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An Intel-ligent Health-Care Strategy

Intel's decision to open up primary-care clinics at large work sites should save the giant chipmaker a lot of money – and prompt others to consider the increasingly prevalent arrangement.
David McCann, CFO.com | US
January 18, 2011

More and more companies, especially large ones, are opening on-site medical facilities for their employees. They hope the facilities will lower the ever-rising cost of employee health care while increasing the productivity of workers who don't have to take a half-day off for a 30-minute doctor appointment.

Now one of the world's most watched and influential employers is adopting the strategy. This month Intel announced the opening of a 5,000 square-foot primary-care center at its 5,800-employee office and lab facility in Hillsboro, Oregon. The "Health for Life" center follows a successful pilot program launched a year ago at two Intel work sites in Arizona, where half of the employees used the on-site clinics for primary care, resulting in 22,000 visits.

The program will come to an Intel manufacturing location, also in Hillsboro, in mid-2011, and subsequently to work sites in Folsom, California, and Rio Rancho, New Mexico. All are operated by Take Care Health Systems, a subsidiary of drugstore giant Walgreen that runs some 380
corporate-site health clinics.

Intel's employees have access to not only a physician but also nurse practitioners, a physical therapist, urgent care, a pharmacy, vaccinations, lab testing, and a health coach. That's at the high end of what on-site centers provide. "Not all of them go as far as having physical therapy or pharmacy services," says Patricia Curran, principal of the national clinical practice at Buck Consultants.

The computer chipmaker's program sounds expensive — and it is. But given the large numbers of employees at the work sites that are getting the primary-care clinics, Intel stands to save a lot of money, even while providing the services at minimal or no cost to its workers.

Like most large companies, Intel is self-insured, so it directly pays for workers' health costs. But it also pays substantially lower prices for the health care and drugs offered by its clinics, since they come without the substantial profit margin that external providers typically command. "For example, because we buy generic drugs in bulk, we can fill quite a lot of employees' drug needs for a very token amount of money," says Neil Tunmore, Intel's director of corporate services and vice president of technology and manufacturing.

on-site health

Also, there is no real estate overhead to factor into the pricing, since Intel is rearranging existing space to accommodate its new clinics.

Intel's decision to offer on-site clinics may have seemed like a no-brainer, Tunmore acknowledges, but there was still "an internal debate about how much we believed the data," he says. "After all, you've got to lay out a fair amount of cash up front, and those setup costs need to get washed out over, say, a 5- or 10-year period."

The company's big concern was how to market the clinics so they would get enough employee buy-in to financially justify them. In particular, Intel had to suss out whether employees had privacy concerns, with health care being provided right at the work site. Ultimately, all of the doubts were overcome.

When Buck Consultants helps a client decide whether to put in an on-site clinic, it does a feasibility study that looks at historical data on medical claims, pharmacy usage, health-risk profiles, chronic-disease prevalence, emergency-room utilization, and employee demographics, says Curran. Also taken into account is employees' access to outside health care. At rural plants, which are popular among manufacturers, employees may have to drive for hours to get high-quality care, or else wait for days or weeks to get access to what little top-notch care is available in their community.

With retail health-care costs so high, companies are increasingly saying yes to on-site clinics. Buck is finding that most employers get a two-to-one return on investment within three years, says Curran.

A 2008 white paper by Fuld & Co. predicted that by 2015, 10% of people under age 65 with employer-sponsored health benefits would be served by work-site clinics. That would be up from 4% seven years earlier. But the menus of offerings vary widely, from a single nurse providing some basic services and health coaching to centers with several full-time doctors among 40 or 50 employees. "We have a saying that if you've seen one, you've seen one," says Peter Hotz, group vice president of the health and wellness division at Walgreen.

Most of Walgreen's Take Care sites are heavily focused on long-term health management, which can vastly increase the value to employers, says Hotz. The company's model is to incentivize its doctors and other providers to spend more time with their patients in order to help them manage all their health risks, "versus just the runny nose they happened to walk through the door with," he says.




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