Quest to rein in health care costs gives momentum to on-site clinics

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clinics stats factboxIndiana’s cluster of on-site-clinic providers is growing fast and some are even looking to take their expertise around the Midwest.

These companies—such as Activate Healthcare, OurHealth, NoviaCare Clinics LLC and RepuCare Inc.—have opened a flurry of clinics at Hoosier employers the past two years as employers increasingly embrace the concept as a way to restrain employee health costs.

In February, Activate Healthcare, led by former Steak n Shake CEO Peter Dunn, raised $950,000 from private investors to help its expansion in Indiana and in neighboring states. Activate, based in Indianapolis, has attracted more than 20 companies to use one of its clinics in the past two years.

Also this spring, Indianapolis-based OurHealth started fishing for clients in the Chicago market, building off a clinic it started there for Bankers Life & Casualty Co., a subsidiary of Carmel-based CNO Financial Group Inc. The company has launched eight clinics the past two years.

And in April, RepuCare—which is better known for its medical staffing business—announced that it expects to add more than 80 employees over the next three years, with roughly half working in its on-site-clinic business. RepuCare currently operates four on-site clinics and hopes to win commitments for 10 more in the next 18 months.

NoviaCare Clinics, which popularized on-site clinics in Indiana, continues to operate more than 20 here in Indiana, and has recently been talking to potential clients in Florida.

On top of those companies, all four major hospital systems in the Indianapolis area offer on-site clinics for employers and are aggressively marketing the service.

Jeffrey M. Wells Wells

“We’ve seen more rapid adoption from a marketplace perspective,” Dr. Jeff Wells, president of OurHealth, said of on-site clinics.

“It went from a portion of people talking about it and very few people doing it, to a lot of people talking about it and a handful of people doing it, to what we see now—which is almost everybody talking about it and a lot of people doing it.”

Benefits brokers have noticed the trend, and frequently pitch employers on the idea of opening an on-site clinic.

Employers are willing to at least consider getting into the health care game because tinkering with their health plans rarely has been enough to lessen the pain of annual hikes in health benefits.

The average cost for a family health insurance policy rose 9.5 percent in 2011 to more than $15,000, according to a survey by the California-based Kaiser Family Foundation. Single coverage rose 7.5 percent last year to nearly $5,500.

On-site clinics certainly require substantial spending by employers before they realize any savings. Upfront costs range from $20,000 for extremely modest clinics to as much as $500,000 for a full-fledged clinic able to serve hundreds of employees.

Clinic vendors typically charge employers a monthly fee per employee in their health plan, ranging from as low as $5 to as high as $30. Drugs and administrative costs typically are priced into the higher fees. Employers with lower fees often pay those separately.

In spite of those costs, the high cost of health benefits has made it worth considering for more and more employers.

“Among progressive employers, I would say it’s a much easier presentation than it was three or four years ago,” said Dunn, who partnered with Deb Geihsler, a former manager of large physician practices in Boston and Chicago, to launch Activate Healthcare. The company now has more than 25 employees.

Dunn Dunn

“When you think about it,” Dunn added, “what’s the alternative? You can either keep taking it on the chin or you can try and do something.”

On-site clinics have been around for decades, but they typically focused on providing occupational health care for workers injured or at risk of injury on the job.

The recent clinic trend is to staff the clinics with primary care physicians and nurse practitioners to help coach the patients to live healthier lives and, when they need specialized medical care, to guide them to the best providers.

In that way, employers see the clinics as a way not only to change employees’ behavior, but to change the behavior of medical professionals as well.

By providing easy access to generic drugs, blood testing and longer times with a physician, Geihsler said, the clinics are designed to deal with and prevent chronic diseases in a far better way than the rest of the U.S. health care system, which was designed to treat specific episodes of acute medical need.

Activate’s first clinic and biggest success story serves Monroe County government workers. A year after the clinic opened in Bloomington in 2010, the county said its health care spending dropped more than $500,000, with nearly a quarter of those savings going to employees.

That success was vital in Activate’s ability to raise its additional funding this year, Dunn said.

One year after OurHealth launched a clinic at OneAmerica Financial Partners Inc. in Indianapolis, the life insurance company saw its health care costs rise only 6.6 percent, compared with a 12.6-percent increase the previous year, and a 25-percent increase the year before that.

OneAmerica also paired its clinic with a wellness program that includes many education programs, weight-loss challenges and in-person health care coaching by nurses.

Debby Routt, OneAmerica’s vice president of compensation and benefits, said that out of a pool of 2,500 employees, retirees and dependents, 950 visited the clinic in its first year, making a total of 3,300 appointments.

“I’m absolutely amazed, honestly, on the adoption this has gotten into the culture of our organization,” she said. “It’s very difficult to get a culture to move, especially in a large company. I’ve really seen a lot of people embracing this culture.”

Spencer Milus, executive vice president at RepuCare, said the activity in the on-site-clinic market is amazing, considering that as recently as 2005, the Indiana University Health and Community Health Network hospital systems were the only ones offering employer clinics.

Now, the numbers of both vendors and employers participating are increasing rapidly, said Milus, who formerly worked for Community’s Infinity on-site-clinic program.

“This is a fun time and this is a fun industry to be in,” she said.•

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