Clinics Cut Health Costs
By Milt Freudenheim
New York Times
Sunday, January 14, 2007
Frustrated by runaway health costs, the nation’s largest
employers are moving rapidly to open more primary care
medical centers in their offices and factories as a way to
offer convenient service and free or low-cost health care.
Within the last two years, companies including Toyota,
Sprint Nextel, Florida Power and Light, Credit Suisse, and
Pepsi Bottling Group have opened or expanded on-site
clinics. And many employers are adding or planning to add
even more clinics, which were experimented with about 30
years ago but fell out of favor amid questions about their
Today a new wave of clinics is opening, driven largely by a
motive that was less of a factor in the past: employers’
desires to reduce their health insurance premiums by taking
care of workers before they need to see outside doctors.
More than 100 of the nation’s 1,000 largest employers now
offer on-site primary care or preventive health services — a
number forecast to exceed 250 by the end of the year,
according to David Beech, a health benefits consultant.
Corporate America’s new in-house medical offices go well
beyond traditional occupational health clinics that hundreds
of factories have long maintained for job-related injuries
and worker’s compensation cases. Employees can now stop by
for check-ups, allergy and flu shots, pregnancy tests or
routine monitoring for chronic diseases like diabetes and
When prescription drugs are required, some employers arrange
for the pills to be delivered the next day at the office or
plant, while others even maintain fully stocked pharmacies.
Even at the older-style clinics run by companies like
General Motors, about 40 percent of the services now
rendered “could be characterized as primary care or urgent
care,” said Dr. Joel Bender, corporate medical director of
G.M. Health Services. But at these more traditional
clinics, employees are typically sent on to their family
physician or an outside specialist.
At the newer corporate health centers, by contrast, the goal
whenever possible is to help solve the employee’s health
problems without the need for additional outside care.
Such clinics have been attempted in the past, reaching a
peak in the 1970s and then gradually being eliminated as
redundant. In the last few years, though, as health
insurance premiums have soared and many companies have run
up big bills at emergency rooms and urgent care centers, the
corporate clinic has made a comeback. For employees,
on-site clinics can mean faster medical attention and lower
out-of-pocket costs, since visits are usually free or carry
only a small co-payment. Some workers may fret about the
privacy of their medical records, but employers say they
treat the information carefully and responsibly. Some
companies hire outside providers to run the clinics, thus
offering an additional privacy firewall.
For employers, on-site clinics can mean gains in worker
productivity and lower health-insurance outlays. “A clinic
serving a couple thousand employees can probably save $1.5
million to $2 million a year,” said Mr. Beech, a health care
specialist at the Watson Wyatt benefits consulting firm.
“Right away, it’s easy to see reduced referrals to hospital
emergency rooms and specialist physicians, and a shift away
from hospital outpatient doctors to the clinic.”
The biggest primary care clinic so far opened Jan. 2 in
Texas, when Toyota workers and their families started using
a $9 million, 20,000-square-foot medical center alongside a
new truck assembly plant in San Antonio.
Unlike most of the new medical offices — which are staffed
by nurse practitioners and in some cases a part-time doctor
— Toyota’s San Antonio health center has two-full time
doctors, a part-time physician, a blood-test lab and an
It is “a clinic on steroids,” Mr. Beech said.
And yet, even smaller operations, like the one with nurses,
a physician’s assistant and a part-time doctor at the
midtown Manhattan offices of the investment firm Credit
Suisse are drawing praise from many employees.
John Probert, a 42-year-old Credit Suisse foreign exchange
trader, recently took a few minutes from his
10-and-a-half-hour work day to pick up a prescription for a
throat remedy at the firm’s clinic. He had it filled at a
“My throat was just killing me,” Mr. Probert said. The next
day one of the clinic’s two nurses, Allison Ain, called to
see how he was faring. “I told her I was feeling much
better,” he said. “It’s nice to have a human on the other
end of the phone that actually cares.”
And he liked the fact that his medical care did not take
much of his time. “Instead of doing it on a Saturday,” Mr.
Probert said, “you can just hop over next door and get back
on the trading floor.”
Pepsi Bottling, another sponsor of clinics, is trying to
meet the basic health care needs of its 33,000 workers at 46
plants and 264 distribution centers around the country. The
company currently has 15 clinics and plans to open 15 more
over the next couple of years, according to David Kasiarz,
the vice president for compensation and benefits.
