A ‘Free Health Clinic’ for Montana State Employees

Before he left office, then-Montana Gov. Brian Schweitzer decided Montana’s 11,000 state workers, retirees and their dependents needed an employee health clinic. Before leaving office he had one created without consulting the legislature. For those of you who have not heard of the concept, it’s sort of like the school nurse, except there are doctors and real medical equipment involved. At most employee health clinics, physician visits are either free or involve no cost-sharing. Montana employees aren’t required to use the clinic; they can continue to see their own doctors with the normal cost-sharing.

The NPR article about the clinic claims the clinic has saved $1.5 million compared to before it was opened. The reason given: “Because there’s no markup, our cost per visit is lower than in a private fee-for-service environment.”

The argument about the clinics saving money because they lack a markup seems odd to me. In discussions I’ve had with entrepreneurs who run these types of clinics, they are touted as a money-saving because the medical staff is employed. What that means is the doctors do not gain from the number of procedures or type of care ordered. They are trained to practice medicine in an efficient manner. By efficient, I mean cheaply! For example, unnecessary MRIs are not ordered; medical staff can be required to being therapies with lower-cost drugs and not move to higher cost therapies unless a problem exists with the lower cost ones. Finally, the medical staff can be conditioned to avoid unnecessary specialist referrals. Basically, it’s a way to bribe enrollees into managed care in return for free office visits that require no cost-sharing — although that is not necessarily bad.

Many free-market advocates argue primary care should be paid entirely out of pocket; while many advocates of socialized medicine believe primary care (and all other care for that matter) should be free at the point of service. Regardless of where you come down in the issue, the clinic is popular with state employees and more clinics are planned.

Some private employers tout the clinics as a way to reduce absenteeism and bring down the likelihood of the perverse incentives that result from fee-for-service physician visits. Many employers do not want their workers to avoid the doctor due to the cost when they are sick. Whether this is an additional fringe benefit Montana state employees receive or a real money-saving tool is an interesting topic. I would be also be interested in hearing about the results when the organization sponsoring it is a for-profit company that has weighed the evidence solely on costs.

Comments (12)

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  1. Barry Carol says:

    When Walgreens got into the business of managing work site clinics a number of years back, I was told that there were roughly 8,000 such sites around the country. They work best when a single employer employs 1,000 or more people at a single plant site or campus. They provide mainly primary care services and one of the attractions is that employees can get care where they work rather than have to take additional time off to visit a doctor off site.

    When outside companies like Walgreens are engaged to manage these facilities, they are paid on a cost plus basis as I understand it. I don’t think these facilities are intended to be the primary ongoing source of care for employees or their families. Rather, they’re basically an urgent care clinic located at or adjacent to the employer’s campus or plant. When companies attempt to quantify cost-effectiveness, I have no idea how they measure or value saved or lost productivity attributable to having the clinic or not.

    • Devon Herrick says:

      Productivity is a factor for those with chronic diseases. Asthma comes to mind. The employee health clinic would (hopefully) be involved in helping workers manage their medical conditions and assist in care coordination. But I believe one of the greatest benefits is having a conservative practice of medicine for the worried well and a risk assessment with disease management for those with health problems. Depending on the socioeconomic status of the workers, such a clinic may even reduce unnecessary emergency room visits.

      • Barry Carol says:

        However the employer measures or perceives the benefits of having a work site clinic, most seem to be pleased with the value they provide. That’s why they continue to be sustained on a long term basis in most cases. The fact that the care is usually free to the employee is also an incentive to use the facility, at least for minor complaints, as opposed to going to their regular primary care doctor.

        The company I used to work for has several of these clinics at its larger plants but didn’t have one in NYC as our little pension fund subsidiary only had 23 employees.

  2. Devon Herrick says:

    It would not be legal under the ACA, but a major employer with a large number of modest-income workers could probably make due with a retail clinic and a employee health clinic coupled with a limited benefit plan. Most research I’ve seen suggests modest-income folks would gladly trade a high-deductible plan (with no benefit limits) for the ability to actually see a doctor when needed and protection from a minor hospital stay.

  3. Perry says:

    It should be pointed out that “no-cost” out of pocket and free are completely different things. This really bugs me when those in favor of socialized medicine talk about “free” health care. Doctors, nurses, lab techs, Xray techs, etc are not working for free. Either cost is coming out of taxes (for gov’t sponsored) or your pay (for employer sponsored).
    This set up is really not much different from an ACO where the less care you provide, the better the reimbursement will be.

    • John Fembup says:

      Perry you are correct. I would even extend the point to argue that whatever the government pays for also comes out of workers’ pay.

      Even more fundamentally, productive work the only real source of income.

      Mine . . . yours . . . . theirs . . .

  4. John Fembup says:

    For a while during the 1990s I consulted for a number of very large companies that were considering and some that implemented, worksite primary care clinics. The germ of the idea seems to have come from the fact that these employers maintained worksite medical facilities to meet their worker comp obligations. Why not capitalize on that resource?

    A natural extension of the concept was to locate the facility offsite to a place that would still be convenient for employees, but also be convenient for their families. It was a simple matter to triage treatment for work-related conditions from all other.

    Next came onsite pharmacy, electronically linked with exam rooms for submitting prescriptions, use of advanced dispensing technology, plus drive theu pickup. After that we began to facilitate contracting of dental, vision, sports medicine, and orthopedic professionals to spend designated days seeing patients at the clinic, to provide routine care or diagnosis and referral. One company electronically linked its state of the art onsite exercise center to the primary clinic, merging and sharing data with employees and with the primary care clinic docs about health status and exercise data

    It was a logical – if not always simple – step to affiliate with a local managed care network or hospital system and its affiliated physician specialists, in order to ensure that the clinic primary care would be considered “in network” and to ensure access to secondary and tertiary levels of care at discounted prices.

    i haven’t followed this trend in recent years but am not surprised it still exists. It would disappoint to learn that ACA prohibits this innovative approach to primary care.

    • Devon Herrick says:

      It would disappoint to learn that ACA prohibits this innovative approach to primary care.

      There are several physician-owned hospitals in North Texas that are in bankruptcy because of Obamacare’s narrow networks. If I’m not mistaken, their business model was premised on the notion of being out-of-network luxury hospitals.

      That got me to thinking… I wonder if it would be a good strategy for a large employer (or a group of large employers) to contract with one hospital like that; and have an employee health clinic. The idea might be that workers pay $100 per month and have cost-sharing, but would not have absolute access to everything the medical community has to offer. Of course it would not be legal under the ACA.

      • Perry says:

        This too bothers me about the ACA. We’ve made a law that mandates too many things and does not allow for initiative or innovation to help bring costs down.

        • John Fembup says:

          More and more, the government won’t let us buy what we want, and makes us buy what we don’t want.

          The older I get the more I suspect that Malthus will turn out to be correct by accident – – he forgot to factor in politicians.

  5. W. J. Leitold says:

    This argument has striking similarity to the ones that socialists make about publicly provided services being cheaper then for profit private services. The root issue is incentives or lack of.