Visit any major corporation these days and chances are you’ll find an on-site primary care and occupational health facility staffed with any number of physicians, nurse practitioners, medical assistants, physical therapists, practice administrators, case managers and administrative personnel.
A recent study by the Washington Business Group of 120 organizations with more than 1,000 employees found that of companies with on-site medical clinics:
- 68 percent say that the facilities effectively improve employee health;
- 59 percent say that the facilities manage costs effectively;
- 56 percent say that the facilities effectively improve employee satisfaction;
- 54 percent say that the facilities effectively increase employee productivity.
On-site healthcare facilities will likely continue to increase in popularity as firms run out of short-term options for cutting health care costs, such as restructuring benefit plans and shifting costs to employees. And while on-site facilities might make sense for larger employers, what can the smaller ones do?
Retail healthcare
Smaller businesses, particularly those in major metropolitan areas, now have an alternative to hosting their own medical clinic: the local retail clinic around the corner, and increasingly, inside big box stores like Wal- Mart, CVS and Target.
Retail-based medical clinics have attracted a lot of attention since they emerged a few years ago. The clinical care and business models vary by operator and location, but all have a common value proposition: They offer consumers a limited menu of simple health services within a walk-in retail environment. The journal Health Affairs reported last year that there were about 1,000 clinics in 37 states, which accounted for almost 3 million office visits.
In addition to increased access (convenient locations, expanded hours and no appointments required), retail medical clinics offered medical services at lower prices than other outlets. A study in Health Affairs examined office visits for the five conditions most frequently treated at a chain of retail clinics in the Minneapolis/St. Paul area, versus cost of treatment at other outlets. The study found that getting treatment at a MinuteClinic cost an average of $104, a savings of $51 from the cost of urgent care, $55 less than visiting a physician’s office, and a whopping $279 less than treatment in an emergency room. (Interestingly, in contrast to what you might expect, the study also found that other medical providers in the area did not lower their rates in response to competition from Minute- Clinic. In fact, cost of treating the five conditions studied rose 14.1 percent during the four-year study period. The study’s author attributed this to other providers raising their charges to make up for lost revenue.)
In addition to increased access (convenient locations, expanded hours and no appointments required), retail medical clinics offered medical services at lower prices than other outlets. A study in Health Affairs examined office visits for the five conditions most frequently treated at a chain of retail clinics in the Minneapolis/St. Paul area, versus cost of treatment at other outlets. The study found that getting treatment at a MinuteClinic cost an average of $104, a savings of $51 from the cost of urgent care, $55 less than visiting a physician’s office, and a whopping $279 less than treatment in an emergency room. (Interestingly, in contrast to what you might expect, the study also found that other medical providers in the area did not lower their rates in response to competition from Minute- Clinic. In fact, cost of treating the five conditions studied rose 14.1 percent during the four-year study period. The study’s author attributed this to other providers raising their charges to make up for lost revenue.) As attracted as insurers were by the potential cost savings, many were nervous that clinics would increase their subscribers’ total health care visits, rather than acting as a cheaper substitute for care they would have received elsewhere, according to a report by the California HealthCare Foundation.
Once it was clear from initial usage patterns that the clinics did not appear to increase overall demand for medical services, insurers were sufficiently encouraged to begin covering retail clinic services.
Clinic operators, however, didn’t initially accept insurance because the claims process is expensive for the provider. Billings-related expenses account for about 30 percent of the operating costs of a physician’s practice (this includes staffing, documentation, IT, delays in accounts receivable and unpaid claims). The economics of in-store clinics cannot support such overhead.
But in 2004, a retail clinic in Minneapolis began working with certain plans to find an approach that made sense for the retail clinic model. The plans changed their paper- and people-intensive process (including multiple claims rejections and negotiated fees) to a radically simplified system: 100 percent payment for 100 percent of claims within 10 to 14 days.
About 40 percent of retail medical clinics now accept insurance. Check with your insurer to see if you can work with a retail clinic in your area. If you can, be sure to educate employees on this new benefit. Many clinics offer preventive services, such as vaccinations, at less cost than a physician’s office. And encouraging employees to visit their local clinic for urgent, non-emergency care rather than going to the emergency room can save your health plan a lot of money, while employees get the care they need faster and with less hassle.