Employers as Doctors

On the grounds of Cerner Corporation in Kansas City, Mo., there is an on-site medical facility for Cerner employees and their families. There is no waiting room, however. Patients make appointments online and upon arrival are led into a treatment room, complete with a flat screen monitor they can use to update their personal health records electronically. While away from the facility, employees can obtain consultations and prescriptions by telephone or e-mail.

Is this a good thing or a bad thing?

Since I believe in competition and free markets, I have no problem with onsite clinics. The problem is: employer-sponsored clinics are able to repackage, rebundle and reprice doctor services in a way that ordinary doctors cannot. In an ideal world, every primary care physician would be able to offer the same types of services onsite clinics offer.

Cerner believes its approach to primary care reduces health care costs. By employing its own doctor, the employer immediately solves the problem of “up-coding” (classifying the patient’s condition in a way that generates higher physician reimbursements). The company doctor can also direct patients to lower-cost generic and therapeutic substitute drugs rather than more costly brand name drugs. Having a pharmacy connected to the clinic reinforces this goal. Additionally, the company doctor — freed from the constraints of traditional third-party payment — is free to coordinate care in ways that encourage patient compliance with protocols and minimize redundant and unnecessary procedures.  And by economizing on waiting time, the clinic probably also increases productivity — benefiting both the employer and employees.

Then, because the employer can completely escape from third-party reimbursement formulas, it can offer a new bundle of services: online appointments, personal and portable computer records, telephone and e-mail consultations, etc. A garden variety general practitioner gets no extra reimbursement for any of these services.

Cerner is not alone. Walgreens, the pharmacy chain, is now in the business of offering company doctor services to employers across the country. According to an article in Forbes, Walgreens operates 364 work-site clinics for 183 large companies, including Goldman Sachs, Continental Airlines and Toyota.

Cerner believes its approach to primary care is lowering costs and raising quality. If the company is right, why don’t we see similar facilities sprouting up everywhere? And why doesn’t Cerner open its doors and take non-employee patients — charging whatever price the market will bear? The short answer is: doctors and other patients are trapped in a payment system that doesn’t permit reimbursement for this type of innovative primary care.

Even if third-party reimbursement were not a problem, Cerner would probably be violating the Stark Amendment if it sold its services to non-employees — especially with the automatic referrals to the onsite pharmacy. And any doctor who tried to mimic Cerner’s approach in the general marketplace would face the same legal restrictions.

Clearly, outmoded payment systems and outmoded laws are preventing patients from having access to higher-quality, lower-cost care. In the process, it’s forcing employers to do something they may not be well suited to do: become the deliverer of primary care.

Comments (11)

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  1. Greg says:

    It’s not just that employers are practicing medicine. They are able to do what doctors are prohibited from doing.

    The same principle applies to walk-in clincs. Wal-Mart can host a clinic that prescribes at the Wal-mart pharmacy — resulting in lower costs and higher quality for the patient. But doctors cannot do this.

  2. Nancy says:

    The problem with the employer as doctor is that the interests of the employer and the employee/patient are not the same. The doctor cannot be a reliable agent of the patient if he is on someone else’s payroll.

  3. Joe S. says:

    The key here is a dysfunctional third-party reimbursement system. When the employer pays the bills, he can escape from the traditional payment schemes and pay for different and better bundles of care.

    Patients and doctors on their own cannot do this. They are trapped in a reimbursement system they cannot escape from.

  4. Mike says:

    Stark is not a problem here as the physician is a bona fide employee and is not making referrals to the employer for one of the designated health sevices, i.e. radiology. Could be a corporate practice of medicine problem, as Greg says, if service is opened up to non-employees. State laws control on that point.

  5. David Marcus says:

    The big problem of opening these internal practices to outside patients is dilution of mission. The practice location at the worksite makes it convenient for patients to obtain primary care and should encourage early intervention/prevention. Cerner gains when its employees receive medical care quickly. I also doubt that Cerner–whose business depends heavily on physician customers–wants to become in a very visible way with those customers by opening its clinic to nonemployee patients.

  6. DoctorSH says:

    What happens to these employees when they no longer work for the employer. While this may help cut costs for employers, it still does not help with the issue of portable healthcare coverage. It also keeps the employer as the responsible entity for healthcare instead of the patient.

