On-site med center aids health and bottom line

Management confident of positive return

The company sees a new on-site family medical center and pharmacy for the employees of Smithfield Packing Co.’s facility in Tar Heel, NC, as a win-win. While it will no doubt be an important new health benefit for employees, anticipated use by workers should help offset the construction and management costs after the first year.

"With the costs of a traditional health care delivery system continuing to rise, employers like us need to take a look at better managing those costs while offering an enhanced benefit," explains Sherrie String, Smithfield’s vice president of human resources. "One way to address the problem is through an employer-sponsored medical center. We believe it will, in fact, lower our health care costs while offering employees better health care service, better hours, and a lower fee structure."

Using an outside contractor

Smithfield has contracted with CHD Meridian Healthcare for the operation and management of the facility, which opened in late August. CHD has been a pioneer of employer-sponsored health centers and pharmacies. "In our opinion, they have been in the business the longest and are the most experienced," says String. "We interviewed them, visited several of their other sites, and got excellent references."

The center, which is located right across the street from the Tar Heel facility, will provide family physicians, nursing services, a full-service laboratory, X-ray capabilities, and a pharmacy. CHD will hire the doctors and staff to manage the center and pharmacy. Routine sick primary care services, as well as well child care for children younger than 5 years old, will be provided for a $10 copayment. Preventive services will be provided according to the Smithfield health plan, and pharmacy services, including the ability to fill prescriptions written from outside physicians, also will be offered.

The center will operate on the basis of appointments, and registered nurses are available by phone for health advice. However, employees with true emergencies are expected to go to a hospital emergency department.

Use is voluntary

One aspect of the Smithfield program is that use of the new center will be voluntary; employees may continue to see their own physicians under the existing health plan, should they wish. Since employees are free to go elsewhere, how can management be confident they will use it with sufficient frequency to justify the cost of construction and management for the new facility? "For one thing, there’s convenience and access," says String. "The location is pretty much on site, and if you don’t feel well, you can go there right after work because they will accommodate walk-in appointments."

The fee structure also is attractive, she adds. "If you utilize the center, you have a one-time cost," she explains. "If you go see the physician and you need labs and an X-ray, you still pay one $10 fee, so it’s one-stop shopping at a single, reduced price."

Because of these inducements, Smithfield was confident the new center would eventually pay for itself. "In our strategic plan, we anticipate more and more employee use," reports String. "We have a target of 50% utilization by covered employees and dependents in the first year; if we start to see that we believe, we will have payback that is beneficial to us."

For anyone considering such a project, it is critical not to make your decision in a vacuum, String cautions. "Assess your geographical area," she advises. "You need all the right elements, such as employee population — are there enough covered lives, including family members? Take a look at your volume, and do an assessment based on current traditional health care costs, what the costs of building and management will be, and weigh that against 50% utilization, 60% utilization, and so on. This way you can calculate your payback."

Smithfield has other locations, she explains, where such a center might not work. "When you have, say, a 400-person site, you would not necessarily have the same payback," String observes. "You need to be a large employer with a reasonable number of covered lives."

But Smithfield’s project will be much more than just a financial success, she emphasizes. "I think there will be a higher quality of care and access of care, and ease of access to pharmacy care," String says. "Employees will not have to hesitate to make appointments, and they will more readily seek out help for disease management, preventative, and wellness services. Hopefully, it will get them to think more in preventative terms and seek health care before their health problems become more serious."

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