With his company’s health costs rising and his employees struggling with high blood pressure and other medical conditions, Laurel Grocery Company CEO Winston Griffin knew his company had to do something.
So the London, Kentucky, wholesaler opened a health clinic.
“Our margins are small, so every cost matters,” Griffin said. He said the clinic has helped the company reduce health costs and reduce sick leave for employees.
Large employers have been running clinics for decades. At Laurel Grocery’s in-house clinic, employees can get free checkups, blood tests and other primary care needs without leaving the workplace. But Griffin’s move is notable because of the size of his company: just 250 employees.
According to surveys and interviews with corporate vendors and consulting firms, nationwide, a small number of small and medium-sized employers have established their own health clinics at or near their workplaces that help employers open such facilities.
Improving the health of employees and reducing health costs is one of the main advantages of employers’ sites to run clinics. But some companies also say they’re helping to alleviate the nation’s shortage of primary care doctors and the hassle of finding and getting care.
“Why did we do it? So my staff wouldn’t die on the floor,” Griffin said. “We had such an unhealthy workforce and tough times called for tough measures.”
KFF’s annual survey of workplace benefits this year found that about 20% of employers that offer health insurance and have 200 to 999 employees offer on-site or nearby clinics. That compares to 30% or better for employers with 1,000 or more employees.
This figure has remained relatively stable in recent years, the survey shows.
And U.S. employers reported the biggest increase this year in annual family premiums for their sponsored health plans in a decade — an average increase of 7% to nearly $24,000, according to a KFF survey released in October. 18. This spike may intensify interest among business leaders in curbing underlying health costs, including exploring workplace care delivery.
Employers do not require their employees to use their clinics but usually offer incentives such as free or reduced payments. Griffin employees offered $150 to get a physical at the clinic; 90% have taken advantage of the deal, he said.
Employer clinics can reduce the growing demand for primary care. According to data compiled by the Peterson Center on Health Care and KFF, a much lower proportion of U.S. doctors are generalists than in other advanced economies.
For patients, frustrating wait times are a result. A recent survey by a physician staffing firm found that it now takes an average of three weeks to see a family doctor.
In 2022, Franklin International, an adhesive maker in Columbus, Ohio, began offering its 450 workers the option of using local primary care clinics run by Marathon Health, one of about a dozen companies that set up health centers on site or near employers.
Franklin employees pay nothing compared to the $50 copayment to see an outside doctor in their insurance network at clinics. So far about 30% of its workers use the Marathon clinic, said Doug Race, Franklin’s manager of compensation benefits.
“We heard that the workers had difficulty going to the doctor,” he said. They would call providers who said they were accepting new patients but were still waiting months for an appointment, he added.
At Marathon clinics — which are shared by other employers — employees will now see a provider within a day, he said.
That’s good for employees — and for the company’s recruiting efforts. “It’s a nice perk to say you can get primary care for free,” Reyes said.
Employers who have explored opening their own clinics have not seen the value. In 2020, the agency that oversees health benefits for state employees in Wisconsin opted against the site model after reviewing the experiences of similar agencies in Indiana and Kentucky that it didn’t save money or cap health insurance premiums.
Cara Spear, national practice leader at consulting firm WTW, said potential cost savings from employer-run clinics could take years to materialize as employees shift from expensive hospital emergency rooms and urgent care clinics. And it can be difficult to measure whether clinics are controlling costs by improving staff health through preventive screenings and checks, he said.
About 25% of its 250 clients are firms with fewer than 500 people, said Kathy Vickers, senior vice president at Marathon Health. Marathon’s clinics help keep costs down and give employees easier access to doctors who spend more time with them during appointments, he said. His company helps employers better manage workers with chronic diseases and redirect care from urgent care centers and ERs, he said.
Hospitals have also sought to get into the business of running on-site clinics for employers, but some potential clients question whether those health systems have an incentive to send workers to their own hospitals and specialists.
At Laurel Grocery, Griffin said he knows many of his employees don’t exercise regularly and have poor diets — a reflection of the region’s overall population. Health screenings performed by local hospitals over the years have found many residents to have high cholesterol and high blood pressure. “Nothing tended to change,” he said.
Laurel Grocery contracts with a local hospital for about $100,000 a year to operate its clinic, including having a physician assistant on site three days a week. Laurel Grocery does not have access to any employee health records.
He said the clinic has saved money by reducing unnecessary ER use and hospital admissions. “It’s been a lot more successful than I thought,” he said.
The clinic is about a three-minute walk from Kip Faulhub’s office. Faulhaber, who is 73 years old and a senior vice president at Laurel Grocers, said he goes in for a vitamin B12 shot every week to treat a deficiency. She goes to the clinic for an annual physical, vaccinations and when she has a sinus infection but doesn’t want to wait days to see her regular physician.
“It’s more than a convenience,” he said.
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