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Department of I don't see why we don't have more of this
Frustrated by runaway health costs, the nation’s largest employers are moving rapidly to open more primary care medical centers in their offices and factories as a way to offer convenient service and free or low-cost health care.
Here is more.
Posted by Tyler Cowen on January 14, 2007 at 08:06 AM in Medicine | Permalink
Comments
FYI, IBM has always had it's own medical office.
Posted by: bird dog at Jan 14, 2007 9:58:41 AM
This strikes me as a retrograde idea, a return to the bad old days, for the reason given by Milton Friedman: why would you want to buy your health care at the company store?
I guess Arnold Kling would agree with me.
Posted by: Bruce G Charlton at Jan 14, 2007 1:02:37 PM
I have to disagree with Bruce. I work for Sprint at the Overland Park campus (Kansas City), and the clinic is top-notch. The bad old days were a case of less for less.
Given the extraordinary cost of health-care, clinics such as these are more for less.
Posted by: Bill at Jan 14, 2007 1:13:28 PM
So I imagine that this is an attempt to capture certain externalities with health care-- medical providers make higher profits with more expensive tests, consumers (who know their conditions best or second best after the doctors) are shielded from immediate costs and also want as much treatment as possible, and insurers don't have sufficient information to know when a test is needed and when not (and the micromanaging involved in trying to figure that annoyes everyone.) The idea here is presumably to align the doctors' incentives properly by having the company save money when an unnecessary test is not ordered.
However, while this would be good for the companies, given current employer-provided insurance, I'm not sure that actual employee/patients would like it so much.
Posted by: John Thacker at Jan 14, 2007 1:42:08 PM
This indeed sounds like a regressive idea... One of the problems is that health care was unwisely linked to employers in the first place, a poor decision we are now paying for as people switch jobs more and more. Health care delivers true value when it has a long-term interest in the person's well-being, something you won't get from a stop-and-shop company store that expects the employee to leave (willingly or otherwise) shortly thereafter.
Posted by: Christopher Prottas at Jan 14, 2007 3:31:28 PM
The clock is now running on the impending AMA condemnation of this lodge company practice evil. Can we start a pool?
Posted by: Eric H at Jan 14, 2007 5:17:50 PM
Oops, I meant to strike out lodge.
Posted by: Eric H at Jan 14, 2007 5:18:28 PM
Someone explain why this idea is "regressive"? As with evolution, there seems no place in economics to discuss "regressive" adaptation: if the costs of healthcare are such that it is better to do it in-house, then that policy represents a well-adapted decision.
Posted by: Steven Schreiber at Jan 14, 2007 5:28:23 PM
John Thacker:
I think it's simpler than that. Big companies already have departments devoted to fighting with insurance companies and making them pay what they've promised (which is a big advantage to having insurance through a big company!). Coverage through clinics avoids these fights.
Posted by: Douglas Knight at Jan 14, 2007 5:45:01 PM
I would think that the incentive to save employees' time would be a reasonable issue. It always seems obvious that doctors' offices would be able to make better use of patients' time if it wasn't worthless to them. In this case, the employees' time IS worth something to the organizers of the medical facility.
As recently as the early 1990s, Ford Motor Co. had barber shops at World Headquarters and at one of the engineering buildings. Why: they said it was so employees could get a haircut without wasting time!
Posted by: anon at Jan 14, 2007 7:10:38 PM
Presumably, if the clinics are free or cheaper and there's no requirement to go there first, then this is in no way regressive. The whole problem with the company store was being forced to use it.
Posted by: billb at Jan 14, 2007 7:13:46 PM
FWIW you can almost live at the Pentagon with all of the services they have available. I don't know about healthcare though.
Posted by: BillWallace at Jan 14, 2007 8:50:02 PM
I can see the plaintiffs lawyers salivating over these clinics. Most of them are staffed by nurse practitioners to save money, so the company would become the deep pocket in a lawsuit. I see it as a huge liability for the companies-there is very little they can do to screen themselves from being dragged into a multi-million dollar medical malpractice case, which will happen eventually.
Posted by: DrTom at Jan 14, 2007 9:02:38 PM
The ideal medical interaction is between a patient whose marginal value of receiving the care equals the marginal benefit to the physician for providing it. This is particularly true in primary care. Having third
party payers interfere in this basic economic interaction leads to excess
care being delivered and the excessive cost of medical care that everyone
complains about. Medical insurance has a large negative externality! It makes care expensive and markedly increases its costs particularly to the uninsured. It is hard to imagine how company provided care would be cost effective unless the company's
profits influence the care provided. If they can provide medical care more cheaply than existing providers, they should probably be running a health care company and not making cars,computers, etc.
Posted by: WS Grizzard, MD at Jan 14, 2007 9:35:10 PM
I assume at least part of this is to avoid some of the cost-shifting games, where doctors try to shift costs of nonpaying or low-paying customers onto the paying ones. The IBM clinic doesn't have to figure out how to shift the unpaid costs of their Medicare or Medicaid patients onto the rest of the customers, because they don't have any.
Perhaps another reason for this is to discourage job-hopping. The link between jobs and insurance does this to some extent, but in practice, I'm not taking a job without insurance. But if I have to change doctors, too, maybe it's harder to leave.