  7. Phil Pfeiffer says:

    John your comments are right on! The first thing to do is abolish the existing fee-for-service Medicare and Medicaid programs than develop the reform of our Medicare, Medicaid and private health -insurance system. With the continuing watershed movements in our global finanical system, decline form power both military, and economicially its allows us to hopefully refocus on our problems in the USA( energy, entitlements, social security, education, infrastructure, proliferation and health care).

    The main sticking point is that now the consumer wants to save( really needed) and cut spending but the politicians will want the consumer to continue spending and not save!!! Have a good day. Phil Pfeiffer

  8. Chris Ewin, MD says:

    Doctor SH is correct. Employers shouldn’t “steer” patients to a medical home if it’s not portable. Patients need access to a trusted physician that they select to provide long term follow-up care. I have no problem with employees seeing an on-site physician as long as the patient agrees.

  9. Nevena Puhova says:

    Hi John,
    i have all knowlidge of mine about healthcare almost from you and your blog.It was very dificult to me to understand the american system of care.i always compare.So as I am in Britain now I have learn its care.
    I saw how it isfine to a pencioner here !
    The care for old people is the most profitable industry here.And so and corporate compliance is investing into it.
    They offer 24 hours care according LIFE-TIME-INSURENCE EQUITY instead the property of the homeoner.

    Then all busness step on the Risk Assessments of patient, the clinic paths and paid care and the professional diseases.
    If somebody got assessed as a patient they take money from the Social Servises and the Health Care Funds.
    WWWWhat is wandering that the average fee of a person in a Nursing Home is from £450 to 800 a week ?

    There is 23 000 homes across UK.You can count the profit.But the property that they covered equities stay unsaleseble on the market.Only that everione house probably has coused a big family tragedy before…

    The businessmen in that industry finely speculate with deteorated relations home – they aggressivly offer residental hone care instead the part of ownership, that the old people have got.It is absolutely nonacceptable !
    to be continued…

    Cheers : Nevena

  10. Marti Settle says:

    As the owner of a Laser Hair Removal Center I am forbidden to employ a physician by law in Texas. Although the state has attempted over and over to restrict the use of lasers for hair removal to any practice where a medical doctor is on site and immediately available. They make no provisions as to whether the physician is trained for laser hair removal or that the hair removal technician be trained in any manner whatsoever. The only requirement is that the physician be on site. This nonsense has in its sight that only physicians be allowed to reap the financial benefits from the use of lasers for hair removal which has always been a relatively lucrative business. For years needle electrolysis was the only method for removing unwanted body hair. Since the late 1990’s lasers became available and people in the hair removal business recognized the changing paradigm and bought the more expensive lasers and trained to use them. In the process the industry headed up mostly by women exploded the market. Doctors who would never behoove themselves to remove hair took notice of the profitability and started an ad hominem attack on the unwashed and the dermatological societies moved like vultures going from state to state using facetious lies about unsubstantiated injuries to state boards of medical examiners to put these very excellent people out of business. In Texas we have spent hundreds of thousands to maintain our stake in the industry. In the meantime manufacturers of lasers are taking a direct hit in the belly because of loss of sales of lasers and high dollar equipment because people are scared to expand their business. With the sword of damacles hanging over our heads we have not expanded nor have we replaced aging equipment because of a group of greedy doctors who would put us out of business. In fact, a great number of the dermatologists and plastic surgeons who fought against the independents do not even offer laser hair removal services. They just join in because their professional associations tell them to. They have no dog in the fight.

    So, in short. it’s illegal for a non-physician to hire a physician. I have witnessed this turf war growing and imploding since 2001. Know what? Doctors are hurting bad. They are hanging on by their fingernails. The insurance reimbursements they receive are a pittance. So, where is all the medical money going? I don’t know. I am presently paying $958 a month for private insurance. I have 4 more months before I go on Medicare. At the age of 64, I just watched my meager retirement fall to nothing. I pray the state won’t shut down my business I will not run out of money before I run out of life.

  11. Dr Bob says:

    TI has had a clinic at their headquarters facility for years. It was (and probably still is) staffed on a sublease to Baylor. They provide full outpatient services to employees.

    The difficulty of seeing one’s PCP on a same day need, is what drives it and what makes TelaDoc such a viable alternative. No time lost from work, less expensive and quality consult service.