INNOBLOG

This month, Toyota opened the largest corporate clinic in the United States, a $9 million facility at a new assembly plant in Texas. Toyotas facility is an outlier in terms of its sheer size, but it is illustrative of how providing healthcare at the workplace is growing rapidly. This kind of benefit used to be reasonably commonplace in the 1950s and 1960s, as people joined large employers for long careers, and then they fell out of favor in recent decades due to cost cutting. Why the resurgence? First, technology has enabled relatively less skilled providers to deliver adequate quality care for an increasingly large range of conditions. Diagnosing strep throat or flu, for instance, takes a swab and an easy-to-read test, not a complex analysis of symptoms. In tandem with advancing technology, the supply of nurse practitioners has grown rapidly, at around 10% annually since 1990. Nurse practitioners can deliver these services for significantly less cost than a Medical Doctor. This combination of circumstances has enabled the creation of walk-in clinics in retail stores, such as MinuteClinic, and has the same impact in the corporate setting. Second, employers are motivated to provide on-site care to reduce usage of expensive emergency rooms and specialist providers. Health insurance premiums continue their rapid increase, and keeping simple conditions in a low-cost, primary care setting allows the employer real savings. Indeed, a health benefits manager at Florida Power and Light recently estimated that his company saved $1.50 for every $1 spent on its three company clinics. Third, employees time can be very valuable. Wall Street firms, for instance, provide on-site care to avoid having employees take time off for doctors visits. As the incomes of rich and poor continue to bifurcate, it will make even more sense for firms to save the time of their highly compensated employees. Last, company clinics can stress preventative care in a way that many primary care physicians simply are not incented to do. Insurers are notoriously stingy in reimbursing doctors for the time they spend counseling patients on issues such as diet and exercise. Given that the average employee in a health plan stays with the insurer for only eight years, it just doesnt pay to invest heavily in prevention. However, some employers have longer timeframes in mind, and many will also see the financial impacts of prevention materialize before the health costs do (e.g., fewer days off sick, more productivity, etc.). It is curious that some physician groups see company clinics as a threat. In reality, they present an outstanding growth opportunity, albeit one that requires a significant change in business practices vs. operating the sort of doctors office to which they are accustomed. Predictably, rather than seeing local doctors seize the opportunity, we are witnessing new specialists such as CHD Meridian and Whole Health Management ride the disruptive wave. Source material for this posting was taken from "Company Clinics Cut Health Costs, New York Times, January 14, 2007