Another benefit for the clinic is that working people tend to be relatively healthier, more put-together, and for most companies, working there pretty-much ensures you're literate and not terribly stupid. All those decrease the costs/difficulty of providing care. If you're running a clinic for Microsoft employees, you've probably got a population of patients with college degrees and IQs averaging around 120. You can give them detailed instructions and have them understood and correctly followed.
Posted by: albatross at Jan 15, 2007 2:28:07 AM
I am in the UK at the moment for several weeks on behalf of my company. Here is a story which appeared in yesterday's Daily Telegraph which states that if you happen to live in an area which is held by a Tory (Conservative) Party MP, you will have to wait in line for a longer period of time than you would if you happen to live in an constituency which is controlled by the Labour Party. The Lib Dems fall in between the two.
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/01/14/ngp114.xml
Yes, for those of you who believe in state control of health care, it is more than
possible to play plenty of games with people's health as long as you have their taxpayer dollars.
Posted by: Neal Meyer at Jan 15, 2007 8:05:12 AM
Christopher, I think you have the dynamic wrong. Most employers now actually are concerned about the well-being of their employees, for the bottom-line reason that unwell employees are more expensive. They miss work more often, they are less productive, and they hurt insurance rates. That's why even small employers like mine offer "wellness" plans that encourage employees to eat right, get flu shots, etc. I'm not saying anyone's getting it right, but they're responding to incentives and trying to get it right.
Posted by: Thomas at Jan 15, 2007 10:41:45 AM
In my mind, this points to the idea of the single-payer people being *right*. What's the cost difference between "company hires doctors" and "companies pay insurance companies to interface with doctors"? The latter case is supposedly the free-market solution, since doctors, insurance companies, and patients are all subject to market forces. If the former case turns out to be cheaper, perhaps it's because (as single-payer proposes) a cheat-proof free market system requires expensive piles of paperwork.
Posted by: Ben M at Jan 15, 2007 12:57:39 PM
The examples in the article suggest that employer clinics, which have been around for a long time, are for basic things akin to the minute clinics that are opening in some large retail stores. They may work well for some things for some people. People needing advanced medical care are going to have to go elsewhere. Then there is the incentive problem--docs who work for employers face different incentives than physicians who work for patients. People will probably continue paying cash for consultations over medical problems that they do not wish widely known. Thanks to HIPAA, medical records are not private. There is a routine exemption for cost control purposes, for example. Finally, there is little systemic evidence that preventive care reduces overall expenditures once you get past routine childhood immunizations and push things past the clinical trial stage. Screening costs money, too.
Posted by: lg at Jan 15, 2007 3:41:12 PM
Fascinating. My local Wal-Mart's opened a primary-care clinic in between the arcade and the photo studio, and I thought, who on earth would go there?
It didn't occur to me that their own employees might be their # 1 targets.
That's Wal-Mart for you: lousy insurance, but cheap primary care!
Posted by: Anderson at Jan 15, 2007 4:29:11 PM
I really wonder how much of this is health care specific and how much of it is an instance of the general phenomenon of errand-time-saving. Employers realize that for many workers, a major component of non-on-the-job time is time spent doing various necessary errands and traveling to and from same. The travel component is annoying and subtracts both from free time and from working time; so if they can reduce it by putting errand-type services at the workplace where employees are going to be anyway, the employees will work longer hours and also feel they have more satisfying and relaxing leisure time.
My own employer carries this to something of an extreme: besides the onsite food and clinic we have onsite dental services, haircuts, car washes, oil changes, massages, et multae cetera. But the fact that many of these services are outsourced to contractors who serve many local companies on a rotating basis (e.g. the RV with the mobile haircut station stops by every Thursday) suggests that this is catching on.
Posted by: Nicholas Weininger at Jan 15, 2007 5:31:47 PM
Employers have already implemented cost control in one area. The health history databases mean if you use medical resources much, you simply are not hired. I wonder how much information from the company clinic won't end up as part of your evaluation. No more birth control or a positive cancer screen = layoff or no second chances for a mistake.
Posted by: Fiddlerdave at Jan 16, 2007 1:44:51 AM
But doctors aren't your employees now, either. They are paid by your insurance agency, which effectively determines how much time they have per patient.
Posted by: albatross at Jan 16, 2007 3:17:39 AM
How does this interact with employment-at-will? What do you do if you're on a course of drugs and you come to work one day to discover that your employment has been terminated?
Posted by: Peter Clay at Jan 16, 2007 12:52:51 PM
Companies such as SAS in North Carolina, Storagetek in Colorado, IBM in New York have had on-site clinics for years. THe employees I have spoken to about them love them. They get good care, do not miss work, get generally competent doctors. If the employees like them and the employer saves money and gets higher productivity, what is not to like?
As for Peter Clay's question, when you change firms frequently your doctor is not on the new company's insurance plan and you have to switch doctors. How is that any different? There are trade offs to every action, this just happens to be another one. Your records will transfer to the new doctor and they can continue you on the drug regimen.
Posted by: Murphy at Jan 16, 2007 2:49:47 PM