Pepsi Bottling employees are not charged for the services,
which include not only allergy shots and prescriptions, but
advice on weight loss and smoking cessation.
“We think health affects business performance,” Mr. Kasiarz
said. “Our drivers and sales people define how customers
look at Pepsi Bottling. We need to keep them on the
street; we need to keep them well and happy.” The nurses
and physician’s assistants who run the Pepsi Bottling
clinics are employed by a unit of Johns Hopkins University.
“It is important that this is considered independent, ” Mr.
Although many companies still run their own clinics, a
growing number have been hiring independent vendors. CHD
Meridian, a unit of I-Trax, is the largest
clinic-outsourcing company; others include Whole Health
Management, Comprehensive Health Services and IMC
HealthCare. All say they have pending orders from employers
for new clinics that will offer primary care and other
“There has been an evolution in this industry,” said Stuart
Clark, executive vice president of Comprehensive Health
Services, which operates dozens of traditional on-site
clinics. “As the workplace becomes safer through training
and safety engineering, our customers have opened access to
their clinics for nonwork-related issues like flu shots,
chronic disease, weight management and smoking.”
Andrew Scibelli, health benefits manager at Florida Power
and Light, said his company estimated that it got back $1.50
for every $1 spent at its three on-site health centers,
which are run by Whole Health. That estimate, he said, is
based on what the services would cost if provided by doctors
under the company’s health insurance, along with a
calculation of the value of an employee’s time spent
visiting an outside doctor.
General Motors, despite continuing its traditional clinics,
has put its emphasis on working with local doctors and
hospitals to improve the quality of health care in
communities like Flint, Mich., where G.M. retirees and their
families vastly outnumber the company’s active work force.
Other companies have eliminated primary-care clinics, either
because they did not consider them cost-effective or for
other reasons. Ford Motor, which used to offer basic health
care in the 1950s at its big Rouge plant in Dearborn, Mich.,
now says it believes that most employees prefer to go to
their own doctor for primary care.
But the foreign-based auto makers in this country, including
Nissan and BMW, which do not have union-negotiated benefits
or large numbers of retirees, are embracing the on-site
health trend for their work forces. Comprehensive Health
Services recently announced plans to provide clinic services
at three existing Nissan plants and the company’s new North
American headquarters in Franklin, Tenn.
Toyota currently has on-site pharmacies or prescription drug
services at 11 plants in the United States. The new San
Antonio clinic is meant to serve the 2,000 Toyota employees
and 2,100 people working for suppliers as well as their
families. The doctors, who will be employees of the
contractor CHD Meridian, will emphasize preventive care,
said Dan Sieger, a Toyota spokesman. “We are really excited
about this,” he said.
Big health insurers say they are closely watching the
proliferating clinics, which could potentially pose a
competitive threat. A vendor company that runs on-site
clinics, for example, could steer patients to its own
programs for disease management, say, or smoking cessation,
instead of equivalent ones offered by the patient’s health
Cigna, which runs clinics for its own employees in
Bloomfield, Conn., Philadelphia and Phoenix, sees its role
as a “partner with both the employer and the clinic
provider” to make sure an employee’s doctor is fully aware
of the patient’s medical history and health needs, said Tom
Richards, a Cigna senior vice president.
Brad Fluegel, an Aetna vice president, said the company was
talking to its large customers about ways to dovetail its
own “wellness” and chronic disease management programs with
the companies’ expanding on-site programs.
“There might be even greater savings if a clinic can steer
people to lower-cost places for treatment — efficient,
high-quality providers — and generic drugs” Mr. Fluegel
A pharmacy is one of the new features planned by Qualcomm,
the wireless technology company based in San Diego. The
company, which has operated a heavily used free clinic for
its 8,000 workers in San Diego since 1998, is now nearly
tripling the space to 4,000 square feet, extending visiting
hours and hiring Whole Health.
Qualcomm says it sees the clinics and related health
services as a way to retain the loyalty of employees —
particularly its thousands of engineers.
But of course, for Qualcomm and other big companies, cost
considerations are always a primary concern.
“Employers are so frustrated with health costs that they are
looking for any solution,” said Dee W. Edington, director of
the Health Management Research Center at the University of
Michigan. “One option is to find ways to take care of
people before they get sick.”