Employers See Results with Onsite Health Centers

Employers are confident their onsite or near-site health centers improve the health and productivity of their employees, a survey finds.

Nearly four in 10 (38%) large U.S. employers with onsite health facilities plan to add new centers over the next two years, according the Towers Watson 2015 Employer-Sponsored Health Care Centers Survey.

A majority of the 120 responding employers that already have onsite or near-site health facilities, or are planning to implement them, share these objectives for their centers:

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  • increase productivity (75%);
  • reduce health care costs (74%); and
  • improve convenient employee access to health care services (66%).

Nearly all centers offer a similar range of primary care services. Immunizations (99%), care for acute conditions such as upper respiratory and urinary tract infections (99%), and blood draws (95%) top the list.

By 2018, two-thirds of survey respondents (66%) expect to expand or enhance the already broad services they offer. In addition, employers expect their centers to play an even greater role—above and beyond their current use—in the management and coordination of employee wellness. Wellness programs are already available at 86% of centers, and lifestyle coaching to promote and reinforce behavior changes is currently offered at nearly two-thirds (63%).

NEXT: Increasing pharmacy services and telemedicine.

Employers have also been expanding the scope of their onsite and near-site health centers beyond primary care. Half of employer-sponsored health centers now offer some type of pharmacy services, a considerable increase from 38% in 2012. “Pharmacy services interest employers because they offer convenient access to prescription drugs for employees, encourage medication compliance and help decrease overall medical and pharmacy spend,” says Dr. Allan Khoury, senior consultant at Towers Watson.

The survey also finds growth in telemedicine. More than one-third (35%) of responding employers offer telemedicine services, with another 12% planning to in the next two years. “Telemedicine and onsite health centers are perfect complements,” adds Khoury. “They help employers make it easy for employees and other eligible members to see a doctor and get informed medical expertise — even on evenings and weekends. They also support an overall employer strategy of keeping workers productive and eliminating wasteful costs such as unnecessary emergency room visits.”

Outsourcing to vendors is the most popular option (64%) for managing staffing and services at the health centers. Roughly one-quarter of survey respondents (23%) report that they run the centers themselves, and nearly one-fifth (18%) use local or regional provider groups or health systems.

NEXT: Measuring return on investment.

Given cost control pressures, more employers are now measuring their centers’ return on investment (ROI). Three in four (75%) employers with onsite health centers calculate their ROI, up significantly from 47% in 2012. However, just 12% of employers have the analysis performed by an independent third party; 33% use their vendors, and 30% rely on internal staff analysis.

Towers Watson says its experience demonstrates that employer-sponsored health centers’ ROI is highly dependent upon employee utilization and staffing levels, for example, clinics increase preventive care while decreasing emergency department and inpatient use. Members with higher health risk scores are more likely to use the employer-sponsored health center, and using the center to refer them to a preferred network of specialists can lead to substantial cost savings.

The Towers Watson 2015 Employer-Sponsored Health Care Centers Survey surveyed mid- to senior-level benefit professionals from 137 U.S. employers in February and March. Out of the respondents, 105 currently offer employer-sponsored health centers, and 15 are planning to offer by 2018.

Documentation and Deliberation Remain Critical Post-Tibble

Two experienced ERISA attorneys suggest the Tibble fee case ruling is a positive for retirement plan sponsors—highlighting important best practices that many have already adopted.

“The main impact of Tibble vs. Edison in my view is that it’s a good reminder that plan sponsors need to sharpen their pencils and look once again at the processes they’re using, both for selection and monitoring of investments,” explains Nancy Ross, partner in Mayer Brown’s litigation and dispute resolution practice.

She is talking, of course, about the Supreme Court’s decision in Tibble vs. Edison, a closely followed example of 401(k) fee litigation playing out between a large plan sponsor and a large class of similarly situated participants. Like others interpreting the outcome of the case, Ross feels the recent decision took a modest step to solidify the “ongoing duty to monitor” investments as a fiduciary duty under the Employee Retirement Income Security Act (ERISA) that is separate and distinct from the duty to exercise prudence in selecting investments for use on a defined contribution plan investment menu.

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“But what does this mean practically for plan sponsors?” Ross asked during a recent webinar. “First of all, the opinion does little more than state the obvious. We have all known that there is a duty to prudently monitor investments under ERISA, and any plan sponsor serious about the fiduciary duty is already doing this monitoring. The Supreme Court dodged the meat of the question of what the duty to monitor is.”

As explained by Ross and another Mayer Brown colleague, Brian Netter, partner in the firm’s Supreme Court and appellate practice, plan sponsors “must have a monitoring practice in place for investments, and they must be able to show they have a well-established monitoring practice.” Beyond this, sponsors need to follow such processes, Ross adds, not just have them written down.

“From this and other cases we have learned that fiduciaries are wise to be able to show there was both deliberation and a decision made for any investment on the menu,” Ross says. “If you don’t have robust deliberation, the court will be suspect as to whether you followed your fiduciary obligations. In the same way, if you have robust deliberation but no clear explanation of why the decision was made, this will also be problematic.”

While Ross and Netter feel the Tibble decision won’t lead to a new string of successful challenges from participants—that doesn’t mean plaintiffs lawyers won’t try to shape the decision into a new wave of litigation.

“The ruling is very narrowly focused on investments and specific duties under ERISA, but it’s very likely the plaintiffs’ bar will use this opinion outside the investment menu and seek to apply it to any number of other issues,” Netter suggests. “The duty to monitor will start popping up as a separate claim … that you failed to monitor a service provider, for example. Or you could be accused of failing to monitor revenue sharing or conflicts of interest. When the Supreme Court speaks, people listen, so there is always an increase in litigation whether the Supreme Court rules to favor plaintiffs or not.”

Despite this attention from plaintiffs attorneys, Netter feels the courts are not particularly interested in drawing a clear line in the sand about what the duty to monitor should look like—a line of commentary that played out directly during argumentation of Tibble before the Supreme Court. During the arguments, Justices Sotomayor and Scalia, for example, expressed similar skepticism about whether the court was in an appropriate position to define something like the duty to monitor, especially whether such matters are still being discussed in other cases before the trial and appellate courts.

Ross warns that plan sponsors must take ownership of all documentation and deliberation processes related to investment selection and monitoring to appease the courts.

“You can’t rely exclusively on advisers or consultants for all of this, and then later claim that you offloaded this fiduciary liability,” she explains. “If you are familiar with the context of Tibble, you’ll know Edison International contracted with a Hewitt Financial Services company for investment consulting advice. That was a good thing to do, but the concern the trial and circuit courts had was that Edison did not do thorough job in reviewing what their consultant was advising.”

Netter says sponsors should fully understand any advisers’ processes, “so that you can know how they reach their conclusions. Are they using the right benchmarks for your plans on performance and fees, for example? Are you comfortable with how they are reaching and documenting their decisions? With the Tibble outcome in mind, the important thing is to show that you debated the pros and cons of an investment selection, even if you have an adviser leading the process.

“The courts know plan fiduciaries are becoming more attentive in this area, and they’ll expect to see strong deliberation and documentation of procedural prudence when it comes to things like investment selection and monitoring,” Netter explains. “The courts want to see evidence that show that fiduciaries were asking the right questions. If you have this evidence, there’s not too much to worry about coming out of Tibble.” 

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