Political and Functional Barriers to Establishing an On-Site Medical Service

A Presentation and White Paper

You have read all of the literature and met with several vendors who are promising employee satisfaction, savings, and improved productivity. An absolute trifecta! So what is holding up the program?

As we all know, sometimes the best ideas get bogged down in the decision-making pipeline or in the implementation process with the result that the entire business enterprise suffers. We need to remember that all good ideas do not have the same value and that most of the businesses out there are focused on avoiding risk, as well as pursuing good ideas. The more complex a program is or the more foreign to a business enterprise, the more risky it seems. Can there be anything more complex or more foreign than getting into the health care business? Could we make it even more risky by including our own employees? Maybe, we could add to the confusion by incorporating occupational health and EAP and pharmacy?

The opportunity of on-site health care is often lost, or minimized, by the time and effort involved in the decision and implementation process. This paper approaches that process from the perspective of the decision-making tasks involved and some simple “org theory” observations that may help with implementation. These comments are derived from experience in the industry as consultants to a variety of firms that have addressed this decision and implemented it successfully. However, some of the decisions are derived from client experiences that are ongoing and unresolved, even after years of analysis and examination.

This issue will be examined in three phases.

  1. The overall determination to do something “on-site.”
  2. The determination steps following the basic decision which defines “what is going to be done and how it is going to be organized.”
  3. The implementation of the decision, once made.

Overall – “Let’s Initiate On-Site Health Care Services for Our Workers”

For those familiar with on-site health care and its many permutations, this seems like a “no-brainer.” “Stuff costs money. We can do stuff cheaper and better. Let’s go.” The problem is that there is a different process for the type of decision-making that has risk and which requires capital. The following obstacles must be overcome in the “on-site” decision process.

  1. This is something we (meaning the host firm) have not done before. It is outside our area of comfort.
  2. This is something that could have unquantifiable risk since it involves employee benefit issues and medical services.
  3. This program has political overtones.
  4. This program is not easily reversible, if it fails.
  5. This program requires significant capital.

The first two issues are derived from the fact that the firm considering the implementation of on-site health services (unless it is a hospital) is generally scared of health care. If it is not scared, the term might be cautious or respectful. Their staff people, attorneys, and advisors are not used to dealing with health care issues, and they are not comfortable with the regulatory environment or with the risk-limiting features of insurance products that might help with this problem. One solution is always to relocate this risk to an outside vendor, but that comes with some cost and effort. The way to address this issue is to move it up-front and either seek counsel from a legal group that has a grasp on this matter (probably not the corporate legal counsel) or decide that the program will be implemented by an outside vendor to whom the risk can be transferred.

The problem with “political overtones” represents something different for each installation. In some cases, firms have a high regard for (and interrelationship with) the local health care community. In some cases, this is less a problem with the health care community and more of a problem with labor groups, existing vendors, internal stakeholders, and present providers. The problem, like any political issue, can be moved from “insurmountable” to “surmountable” once the groups are recognized, listed, and addressed with some form of communication and commitment strategy. Once the overall decision is made, the issue of how these groups might be involved will arise again. If they can be part of the implementation scheme, their concerns might be channeled. If not, they may need to be ignored.

When listing these political contacts, each should be categorized as to their “rank” since any program that is truly revolutionary is not one that will be embraced by structures that benefit from the status quo. Employer sponsored on-site health is definitely not the “status quo,” and change comes hard to people who might feel marginalized, threatened or part of a reorganization. The simple question is: “With whom must we work, and who is ‘important but not essential’?” Since there will be some change, it is best to address the impact up front and decide if the opposition can be minimized, or if not, if it is something that anyone really cares about anyway.

Working with political groups and stakeholders, there is always the possibility that they may have a growth opportunity in the implementation of on-site care. Can they fit into the emerging program? Will their role survive, although it may be altered? Will they have an opportunity to continue to provide service (be involved) in a different fashion? This is where early identification and a written implementation plan might help. This is also where commitments from any vendor to incorporate existing staff and networks and advisory functions into the on-site programming could make a political process less of a stumbling block.

Program “reversibility” is a challenge. Once an on-site clinic and the related structures are initiated, there is little chance of going back. This is not something that a firm can try for awhile and then abandon. The benefit programs will likely have been altered; there may be a building; and employee policies (and expectations) have been recast. This “irreversibility” is one reason that firms linger so long over the idea and why it is one that generally has to move from the HR (human resources) venue to the “Chiefs” – the CEO and the CFO and, maybe, to the Board.

Thankfully, this is getting easier with the general press concerning these programs listing the successes and general satisfaction of firms and their employees. Conferences have emerged, the literature is beginning to take note, and there are many “reference firms” willing to share endorsements of this type of programming. The challenge is to move away from the “vendor assurances” and on to a realm of objective information that can be used to show the feasibility and the practicality of this type of programming. It also helps to frame this decision within the overall framework of the cost and changes occurring in the benefits area. Certainly, the cost-shifting and general fear of benefits loss and the competitive problems created by benefit costs are a good backdrop against which to challenge status quo solutions.

Irreversible? Yes, but it is also a dramatic step that is being taken by the firms that can see beyond the near term and whose executives are planning for a competitive cost environment for the long term. The advent of on-site programming is a lever that can be used for many other changes and program tweaks that could only be accomplished by a firm that is in touch with services and information the likes of which can only be directly managed by being in direct contact with the provider and the employee recipient.

One can also look at the challenge of “reversibility” against all of those other changes that are being made without the firm’s direct involvement. Health care costs are going up. Employees expect to be more directly involved both financially and in their direct choice and payment of plan features. There will be more direct involvement across the board by employers who want to achieve higher productivity and more control over their health care dollar.

The issue of “reversibility” is less of a factor for any firm that falls within the following category: (1) a firm committed to being an “employer of choice”; (2) a firm that is already involved in on-site employee services like child care or exercise and health preventive programming; (3) a firm that is a technology leader or a clear “thought leader” in its industry; (4) a firm that is in a growth and acquisition mode; and (5) a firm that has a bunch of other unconsolidated health care cost control programming efforts.

Capital is another matter. The idea of a new program that is merely an add-on contract change to a benefits constellation is a simple one. Try it and, if it works, keep on doing it. There is no need to allocate space or capital. However, once the space and the capital needs are introduced, the whole equation for decision-making changes. We are including “space” in this discussion since very few firms “overbuild” space or “overbuy” on the prospect of expansion for anything but production. The allocation of space or facility capacity, to most industrial firms, would be a determination that is of similar (or even greater) gravity than capital. We are now in the realm of the CFO, the Chief of Facilities and we enter the concept of ROI (return on investment or return on capital or whatever the firm wants to call it.

Hopefully, this presentation will offer some ideas about how these issues can be addressed and their effects mitigated. As a consulting firm, we work through issues like this with clients on a regular basis, and we probably have seen every factor that fosters success. We have been involved with clients for almost ten years with various stages of planning and more planning and more planning. The programs go through evaluation and, as the data “times out,” through re-evaluation. Our experience looking at successful programming is pretty much that of the industry. There are market leaders and innovators and “early adapters.” They are implementing, or about to implement. The “on-site” adventure is one that they have determined is well worth taking. This presentation is intended to guide those who are supporting the more conservative adopters to move forward with determination.

On-site health programming is almost a “no brainer” unless the exercise becomes one of hyper analysis and multiple layers of decisions. Then, the program “hunt” may actually cause resources to be misdirected as the various constituencies and stakeholders jockey for position. We know the traits of a successful determination and implementation. We are interested in knowing more about any programmatic efforts that have been sidetracked or stalled.

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