Can Employee Health Clinics Save Cities and States Money?

Cities and states are taking a page from the private sector and opening on-site health clinics for public workers.
by | September 21, 2012

In pursuit of a healthier workforce -- and by extension, lower health-care costs -- does it make sense for cities and states to set up their own health clinics for public employees? After all, if you want to make sure workers are getting regular check-ups and accessing primary care that often prevents bigger and more expensive problems down the road, why not?

At Governing’s Cost of Government summit in Washington, D.C., this week, Chattanooga Mayor Ron Littlefield came out as an enthusiastic supporter of health clinics. And he wasn’t alone: officials from Loveland, Colo., and Garland, Texas, also said their cities were pleased with their decision to open a doctor’s office for city employees.

“You can have people with ticking bombs in their bodies: high blood pressure, diabetes and the like,” Littlefield said. “Those things are going to cost a lot of money if you don’t get them under control.”

Employee health-care costs eat up as much as 15 percent of local government budgets. In Chattanooga, those costs were increasing at a rate of 10 percent per year. So, city leaders decided to take a page from the private sector, where employee health clinics have been growing more popular. They contracted with a group of physicians to open two offices: one a block away from the city council and municipal buildings, the other between the police and fire administration buildings. Chattanooga also started buying prescriptions wholesale, which allowed the city to offer them to its employees for little or no cost.

So far, the results are promising, Littlefield said. The clinics have been open for five years, and health-care costs have flatlined over that time. They currently consume a little less than 9 percent of the city’s budget, well below the national average.

“We’ve saved money, and we’ve saved lives, and our employees are happier,” Littlefield said.

Employee health clinics have been getting renewed attention in recent years; Governing first reported on them in June 2010. At the time, Lakeland, Fla., an early adopter, had saved $1.1 million in one year after opening a “preventive medicine” wellness clinic in a conference room in its main offices. Employee participation had grown from 67 percent to 87 percent in the first few years after the clinic opened.

It’s hard to say exactly how many cities or states have decided to establish their own clinics. According to the 2012 Kaiser Family Foundation Survey of Employer Health Benefits, 29 percent of government entities with 1,000 employees or more said they offered an on-site health clinic. The same survey found that 22 percent of all firms with 1,000 or more workers did so. In a forthcoming study from the Center for Studying Health System Change, more than 10 percent of families with at least one person working in government said they had visited an on-site clinic in 2010—compared to 4 percent overall.

A 2008 analysis by Hewitt Associates, a management consulting firm, estimated that on-site health clinics saved employers $2 for every $1 invested. If more success stories emerge and health-care cost containment remains a primary concern, it wouldn’t be a surprise to see those numbers increase.

“I think you're seeing government unions and management realizing that the health-care cost problem is a problem for all of them,” says Alwyn Cassil of the Center for Studying Health System Change. “These clinics are attractive to employers that have a big enough workforce that this could actually move the needle in the quality and quantity of care that employees are getting.”

States are getting in on the act, too, although there are again no comprehensive surveys of how precisely many have actually done so. Alabama, Colorado and Tennessee are among the states that say they offer a clinic for state workers. Montana premiered its first state employee health clinic in Helena at the end of August, according to the Billings Gazette, and Gov. Brian Schweitzer hopes to open two more in the near future. A state analysis has estimated that the clinics could save Montana as much as $100 million within the first five years. The state tabbed CareHere, a Tennessee firm that operates more than 100 similar clinics nationwide, to run them.

“This is a model that’s being used by private enterprise all over America,” Schweitzer said, according to the Gazette. “What corporate America has found is that when you have your own health care facility, and the physicians, the nurse practitioners are paid a salary, not a piece of the action, or aren’t paid for how many procedures they can gin up, you actually get better health care… and it saves money.”

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