The hot new corporate health care trends are old and lukewarm
Large employers from the Rust Belt to Silicon Valley are turning inward as they try to find cheaper, higher-quality health care, embracing ideas like onsite clinics or direct contracts with specific hospitals.
Why it matters: Employer-based benefits are the backbone of the U.S. health care system. But for all the talk about revolutionizing the system, some of their most popular strategies for dealing with rising health care costs are old ideas that don’t exert much pressure on the system overall.
The big picture: There are ways for big companies to save themselves money by exerting greater and more direct control over their employees’ health benefits. But those potential benefits are already limited and will shrink even more as the gig economy grows.
Driving the news: Amazon is looking to open primary care clinics at its Seattle headquarters, CNBC reported last week. It's a possible experiment in Amazon’s joint effort, along with Berkshire Hathaway and JPMorgan Chase, to bring down health care costs.
- Apple is also staffing up health clinics for its employees.
By the numbers: Only about 5% of all businesses offer an onsite clinic, according to the Kaiser Family Foundation. But among businesses with at least 5,000 workers, that number climbs to 32%.
“It is a trend. It’s not giving up on the health care system, but it’s saying, ‘We think there are some things we can better manage,” said Jeff Dobro, who leads clinical services at Mercer, a consulting firm that works on employer health benefits.
Most onsite clinics provide services related to workers' jobs, but a growing number also offer some limited set of primary-care services, according to Mercer.
- Onsite clinics are a way to move relatively cheap, easy procedures — things like flu shots, screenings and urgent care — onto the corporate campus, but employees who have access to one still have to rely on their insurance plan and its provider network for major services like hospitalizations.
Another, more aggressive option for large employers is to bypass the traditional insurance structure and contract directly with one health care provider.
- General Motors announced such a deal last week, partnering with a Detroit-area hospital system (the Henry Ford Health System, ironically enough) for all of its salaried employees’ care.
- Walmart, Disney and Boeing also use direct-purchasing agreements for at least some of their employees’ benefits, according to the Wall Street Journal.
Nether model is new — employer-sponsored health clinics date all the way back to coal mining companies that needed a healthier workforce, Dobro said, and direct purchasing also has been around for decades.
Neither exerts much pressure on the rest of the health care market, either.
- They’re both tools to pull back from the standard insurance system, at least partially. Employers who set up onsite clinics or direct purchasing agreements aren’t using their purchasing power to drive generalized value or shift the system’s incentives. Whatever savings or efficiencies they reap are theirs alone; they don’t trickle down to other patients with other forms of coverage.
- And both are only feasible for large employers. They need a critical mass of workers, all in one place, to justify the cost of operating a clinic or to strike a good deal with a single provider.
Fewer and fewer people work directly for a large company. And if you don’t, “you’re left to your own resources out there,” Dobro said.