“Do-It-Yourself” Employee Health Care

As employers contend with a health-care system that is costly, difficult to access and inconsistent in quality, an old idea — providing health care to employees at or near their workplace — is gaining new momentum. A 2011 study by the professional-services company Towers Watson and the nonprofit National Business Group on Health found that 23% of the midsized and large U.S. employers they surveyed had on-site health clinics and that another 12% planned to establish an on-site clinic in 2012. Some companies operate clinics with their own employees (including doctors and nurses) while others contract with outside organizations for clinical management and staff. Smaller employers may even share a clinic with neighboring employers.

Consider software-provider SAS Institute, selected by Fortune for two consecutive years as the best company to work for in the U.S. SAS reports saving millions of dollars a year — largely through reduced health-plan costs and heightened worker productivity — by operating its own on-site, full-service health-care center for employees and their families. The SAS Health Care Center, which started modestly in 1984 and now has a staff of 55, including four physicians and 10 nurse practitioners, does not charge for services and collects no copays. Same-day appointments are common, and care is unhurried; clinicians may spend 30 minutes or more with a patient. All services typically available in a primary care medical practice are offered, and more. Patients can get allergy shots, consult a dietitian, receive physical therapy, have blood work done or see a psychotherapist. Meanwhile, they develop a relationship with a primary care clinician — in other words, establish a “medical home,” which fosters continuity of care. The center also offers a wide variety of health-related educational programming both on-site and online.

In an era of soaring health-care costs, it may seem unreal that SAS can offer health care free of charge to employees and their families and actually save money. Yet in 2010, efficiency enabled SAS to directly generate in health-plan savings alone more than $1.50 for every dollar it spent to operate its health-care center. Effectiveness and quality drive more than 75% of the 4,700 employees at the company’s Cary, North Carolina, headquarters to choose the center for their primary care even though the health plan allows them to use external providers.

How does SAS do it? In essence, it strives to deliver health care in the way it should be delivered. A salient goal is to keep people healthy, not just treat them when they are sick. There is no “fee for service,” which rewards excessive testing and treatment. Coordinated care minimizes duplication of effort and misaligned treatment from providers in different medical practices. Teams (doctors, nurse practitioners, nurses and nonclinical staff) provide care, with each member of the team working up to the levels of his or her training, skills and experience. For example, physicians and nurse practitioners don’t perform functions that registered nurses could do just as well. Nonclinical staff are trained to carry out certain other duties, such as recording weight and taking blood pressure. Clinicians consolidate services into one appointment rather than deferring other needed care; the patient who comes in because of a rash may also get a tetanus shot and refill a prescription.

As its own health insurer, SAS avoids the cost of paying staff to negotiate claims payments with insurance companies, as most private medical practices have to do. And SAS estimates that each on-site patient visit saves two hours of employee work time because the individual remains on campus, resulting in productivity savings of $3.6 million in 2010. As one SAS employee points out: “You go to the Health Care Center and you are often back to your office in 30 minutes.”

SAS is far from alone in having successfully implemented do-it-yourself employee health care. Orlando-based Rosen Hotels & Resorts brought health care in-house in 1991 with the specific goal of improving employee health. “We weren’t happy with the status quo,” CEO Harris Rosen told us. “In our experience, the traditional health insurers did a good job of paying claims, but we didn’t see much passion for the wellness of our associates.” The company-operated program offers comprehensive health care to 4,500 employees and dependents through on-site care and a community network of specialists and hospitals. A new 15,000-square-foot health and wellness facility houses primary care, specialty care (ranging from cardiology to podiatry), preventive and early diagnostic services (including mammography), rehabilitation services, alternative medical services (such as acupuncture) and a complete fitness center. Shuttle service to the clinic is provided for employees working at other locations. Annual physicals are free, copays for other services are low and many pharmaceuticals are dispensed at no charge. Rosen’s health program has boosted employee morale and productivity even as it has reduced costs. Employee turnover is in the single figures — an impressive statistic for the hospitality industry — and the company reports that it saves an estimated $21 million in health-care spending annually.

While Rosen Hotels and SAS rely on company-employed health-care providers, some companies offer on-site employee care in partnership with local clinicians. In 2007, oil- and gas-producer Chesapeake Energy joined forces with a leading Oklahoma City medical group to offer on-site employee care as a supplement to traditional off-site care. Chesapeake built and now maintains an on-site clinic while the medical group provides staff and specialized medical equipment. The facility offers acute care, disease management, limited specialty care and complete dental and orthodontic care to nearly 4,600 employees.

Similarly, Comporium, a midsized South Carolina-based communications company, has an on-site health and wellness center staffed by an independent medical practice. Nurse practitioners provide acute care for illnesses such as strep throat and sinus infections, and they also offer management for chronic conditions such as hypertension. The physician-owner of the medical practice is on call as needed.

The centers we have described are successful because they were created for the right reasons: to encourage an attitude of wellness, to offer convenient access to high-quality health care, to provide a medical home, to convey the company’s commitment to employees, to improve productivity and reduce turnover and yes, to better control health-care costs. The centers pay off financially because so many employees use them, thereby generating economies of scale, reducing the number of payments to external medical providers and contributing to a healthier and more productive workforce. As SAS CEO Jim Goodnight says, “The number-one benefit you can give an employee is good health.”

But an on-site health-care clinic is not a panacea. It is not the answer for organizations that have relatively few employees concentrated in one location or poor employee relations or high employee turnover. And even under the most favorable of conditions, on-site health care is not an easy path. Transitioning to a do-it-yourself system usually requires new expertise, for example (unless health care is the company’s main line of business), and such a system can be costly at first in terms of money, time and energy. However, for organizations with the appropriate scale, culture and leadership, it is a creative approach to a universal problem.