It has become an economic cliche that healthcare costs are out of control. On a broad scale, the cost of healthcare is rising at about three times that of the rest of the economy, and represents about 16% of U.S. GDP. The impact of rising costs is borne by patients, of course, but it is having an increasing impact on employers' bottom lines. General Motors, for example, claims that the cost of healthcare coverage for its employees and retirees adds $1500 to the cost of every car sold.
But - say it together now - "Challenge leads to improvement," and some companies are now opening on-site health clinics to help tame runaway costs. It is an interesting approach that is reaping dividends for employers and employees alike.
According to the New York Times in an article last week, more than 100 of the largest 1,000 employers in the country now offer on-site primary care or preventative services. This list includes Toyota, Pepsi, Sprint Nextel, and Credit Suisse. David Beech, a health benefits consultant at Watson Wyatt, predicts this will hit 250 by the end of 2007. These clinics offer services such as check-ups, allergy and flu shots, pregnancy tests and monitoring of chronic diseases like asthma and diabetes. Some have on-site pharmacies, or deliver prescriptions to your desk the next day.
Although there are set-up and ongoing costs of supporting the clinics, employers see several significant benefits:
- Productivity rises as the clinics can ease patients problems without forcing them to leave for the doctor, and preventative measures can reduce missed sick days.
- The per-visit cost can be much lower than a visit to an outside doctor. David Beech says that a clinic serving a few thousand employees can save a company up to $2 million per year.
- On-site physicians can educate and direct patients to generic drugs, for example, that can save the company significant dollars.
- Some clinics offer advice on weight loss and smoking cessation - two long term health problems that can drive up costs significantly.
Most companies contract with outside vendors for services. This allows companies to focus on their core competencies and use outside experts for the clinics. The result is a competitive market that will itself generate challenge dividends in the form of lower costs and better care. By using outside contractors, companies are also able to ease employees fears for their medical privacy.
But perhaps the best benefit to the employer is that this adds another benefit for the employee. Imagine walking two minutes to visit a doctor when you are feeling ill, rather than leaving work for 1/2 day and sitting in a crowded lobby. It should be no surprise that on-site clinics improve employee job satisfaction, an increasingly important measure in a time of tight labor markets.
At the end of the day, on-site clinics will likely have a small impact on the overall "healthcare crisis" that is sweeping the nation. But it just might be hundreds of small improvements like this, born from the challenge of rising costs, rather than a sweeping government imposed solution that leads us into a more vital healthcare market.
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