Worksite Clinics - The Next Threat?

Large employers are cutting healthcare costs by opening their own clinics onsite and offering workers nearly-free service. What does this mean for practices like yours?


If you think retail walk-in clinics are worrisome, you’re going to be thrilled to hear about another new competitor to traditional primary care: onsite clinics run by large employers. While these clinics make a lot of sense for employers, they will make it more difficult for many primary-care physicians to stay in business.

Onsite clinics date back to the early 20th century, when some logging and mining companies hired physicians to take care of their employees in remote areas where no other healthcare was available. The modern era of onsite clinics started in 1991, when printer Quad/Graphics opened its first in Milwaukee. The trend has picked up steam in the past few years, as corporate health costs have soared. According to a 2007 survey by Watson Wyatt Worldwide and the National Business Group on Health, 23 percent of companies that employ more than 1,000 workers had onsite clinics, and 29 percent planned to open them in 2008.

Immunizations, screenings and urgent care are the services most commonly offered by onsite clinics, which are usually staffed by salaried physicians. Many also offer physical therapy and mental health services, and a few supply complete primary care and some specialty services to their employees. Worksite clinics are often linked with corporate wellness and disease management programs, although a few provide chronic disease care themselves. Most have electronic health records.

Employers believe that these clinics will increase workers’ productivity, improve their access to care, and save money. Most of the companies in the Watson Wyatt/NBGH survey didn’t yet have data on their return on investment. But another survey, by the LaPenna Group of Grand Rapids, Mich., found that, among 50 companies that had had onsite clinics for at least two years, half were satisfied with their level of savings, and a third said their savings exceeded their expectations. So you can expect this trend to continue.

Another reason to anticipate growth in onsite clinics is that a very big player has entered the business of operating them for employers. Walgreens, the largest operator of retail clinics, last year purchased the two biggest of the 20 firms that run onsite clinics. Its Take Care Health Systems subsidiary is now offering employers a package that combines worksite and retail clinics and pharmacies. The idea is to provide workers with services at retail clinics outside of companies’ business hours.

How they work

Onsite clinics are usually open on weekdays and may have evening hours as well. Employees can see a doctor before or after work or on their lunch hour without losing any time on the job (a big plus for their employers, as well). And they don’t have to travel anywhere or find parking to see a physician.

Onsite clinics usually provide access to dependents as well as employees, since self-insured employers are typically on the hook for dependents’ health costs. Employees and their families generally have low or no out-of-pocket costs when they use these clinics. The self-insured employers will waive patient copays for seeing an onsite physician, a big incentive for employees. Partly as a result, up to 80 percent of them take advantage of onsite services. Although workers may not want their employers to see their health records, this has not apparently deterred many from using onsite clinics.

Internist Greg Hood, who practices in Lexington, Ky., hasn’t felt a major impact from the onsite clinics that a nearby Toyota plant operates. In fact, he occasionally gets referrals of established patients from those offices. But he wonders how many people he never sees because they’re getting their primary care onsite. And he also knows that worksite clinics are absorbing some of the routine visits that form his bread and butter business.

“They can soak up a lot of those visits, and that’s the problem,” Hood explains. “The way our health system is set up, when I take care of a sick person with a dozen different medical problems, I get reimbursed very poorly for the amount of effort it takes. So it’s seeing the quick ankle sprains and urinary tract infections that help me, as a small business owner, pay for the staff and the electronic records that [President] Obama wants us to implement. And when they skim that cream off, our drink is that much more bitter to swallow.”

Bruce Kruger, executive vice president of the Medical Society of Milwaukee County, Wis., agrees that this can be a problem for primary-care physicians. In his area, a large number of residents have access to worksite clinics, such as the one run by Quad/Graphics, which has 12,000 employees (not all in Wisconsin) and twice as many dependents. And the company has established a subsidiary, QuadMed, that operates clinics for other area employers, including Miller Coors Brewing, Briggs & Stratton, and Rockwell Automation. These centers provide primary care for adults and children and some specialty services, including OB/GYN, dermatology, ENT, orthopedics, and general surgery. QuadMed has a full-service pharmacy, and offers optometry and dental services in some locations.

The scariest part of this for independent doctors, says Kruger, is that it’s helping to shift practices’ payer mix in the direction of Medicaid, the uninsured, and other self-pay patients. “The initial reaction of doctors is, ‘I’m going to lose a percentage of my patient base.’ But the longer-term reality is that you’re going to be providing care to a population for which your reimbursement opportunities are much more limited. The only hope for that delivery mechanism is a change in how things are paid for.”

The screw is also turning on reimbursement for routine office visits. When a patient pays little or nothing in an onsite clinic, $59 in a retail clinic, and $100 in a primary-care office, it’s a “no-brainer” where the patient is going to seek care. “The primary-care doctors haven’t been as sensitive to the pricing structure as they need to be to compete in this market,” notes Kruger.

Ken Terry is a New Jersey-based freelance writer and the author of the book “Rx for Health Care Reform.” He can be reached via physicianspractice@cmpmedica.com.

This article originally appeared in the May 2009 issue of Physicians Practice.