Some Companies Open Full-Service Clinics to Save on Health-Care Costs
The rising cost of health care is driving some companies back to the future.
They are reviving the old idea of the company doctor.
But these firms, which include some of the nation’s oldest, such as Goodyear Tire & Rubber Co., and some of its newest, such as America West Airlines Inc., are doing it in modern form.
The companies are setting up their own fully equipped clinics, staffed by doctors, technicians and other support people whose full-time jobs are to provide care for employees and sometimes for retirees and dependents. The benefit to companies: It’s cheaper than having their workers obtain the services on the open market.
In their more advanced form, such clinics offer a wide range of medical services, including laboratory tests, X-rays and diagnostic procedures.
Goodyear’s facilities, for example, are “every bit as sophisticated as any general family-practice clinic in any country,” a company spokesman said. The clinics are popular and convenient and save the company a lot of money, he added.
Medical-care costs, which have been rising at double-digit rates for years, are causing both employers and employees to explore every avenue to ease the burden. Some employers are trying to shift more of the cost to employees; others are pressing to use health maintenance organizations (HMOs) or contracting for discount prices with doctors and hospitals as preferred provider organizations (PPOs).
Still others are turning to the government in hopes that it will either pick up a larger share of the costs or impose some form of nationwide cost control.
The number of companies running their own clinics is still very small. Some critics see the potential for conflicts of interest, while others wonder whether companies really will benefit from getting into the health-care business.
But such skepticism hasn’t detracted from the efforts of companies such as Southern California Edison Co. and Gillette Co., which have been running in-house clinics for many years.
“It’s enormously cost-effective,” said Thomas R. Burke, former chief of staff at the Department of Health and Human Services and now a consultant with A. Foster Higgins & Co. here.
In Burke’s view, the current system of medical care contains incentives for doctors and hospitals to raise costs rather than lower them, and until these incentives are removed, costs will continue to spiral upward. Putting doctors on salary, as these clinics commonly do, accomplishes that.
Numbers supplied by some of the companies operating clinics support his thesis.
Goodyear, which started its first clinic at its Lawton, Okla., tire plant in 1984 and has since opened facilities in Gadsden, Ala., and Akron, Ohio, charges $15 for an office visit. This fee includes most diagnostic tests and any drugs prescribed; X-rays are $3 extra.
The clinic is open to employees, dependents and retirees, a population of eligibles that now totals more than 50,000. The Lawton and Gadsden plants have been saving the company more than $400,000 a year between them, and the plant in Akron, where 30,000 Goodyear workers and retirees reside, is expected to save about $800,000 annually.
America West, a 6-year-old airline based in Phoenix, began with one doctor at a downtown location in 1987 and has since added two more doctors and moved the clinic into leased quarters at Phoenix’s Sky Harbor International Airport.
“I’ve used it,” said Dick Shimizu, America West’s manager of media relations. He said he went in with a sore throat, was examined by a physician and got a prescription filled, “and the whole thing was $11.”
America West has 6,500 employees in Phoenix out of a total of 11,000, but the set-up is so popular that some of those located elsewhere fly in to use it, Shimizu said. This is true even though America West, like Goodyear, makes no effort to compel employees to use the clinic. They are free to choose their own physicians and a conventional insurance plan.
At America West, only employees are eligible now, Shimizu said, but the company is studying expanding the service to dependents.
Gillette, which has operated clinics since 1950, figures that they save the company about $1 million out of a total health-care tab of about $20 million.
Other companies are exploring the clinic option, but they are not so sure about the economics.
“It allegedly saves us money,” said an official of General Electric, which is offering employees at certain plants some routine care on an experimental basis. But GE’s is still just a supplement to its regular health insurance program and it has not yet proven that it is worthwhile, he said.
Health-care experts generally agree that several factors are likely to limit the ultimate savings that in-house corporate medicine can achieve.
First, only employers with large concentrations of employees in one area can make the system work. And because even those firms usually have workers scattered elsewhere, they must continue to offer conventional insurance.
Second, unless corporations are prepared to go into the hospital business, this system will not provide savings for the extremely ill--who account for the majority of medical costs at most companies.
Ethical Concerns Cited
As with PPOs and other cost-containment devices, “I think the book is out on all of that,” said Michael B. Jones of Hewitt Associates, a benefits consulting firm. “I think what’s encouraging is that companies have the guts to take a stand, to take the risks of pioneering efforts to find out what does work.”
Finally, some critics who remember the old-style company doctor--the one who was unable to detect black lung, brown lung, silicosis or various chemical poisonings that an employee might have contracted on the job--worry about what a doctor in a company-sponsored clinic might do if he or she encountered a condition that would cost the company a lot of money.
Likewise, there are questions about how seriously a company doctor might take complaints about potential harm from the workplace environment or equipment, especially if there is scientific debate on the issue.
“We’ve had such bad experience in the past,” said Karen Ignagni of the AFL-CIO, that many workers remain highly suspicious of the concept.
The Goodyear spokesman noted that the company contracts with an outside firm for its medical staffs and that “the employee or retiree knows the company does not run the facility.”
Some Options Cost More
Perhaps the best example of how in-house corporate medicine might evolve can be seen at Southern California Edison. Begun 86 years ago as a way of providing care for workers at remote construction sites, the giant utility’s clinic system rivals that of a major hospital.
“This is a real medical center,” handling 100,000 patient visits a year and dispensing 250,000 prescriptions, said Dr. Jacque J. Sokolov, the company’s medical director. Edison employs 14 doctors and contracts with other specialists, such as obstetricians, dermatologists and orthopedic surgeons, who come to the 10 clinics on a rotating basis.
The company is in the process of obtaining formal certification, like that of any other large hospital or clinic, that will assure patients that the staff meets standards of professional peer review, medical education and the like.
All of the company’s 57,000 employees, dependents and retirees may either use the clinic or opt for conventional coverage--for a higher price.
Doctors Autonomous
The Edison clinics are fully capable of handling most catastrophic illnesses, Sokolov said. In fact, “that’s where we shine,” he said, because the clinics offer not only treatment but case management and follow-up to assure the patient the best care at the lowest cost.
“When a physician identifies an individual who needs catastrophic care, we have it right here and that does save significant amounts of money,” Sokolov said.
He acknowledged that “whenever you have a situation where a company is providing service for the employee, there is always the potential for conflict of interest. But our physicians are essentially autonomous (and) responsible to the standards of their individual profession. They are quality physicians who could be working anywhere.
