Employer Managed Healthcare FAQs
The basic premise behind Employer-Managed Healthcare is that an employer can address the health status of its workforce through a combination of benefit design, direct contracting, preventive measures, and a proactive partnership with employees to promote wellness.
Firms already using this strategy have demonstrated major improvement in cost control, clinical quality, and employee satisfaction.
What are the components of Employer-Managed Healthcare?
Generally, it's a thoughtful mix of elements such as these:
- On-site medical services, including primary care.
- Coordination of occupational medicine, workers compensation, industrial health, and primary care.
- Direct contracting for hospital in-patient and medical specialty services with a local healthcare system.
- Claims analysis with a focus on disease management and disease risk factor control.
- Reorganization of employee benefit structures to promote wellness, prevention, and selection of appropriate network services.
- Direct management of care coordination and utilization functions.
- Coordination of medical records to facilitate recall and compliance tracking.
- Built-in feedback to ensure continuous quality improvement in health benefits.
- Employee involvement to assure solid communications about program features, and to create a learning environment concerning health and the health benefit structure.
Where does this type of a plan work?
Most features can work in any environment, but the entire package usually requires an employer with self-funded benefit programs, a workforce of roughly 1,000 concentrated in one area, and some ability to coordinate on-site information, primary care, and wellness services.
Does the presence of a union prevent this type of approach?
No. Some very successful employer-managed healthcare programs have been implemented with the direct involvement of union leadership and organized labor.
What if the employer contracts with different classes of employees?
This still can be an option for some classes of the workforce, or it can be set up so that certain features are available to each class in formats that would emulate the standard healthcare offerings in any community.
Where do the cost savings come from?
Cost savings are derived from several areas. Short term, the program eliminates "middle vendors" and re-packagers of health-care services; direct contracting with providers can achieve significant savings; on-site primary care can realize savings over standard doctor offices; and on-site services reduce loss-of-work-time costs. Long term, healthier workers use less health care, and rehab utilization improves with more control over the admission/discharge process.
Can the cost savings be predicted?
The cost savings can be reliably predicted, especially those in the near term. The process requires an analysis of the employee base claim history and development of a projection (or pro forma) of an on-site primary-care program, coupled with initial negotiations with local secondary providers to gauge potential discounting. Longer-term savings depend upon the composition of the workforce and the effectiveness of preventive programming. Current literature also suggests significant long-term positive effects for certain wellness and preventive initiatives.
Is there any downside?
The risks are similar to those for any program that promotes core change. There can be political resistance from stakeholders in the health-care system, and from within the organization itself. The employee benefit structure requires redesign, which works only if communication and trust are developed between the organization and its workforce. The program’s success depends upon employee use of program components and network services designed to control costs. All of these risks can be quantified and modeled in a predictive fashion.
Why the on-site medical clinic? Can this be done without one?
An on-site clinic creates program presence, awareness, and access. It delivers a large portion of the primary care required by employees, and it focuses employees (and their dependents) on the preferred network of secondary services. If there is no primary-care component on site, there should be a local site (or sites) where co-pays and access are designed to assure compliance. Primary-care management is critical to program success.
What about liability risk?
This is dealt with through insurance and corporate risk management processes. This is not a concern to organizations that have implemented the program successfully.
Don't employees object to the "company doctor" concept?
This issue is easily resolved, as demonstrated by firms that have successfully implemented employer-managed healthcare. The answer is all in the employees' perception of the value of the program. And, in many cases, this type of corporate oversight of the health-care system's effects on employees and their dependents markedly improves their access to services.
Back to the EMHCA Homepage