Smaller employers weigh a big-company fix for scarce primary care: Their own clinics

Reviewed by Lily Ramsey, LLMOct 27 2023

With his company's health costs soaring and his workers struggling with high blood pressure and other medical conditions, Winston Griffin, CEO of Laurel Grocery Co., knew his company had to do something.

So the London, Kentucky, wholesaler opened a health clinic.

"Our margins are tiny, so every expense is important," Griffin said. The clinic, he said, has helped lower the company's health costs and reduce employee sick leave.

Large employers have run clinics for decades. At Laurel Grocery's in-house clinic, workers can get checkups, blood tests, and other primary care needs fulfilled free, without leaving the workplace. But Griffin's move is notable because of his company's size: only about 250 employees.

Nationwide, a modest number of small- and medium-size employers have set up their own health clinics at or near their workplaces, according to surveys and interviews with corporate vendors and consulting firms that help employers open such facilities.

Improving employee health and lowering health costs are among the main advantages employers cite for running clinics. But some companies also say they're helping to blunt the nation's shortage of primary care doctors and eliminate the hassle of finding and getting care.

"Why did we do this? So my employees would not drop dead on the floor," Griffin said. "We had such an unhealthy workforce, and drastic times called for drastic measures."

KFF's annual survey of workplace benefits this year found that about 20% of employers who offer health insurance and have 200 to 999 workers provide on-site or near-site clinics. That compares with 30% or better for employers with 1,000 or more workers.

Those figures have been relatively steady in recent years, surveys show.

And U.S. employers reported the biggest increase this year in annual family premiums for their sponsored health plans in a decade — an average jump of 7% to nearly $24,000, according to the KFF survey, released Oct. 18. That spike may intensify interest among business leaders in curbing underlying health costs, including by exploring delivering care at workplaces.

Employers don't require their workers to use their clinics but typically provide incentives such as free or reduced copayments. Griffin offered employees $150 to get a physical at the clinic; 90% took advantage of the deal, he said.

Employer clinics could alleviate the rising demand for primary care. A far lower proportion of U.S. doctors are generalists than in other advanced economies, according to data compiled by the Peterson Center on Healthcare and KFF.

For patients, frustrating wait times are one result. A recent survey by a physician staffing firm found it now takes an average of three weeks to get in to see a family doctor.

In 2022, Franklin International, a manufacturer of adhesives in Columbus, Ohio, began offering its 450 workers the option to use local primary care clinics managed by Marathon Health, one of about a dozen companies that set up on-site or near-site health centers for employers.

Franklin employees pay nothing at the clinics compared with a $50 copayment to see an outside doctor in their insurance network. So far about 30% of its workers use the Marathon clinics, said Doug Reys, Franklin's manager of compensation benefits.

"We heard about the difficulty employees had to get in to a doctor," he said. They would call providers who said they were accepting new patients but would still wait months for an appointment, he added.

At the Marathon clinics — which are shared by other employers — workers now can see a provider within a day, he said.

That's good for employees — and for the company's recruiting efforts. "It is a good benefit to say you can get free primary care," Reys said.

Not all employers that have explored opening their own clinics have seen the value. In 2020, the agency that oversees health benefits for Wisconsin state employees opted against the on-site model after a review of experiences by similar agencies in Indiana and Kentucky found it didn't save money or constrain health insurance premiums.

Kara Speer, national practice leader for consulting firm WTW, said potential cost savings from employer-run clinics can take years to accrue as employees shift from pricier hospital emergency rooms and urgent care clinics. And it can be difficult to measure whether clinics control costs by improving workers' health through preventive screenings and checkups, she said.

Kathy Vicars, a senior vice president at Marathon Health, said about 25% of its 250 clients are firms with fewer than 500 people. She said Marathon's clinics help drive down costs and help employees get easier access to doctors who spend more time with them during appointments. Her company helps employers manage workers with chronic diseases better and redirects care from urgent care centers and ERs, she said.

Hospitals have also sought to get into the business of running on-site clinics for employers, but some potential clients question whether those health systems have incentives to funnel workers to their own hospitals and specialists.

At Laurel Grocery, Griffin said he knows many of his employees don't regularly exercise and have poor diets — a reflection of the overall population in the region. Health screenings performed by a local hospital over the years found many residents with high cholesterol and high blood pressure. "Nothing tended to change," he said.

Laurel Grocery contracts with a local hospital for about $100,000 a year to manage its clinic, including having a physician assistant on-site three days a week. Laurel Grocery does not have access to any employee health records.

He said the clinic has saved money by reducing unnecessary ER use and reducing hospitalizations. "It's been way more successful than I thought it would" be, he said.

The clinic is about a three-minute walk from Kip Faulhaber's office. Faulhaber, a senior vice president at Laurel Grocer who is 73, said he goes in every week for a vitamin B12 shot to treat a deficiency. He also turns to the clinic for an annual physical, vaccinations, and when he has a sinus infection but doesn't want to wait several days to see his regular physician.

"This is more than convenient," he said.