Having spent about 30 years in health care benefits consulting, health plan management and health services delivery, I've witnessed many products, services, strategies and platforms introduced to the employer market, climb to the top of the solutions menu and eventually fade away as more effective alternatives emerge. One very popular solution today is the onsite health clinic.
Due to this popularity, the larger industry leaders - such as CHD Meridian, Whole Health and most recently Concentra - have been acquired by larger health delivery organizations. The assimilation of these onsite health management services by larger, more full-service organizations provides customers more comprehensive, fully integrated products and services from a single supplier source, providing uniform, consistent, strategic and tactical health care programming across an employer's entire workforce, in large employee population centers as well as remote workforce operations.
One byproduct of these acquisitions is a remaining field of smaller, unproven, younger startups operating in a relatively unregulated marketplace. As a result, employers need to strengthen their due diligence, procurement process and evaluation focus when considering these smaller suppliers. Here is a top 10 list of issues for employers who have or are contemplating implementing an onsite health clinic:
1. Beware all-inclusive contracts.
To most people, all-inclusive contracts mean just that, meaning no pass-through of extra expenses. Many times, however, prescription costs, lab costs, travel costs beyond a stipulated number of meetings during the contract, and so on are invoiced to the client in addition to the "all-inclusive fixed fee."
Some vendors estimate these additional pass-through charges and are willing to guarantee a maximum (typically per employee per month) to help clients with budgeting. Others vendors do not provide any estimate at all, while still others provide estimates but no guarantees.
Fixed-fee contracts also lack transparency. If the vendor overestimates visit volume, participation, engagement levels or other factors, they have effectively overstaffed, and you end up paying for idle clinicians, administrators and other platform components. Three-year contracts unfortunately tend to protect the vendor from projection variances rather than the client. And there are no "participation clauses" in the standard contracts to return surplus if the supplier overestimates required fees.
2. All vendors are not created equally.
There are numerous industry studies available demonstrating positive ROI for onsite services, but these are generally associated with the legacy firms mentioned earlier and demonstrated over long periods of time and under corporate physician direction. Problem is, many of the newer startups cite those studies and build academic models projecting similar ranges of return. That, however, does not mean that vendor has actually achieved that performance level for its book of business, for most of its clients or for any one of its clients. Some vendors don't even have a full-time corporate physician.
Be mindful of the old adage: "Statistics don't lie, but liars use statistics." Because the large industry veterans achieved documented positive impact doesn't mean an unproven startup with six case studies can consistently perform at that level, nor does it mean they have similar professional experience, process workflows or procedures in place to achieve that level of performance.
3. The definition and functionality of electronic medical records mean different things to different people.
There are approximately 200 vendors that offer electronic medical records. Some vendors have no independent certification of their technology whatsoever; others, such as RelayHealth, enable secure, SaaS-based health information exchange, provide secure personal health records and provide a meaningful-use certified electronic health record; innovators such as Kaiser Permanente (offering onsite clinics through AviviaHealth subsidiary) committed over $4 billion in optimizing groundbreaking, electronic medical record system connectivity.
As physician adoption of EMRs increases, as the market moves toward accountable care organizations and primary care physicians are reimbursed on the quality of their care and care coordination, can a health clinic staffed by midlevel clinicians really deliver performance any better than the employee's own physician already having an EMR? And, if you want EMRs and PHRs in your health clinic, what is the appropriate price to pay given that technology's historical performance? Price ranges vary significantly by onsite clinic supplier. For any given employer, it is not unusual to see one vendor's component EMR and technology priced at $10,000 annually and another is at $160,000 annually. Don't overpay for components you don't need, particularly in three-year contract terms, unless you know precisely what outcomes they have generated through book of business evaluation and certification, not selected case studies chosen for their success. Besides, health plans such as United Healthcare have already announced incentives for their network physicians to incorporate EMRs in their practices. Don't pay for redundancy.
