing on-site medical clinics.

Patricia Friedman, a senior healthcare consultant in the New York City region for Watson Wyatt, says the on-site clinic model is viable.

"Where we see this going, the level of engagement with on-site health providers is really going to allow much more of disease management and the prevention," she says.

Economics aside, it's not clear that on-site clinics can provide the same quality of care available through a bona-fide physicians practice or a hospital, according to doctors groups.

One option for employers is to hire an outside clinical staff. But outsourcing the job of staffing clinics is supposed to improve staff recruitment, ensure better health information systems and allow for expansion into new services, such as pharmacy benefits, family and specialist care, and even minor surgeries.

Market Snapshot

A clinic that delivers primary care at some point needs to be able to bill insurance plans, but this threshold has not yet been reached at Regis' two clinics.

Retail pharmacy Walgreens, which had already invested heavily in retail-based clinics on its premises, acquired in early 2008 the two largest on-site clinic operators, CHD Meridian and Whole Health.

Following the purchases, Walgreens folded all its clinics into a single division called Take Care Health Systems, leaving one major competitor, Comprehensive Health Services. Regis uses a relatively new entrant, Marathon Health.

If corporations have in the past been reticent about hiring outside contractors to manage their clinics, this does not seem to be the case any longer.

Industry executives estimate that the outsourcing business for on-site clinics has been growing at or in excess of 20 percent per year, as companies outsource the management of their existing and new clinics to vendors.

The nation's largest outside contractor for conventional on-site occupational medicine services, Concentra, has been beefing up both its on-site and independent, primary-care clinics.

It manages about 270 conventional on-side clinics and 320 independent clinics to provide primary care. Concentra began to bill private insurance for covered care last year.

With the long-term decline in the number of work injuries, the traditional industrial clinic, which was typically housed on-site, isn't the kind proliferating at 20 percent compound annual growth rates.

The type of clinic that workers see these days may not even be "on-site." At McKee Foods' medical clinic in College Dale, Tenn., a receptionist opens the door at 5 a.m. every weekday morning to accommodate spouses and some of the 3,000 workers in three shifts streaming in and out of separate plants.

McKee Foods, a manufacturer of snacks, placed clinics off-site company premises for a reason. It is beside a bakery and an architect's office in a commercial office park. This is how employers are laying their bets on employee health today.

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