Study: On-site clinics can help public employers curb healthcare costs

NEW YORK — With the cost of employee healthcare benefits on the rise, public employers are under increased pressure to contain costs while also providing benefits that help them maintain a healthy work force and attract the best employees. One solution to consider: on-site health clinics, according to a recently released study.

The Government Finance Officers Association, with a grant from Colonial Life, conducted the independent research to identify the most innovative and effective strategies local governments can employ to contain costs and offer quality employee healthcare benefits.

“One strategy to manage choice of providers while improving the quality of the health benefit for employees is on-site health centers, also known as on-site clinics. An on-site clinic is essentially a doctor’s office that is provided by the public employer, on or near the employer’s premises,” the study stated. “Staffing varies with expected use of the clinic, from only nurse practitioners and physician assistants to a full medical staff. The services offered range from just immunizations and limited acute care to physicals, lab work, behavioral health services and even pharmacy services.”

The case study research suggested that most governments favor relying on a third-party vendor to manage the clinic on their behalf, and that on-site clinics can provide services more cheaply than commercial providers. Furthermore, because an on-site clinic is more accessible than commercial providers, employees usually seek treatment for minor ailments before they become major conditions that are more costly to treat.

The research found that on-site clinics offer a substantial return on investment, with figures ranging from $1.60 to $4 saved for every dollar invested. For example, Cabarrus County, North Carolina, offers a full-service clinic to 1,300 employees and dependents, and realized a net cost savings of $624,000 over a four-year period, the study stated.

However, the study pointed out that, in order to be effective, a clinic must have about 800 to 1,000 potential patients. For a smaller employer, this means that sharing a clinic with other smaller employers might be an ideal solution. For example, in Texas, the City of Mesquite is on the border of what is required to run a cost-effective clinic (1,148 employees), so it partnered with the Mesquite School District (4,700 employees) to offer a full-service clinic.

Once a clinic is in place, employees need to have an incentive to use the clinic instead of a commercial provider. GFOA’s case studies used a number of enticements to make the clinic less expensive and more convenient than other alternatives:

• Waive or substantially reduce co-pays when visiting the clinic;
• Provide convenient scheduling options, such as Web-based appointment setting. Employers also can negotiate wait time standards with the managers of the clinic to ensure visits are expeditious;
• Develop advantageous time-off policies for using the clinic, such as not requiring the use of sick time to visit the clinic or allowing flexible work scheduling; and
• Provide services that are focused but cover major employee needs. Clinics that provide only the most basic services will not see high utilization, and services that are too specialized will not enjoy economies of scale.

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