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Firm sees growth for on-site clinics: Novia thinks workplace care can cut costs, help employees

October 15, 2007

Doctors who make house calls are about as obsolete as polio. But a fledgling local company is taking a page from the past and reintroducing the practice to the workplace instead of the home.

Rising medical costs and the companies desperate to contain them are driving interest in the emerging model of on-site clinics. Large employers such as Toyota Motor Co., Pepsi Bottling Group, Credit Suisse and Sprint Nextel have embraced health clinics in recent years, in hopes of promoting wellness and cutting health care expenses.

Indianapolis-based Novia CareClinics LLC is targeting companies large and small by contracting to manage the clinics for them. Convincing employers to build on-site clinics and bear the expenses of running them without billing their workers a nickel is no easy task, however.

Novia co-founder and insurance veteran Lanny Green likened the process of explaining its unusual business model to giving birth.

"It is such a different approach to health care that it takes about nine months for them to get their arms around it," he said.

Indeed, the 2-year-old company signed its first client last October and has eight in total, including the Vectren Corp. utility in Evansville, which is testing the concept first at its call center.

Novia's aim is to be profitable by next summer. The company charges clients a monthly fee to manage their clinics, as well as bill them for physician, lab test and pharmaceutical costs at no markup. A conservative cost estimate is $50 a month for each employee, or $5,000 for a company employing 100 people.

Novia has contracts with 10 doctors, three nurse practitioners and one physician's assistance throughout the state who keep each clinic staffed for at least nine hours a week.

While the expense adds another layer to mounting health care benefits costs, employers hope to save money in the long run. The on-site convenience provides preventive medicine to employees who otherwise may not seek a physician's care. The hoped-for result is a healthier work force, cheaper insurance rates and increased productivity.

"The idea is to make health care more easily accessible to their employees," said Eric Wright, a professor and director of the Center for Health Policy at IUPUI. "The more you bring health care to the person, the more likely they are to use it."

Complementing coverage

Novia sprouted in 2005 from Novia Underwriters Inc., a provider of medical stop-loss insurance policies for self-funded plans that Green and co-founder Eric Olson sold to Houston-based HCC Insurance Holdings Inc. in June 2006.

The money from the sale is helping to finance current operations, along with 50 investors who were stockholders of Novia Holdings, parent of Novia Underwriters.

Green and Olson, as well as the three other Novia execs, are veterans of the insurance industry who met at Vasa Brougher Inc. in Indianapolis, where they worked from the early 1980s to the late '90s.

Green learned about on-site health clinics in 2005 while visiting an old friend in Tennessee after returning from a marketing trip to Florida. His pal, Ernie Clevenger, is a veteran provider of on-site health care who operates CareHere LLC in Nashville. Novia uses the online scheduling and medical records systems developed by CareHere, and Clevenger serves as a consultant to the company.

On-site clinics are not new. In the 1930s and 1940s, large industrial manufacturers established them for their construction, shipyard and steel mill workers. But they began to disappear in the 1970s because companies viewed the clinics as too costly.

Employers' attempts to contain large annual spikes in benefits costs are fueling the rebound. The clinics hope to avoid the U.S. health care system's typical inefficiencies by cutting out middlemen, bureaucracy and reimbursement paperwork.

In most cases, the clinics supplement rather than replace existing coverage. Simple procedures such as blood drawings are covered in the management and physician fees paid by the employer, so insurance co-pays aren't necessary.

That's what attracted Jeff Goodwin, executive vice president of the Indiana Manufacturers Association, to the concept. The IMA partnered with Novia to promote the service to its members.

"It's an overlay of your existing arrangement with an insurance company or HMO," he said. "It doesn't replace it; it works with it."

Increased productivity

Biddle Precision Components in Sheridan, a machine shop with 190 employees, opened a Novia clinic July 31. For the company, founded in 1939, the decision is better late than never.

Kenny Biddle, founder and grandfather of current CEO Brian Myers, traveled years ago to the Indiana University School of Medicine in an attempt to lure a young physician to the company. For various reasons, the arrangement never came to fruition, said Dave Milbee, Biddle's manager of human resources.

Company executives began to revisit the idea of on-site health care last year when Milbee learned of Novia. He met Green and Olson at the Society for Human Resource Management's state conference and became intrigued. His excitement grew following a trip to Tennessee to observe existing clinics.

In existing space, Biddle built a nurse's office, exam room and pharmacy to treat employees and their dependents three hours a day three times a week. Roundthe-clock shifts make healthy workers especially important to Biddle. The company's intent is to cut the number of insurance claims while increasing productivity.

"[The clinic is] catching people that normally wouldn't go to the doctor," Milbee said. "We need to get them seen, get them healthy and keep them on the job."

Another benefit to having the clinic on site is that employees will spend just 30 minutes visiting a doctor rather than the three to four hours it often takes, cutting down on absenteeism.

Companies contracting with Novia are not burdened by a lengthy contract and can break the agreement at any time if the arrangement for any reason fails. Novia executives boast that client Batesville Tool & Die Inc. has increased its clinic's hours three times since the opening, helping to prompt employees to vote the clinic the shop's top benefit.

Contracts also have been signed with Red Spot Paint & Varnish Co. Inc. in Evansville, Elkhart County government, and school systems in Goshen and Mishawaka. Novia has no clients in Indianapolis but is beginning to make progress, Green said.

Whether on-site clinics are cost-effective enough to attract scores of employers remains to be seen, said Alwyn Cassil, director of Washington, D.C.-based Center for Studying Health System Change.

"I think it depends," she said, "but it's definitely a sign of how diligently employers are working to get a handle on the cost situation."
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