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Municipal hospital

Cities fund clinics to temper rising healthcare costs
May 20, 2013 Derek Prall| American City and County
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With the cost of health benefits for city workers and their families climbing, cities nation-wide are opening municipal healthcare facilities. To get a better understanding of the trend, American City & County spoke with three cities in Florida to see if the quest for publicly-funded, affordable health care is bearing fruit.

DeLand, Fla., is one city seeing success from a city-funded medical center. City Manager Michael Pleus says the facility was necessary to address skyrocketing healthcare costs. “I’ve been working with this city for 13 years, and every year we were seeing double digit percentage increases in healthcare costs… sometimes as much as 28 percent.”

With the city’s premiums growing steadily, DeLand’s solution was to decrease reliance on its insurance provider by opening its own healthcare facility, DeLand Medical Center, in 2010. The facility is paid for through the city’s general fund, with departments handling costs proportionally based on the number of employees. The center offers general care, diagnostic work and prescription services, and is available free-of-charge to all city workers and their families.

Use of the clinic is not mandatory, and supplements existing health care coverage. However, with more workers visiting the municipally funded clinic than private doctors (whose fees increase the city’s insurance costs), Pleus reports that “eliminating the middle-man” has saved DeLand $705,000 over the course of three years.

Pleus also feels that with a free and reliable clinic nearby, city employees are more likely to keep chronic issues, such as diabetes and hypertension, in check. A more intangible benefit of these programs, he says, is that city workers will take better care of themselves – taking less time off and requiring fewer serious medical procedures.

Jeff Tripplet, mayor of Sanford, Fla., reports that his city has experienced similar successes with The City of Sanford Health and Wellness Center in terms of costs and overall employee wellness. “One of the major benefits of this clinic is that it focuses on the future health of patients,” Tripplet says.

Funding for the center is included in employee premiums paid by each worker carrying Sanford’s insurance. The clinic has treated more than 900 patients in its first six months and is projected to save the city $500,000 by 2016, according to Fred Fosson, Sanford’s director of human resources and risk management.

Like the mayor, Fosson says the driving force behind the center is early diagnosis. If health problems are caught early, he says, the costly procedures often required for treating late-stage illnesses can be avoided. “In-patient hospital stays can be quite costly, but can be avoided if treatment is in the early stages — thus, a savings to the city and the employee,” Fosson says.

Oviedo, Fla., also launched a clinic in 2010. Its facility, The City of Oviedo Employee Health Center, is funded by the city’s general fund, stormwater and utility operations. It offers general care, lab tests, prescription services and some imaging work.

“It provides quality health care in a convenient location, and reduces costs to city employees, and, by extension, taxpayers,”
 Mayor Dominic Persampiere says.

Since opening the clinic, the city has experienced a 3.7 percent decrease in healthcare costs, according to a recent Oviedo Health Center Review. An analysis of the return on investment since March 2010 shows nearly $2 million in claims avoidance, with operating costs totaling $827,182. In short, the return on investment came back as 2.13 : 1.

At first, employees were hesitant to use the clinic. “Acceptance has grown over time, though,” Persampiere says, noting that workers now see the clinic as complementing – not replacing – their doctors. But when city workers opt for the clinic, it saves Oviedo money, according to Persampiere.

“[The clinic] has, without a shadow of a doubt, exceeded our expectations,” he says.

Derek Prall is the assistant editor of American City & County magazine.