Prior to radically shifting their benefit strategy around a near-site clinic five years ago, Seattle Children's faced healthcare costs growing every year at a rate of 7-9%. And when they attempted to shift costs, the impact was nowhere near what they needed. Nor was it a long-term solution.
That's when Seattle Children's realized a near-site clinic was their best option to get control of their costs, without sacrificing care for their employees.
We sat down with Tom Stoeckle, Director of Compensation Benefits at Seattle Children'sto get his perspective on why and how Seattle Children's made a shift to their benefit strategy.
Q: Take us back five years ago, what were the trends looking like for you that made you look for a different, better solution?
Stoeckle: Our healthcare costs were climbing pretty much at the rate of everybody else, 7-9% per year. We found a lot of it was not controllable by us, but by our employees. So we shifted the costs to employees, rather than trying to control them as our method of dealing with it. But we knew it was not sustainable. We also knew it wasn't the best thing for our employees.
We were self-funded so then we looked at our health claims, and we noticed a few trends. We noticed a lot of musculoskeletal injuries. And we also noticed a lot of incidents of high cholesterol, blood pressure, and weight-related illnesses.
So one of the first initiatives we did was biometric screening for employees with an outside agency to help us analyze that data and provide wellness initiatives and telephone counseling to help them address those risk factors.
It did very little for us in moving the needle. We had good engagement the first year. We had some incentives. The second year dropped off. It didn't work for us. So then we wanted to look at how we could bring it in-house. We thought face-to-face health counseling, coaching, and treatment would have more of an impact.
Q: Once you decided to bring a benefit strategy solution in-house, what did the discovery process look like?
Stoeckle: We agreed an on- or near-site clinic option was preferable. Then I partnered with our Director of Occupational Health, and we started researching vendors. We made inquiries, meeting and learning from other organizations, to see which model they would recommend for us. We also talked about how we might implement a similar solution.
As I mentioned above, when we looked at our claims data, we noticed we had employees who had weight issues, they had screening issues with cholesterol and blood pressure. All of these things could be controlled. If we could help our employees address these, it was the right thing to do. But we also knew addressing them would also help us control cost.
Because looking at our patterns, 50% of our employees at the time didn't have a primary care physician identified. So we knew they were seeking care in less than optimum places, like emergency rooms and urgent care clinics. Our employees needed preventive care. The costs we were encountering were high because inappropriate use of care and inappropriate timing of care. If we could address it, it would balance out.
Our Director of Occupational Health fell in love with the on- or near-site clinic model — having the physician and the other providers, the lab, everything, self-contained. The approach towards care for employees, and the overall way the model worked, it convinced us that it was the right model we wanted to pursue.
Q: What piece of advice would you give to someone who's in the same position you were in five years ago?
Stoeckle: Look at your claims data, and look at what you're spending on office visits for a lot of the simple, routine things — like biometrics for weight loss, for insulin and diabetic conditions, office visits, and the cost of the prescription drugs. You also need to look at costs for downtime for people who have to leave the office for part of the day and time off. Because you need to find a solution to better control that, and empower employees to seek medical care in a more systematic way.
At Seattle Children's, for the past three years, cumulatively, we've been under budget by about $13.5 million. So we've actually outperformed our budget by that figure.
When you're approaching healthcare through an organization, like Vera, you're really getting the cost of the providers and then the direct cost for lab and for drugs. But you're not paying all the additional cost for average wholesale price plus the markups. You're not paying the lab fees, the reading fees, those types of things. It's almost like buying wholesale rather than retail. That's how I see it. It's almost a wholesale versus retail transaction, and we're getting quality services for a lower cost. To me it's doing the right thing for employees.
Those savings helped fund ... a benefits transformation. We added 80 hours of bonding leave for new parents. We've added some other features to our medical plans, like Bariatric procedures. We've also taken those savings and applied them to other benefits. We've added between 9 and 12 days of paid time off for all our employees.
Is an on- or near-site clinic model right for you and your organization? Not sure where to even start? We've got a resource for you.