Importantly, with the growth in smartphone devices, mobile health applications and portable health-monitoring devices, some medical experts argue electronic medical records are already becoming obsolete. Don't be afraid to unbundle technology platform components and fees, particularly given the price spreads in the market.
4. Financial models are just that - models.
If you as an employer haven't provided a knowledgeable consultant or multiple bidders with two-to-three years worth of electronic claims history for analysis (including consistent benchmarks and baseline performance data), then you are getting a highly generic or biased projection of financial and clinical implications.
Most employers I've seen use a consultant or broker only in the procurement and selection process for onsite services. Unfortunately, the consultant is often put in the position of rendering the financial model and projection as reasonable based on industry best practice performance, even though employer-specific electronic claims history may not have been made available for projection development.
Although most employers do not continuously engage a consultant to manage onsite clinic vendor performance throughout the term of the contract, I would advise that 3% to 5% of contract cost is a reasonable amount of investment to make to retain an expert on an ongoing basis to ensure you are delivered the results that were projected and to initiate corrective action and make course changes at the point in time underperformance begins to emerge.
5. There is considerable discussion around what the term "engagement" really means.
More focus needs to be given to the strength of the predictive model the vendor uses to identify the "at risk" population. Evaluating a vendor's actual book-of-business headcounts for identification, engagement and outcomes is a much better indicator of performance and experience.
If it's lifestyle coaching you are primarily interested in until physician practices in your community incorporate lifestyle coaches as the market moves toward ACO's, there are very effective vendors in the market charging $10-$12 per month per employee rather than the fully loaded health clinics costing the equivalent of $30-$55 per employee per month and deliver very attractive ROI.
6. Challenge the onsite vendor's math.
Under a fixed-fee arrangement, a vendor can manipulate the unit cost rate for a visit by assuming larger encounter volumes and participation, so make sure the assumptions are consistent with the data points for your benefit plan environment and reasonable based on what you are actually paying under your health plan.
7. Be mindful of ERISA fiduciary requirements, since most onsite health centers are structured as ERISA programs.
Fines and even imprisonment apply to employers and individual decision-makers for not undertaking their responsibilities in a prudent manner. Some vendors may hide behind an indemnification clause or may de-emphasize the importance of their financial status. But indemnification clauses between the employer and the vendor can't stop employees from suing their employer.
Find vendors who display high levels of integrity, disclosure and financial staying power and work with them. Make a practice of checking the backgrounds of your proposed account team, executives of the vendor organization and the people who attend your finalist meeting. Many consultants do not, relying on generic RFP questions that may not adequately extract important vendor selection information. I guarantee if you leverage Google in this manner you will be shocked at what you learn and your finalist candidate list will be a bit shorter.
8. There's a big difference between being capable of providing certain services and having substantial experience from historically performing high volumes of those services.
Structure your RFP questions to focus on actual transaction volumes and history across the vendor's book of business for several calendar years to gain a better measure of their experience and expertise. Every vendor is capable, but not every vendor is performing certain services.
9. Tensions with local community providers can and do occur.
While the capability might exist for an individual's own physician to access the clinic's EMR or PHR data for a common patient, the reality is that few do. Most physicians are busy addressing their own EMR needs. Besides, the medical literature is citing strong results for physicians who employ lifestyle coaches within their medical practice.
Employers must understand their local markets and understand certain primary care data points for the site in question to avoid potential conflict and further fragmentation of patient care delivery.
10. There are many ways to define and tabulate savings, ROI and other performance metrics, and every vendor has its own unique methodology.
Make sure you fully understand the proposed methodology, make sure it is defined and incorporated in the contract, and address how best to monitor vendor self-reported results before putting your signature on the contract.
Charles D. Reuter is the president of USI Insurance Services-Northeast-New York Employee Benefits. He has published numerous articles on health care trends and strategic initiatives designed to improve health care cost and quality-of-care performance for employers, based on comprehensive perspectives developed over a 30-year career.
If you have already registered to Benefit News, please use the form below to login. When completed you will immediately be directed to post a comment.
You must be registered to post a comment. Click here to register.