Hospitals Selling Direct To Employers Harkins

Harkins Associates
Cutting out the
Middle Man
O ppor tunities for Hospitals to
Par tner D irec tly with Employers

Kathleen Harkins
Principal
Harkins Associates
October 2011

Companies in almost every sector of business offer some kind of healthcare services For the employer, programs like these hold the potential to lower their overall
to their employees. They can access employer health services via many outlets, healthcare costs, lessen employee absenteeism, enhance productivity and build
including private “wellness” companies, their managed care plan and even via employee morale. For the hospital, these programs can generate revenue
large consulting firms offering “employer healthcare solutions.” on many fronts, including serving as feeders into their (vs. a competitor’s) health
system services, and creating the potential for significant downstream revenue.
However, with local hospitals and health systems increasingly networked
with outpatient treatment facilities and multispecialty providers, who better What do hospital-to-employer services look like?
than they to provide the greatest array of employer services? Today, many Many hospitals offer some form of wellness service to employer groups. The range
hospitals and health systems are taking a leading role in this arena, by packaging of options is limited only by the hospital’s areas of clinical expertise, the needs
solutions — from employee wellness services to full-service health plan of the community or employer group, the resources available for each service and
management — and selling them to companies in their area. the business expertise to plan, launch and sell the programs to employers.
In other words, it is not as easy as it may look.
There is a wide range of options a hospital or health system has for providing
business-to-business (hospital-to-employer) services. In this article, we explore Start with what you know
several successful service models, what to consider in establishing a program and At its simplest, a hospital can model a hospital-to-employer service after its existing
what it takes to create lasting success. For forward-looking healthcare providers, community wellness programs, for example. You could offer employers a health fair
there are options worth exploring. for their staff or classes about prevention of common ailments or high-cost injuries,
for example.
Then and now
Decades ago many of the nation’s businesses hired so-called “corporate” doctors, “That’s how we usually get our foot in the door,” says Stuart May, director of
nurses and PAs. They held regular office hours to serve employees, handling CorpCare Occupational Health Services, the corporate health arm of Eastern
everything from pre-employment physicals to yearly checkups, drug testing and Connecticut Health Network, a two-hospital health system based in
workplace injury triage. Even today, some companies like software giant SAS Manchester, Conn.
Institute in North Carolina offer staff — and even their families — on-site
A step beyond that might be an umbrella of employer services, such as new-
healthcare. Also today on the provider side, health systems are partnering with
employee screenings, workplace injury care, employee assistance programs,
local businesses to become direct providers of a range of similar services.
employee physicals and prevention and early detection programs. Like other health
systems we discuss here, CorpCare offers those services, and more.

Case Study: Connecticut’s CorpCare Occupational Health

From annual worker physicals to customized Taking advantage of the resources of the hospitals in the system, CorpCare clients who
injury prevention programs have an employee with a second- or third-shift injury go to the health system’s
urgent and emergency care facilities.
A hospital in Connecticut rolled out an occupational health service for area employers
in the late 1980s. Today, the services are still part of a growing hospital system and The business model ensures that CorpCare can connect workers with a full range of
provide care to a client base of 35,000 workers in about 200 businesses and healthcare within the health system. There’s potential to care for those workers’ family
organizations. members, as well.
“Our business philosophy is to manage the entire continuum of corporate health care “We want to be a partner with our clients in the business community,” Mr. Stuart
for our clients’ employees,” says Stuart May, director of the service, called CorpCare says. “So we also approach them with injury trends that we’re seeing and then offer
(pronounced Corp Care) Occupational Health. “We offer many [occupational health] pro-active, preventive training to their employees.”
services in our freestanding facility. But any services that we don’t offer here, we send Adding value
to one of the hospitals in our health system.” Mr. Stuart reports that their clients appreciate the fact that CorpCare coordinates all
CorpCare’s clients range from manufacturing facilities to municipalities. Workers run steps of employees’ care and billing for them. “Many also like the fact that we can
the gamut, from those on factory floors, in firefighting units and in executive offices. track the total cost of managing a specific patient, all employees or a subset of
Building on a relationship injuries, too.”
CorpCare traditionally begins working with a company by performing their employee To broaden its reach, CorpCare has also joined a network of other hospitals that offer
physicals, hearing or eye tests and DOT random drug screens, Stuart says. Workplace occupational health services. This increases the number of locations for care, which is
injury care, rehabilitation and return-to-work readiness evaluations often follow. a benefit that larger employers and those with multiple locations value.

CorpCare is a wholly owned subsidiary of Eastern Connecticut Health System, Manchester, Conn., and employs
just fewer than 20 staff members, including a physician, nurses and other mid-level practitioners. http://bit.ly/pZr1sw

Harkins Associates | office 845.295.9076 | fax 845.295.7077 | www.harkinsassociates.com | kharkins@harkinsassociates.com | 54 Weston Way, Liberty, NY 12754
“Cutting out the Middle Man” Property of Harkins Associates Copyright © 2011 Harkins Associates All rights reserved.

Success with niche services
Morristown, N.J., Atlantic Health System, is an example of a health system that Case Study: New Jersey’ Atlantic Health System
takes advantage of its metropolitan location. With 1,308 beds in the system, its - Niche marketing of “executive health” services
Corporate Health Department coordinates health and wellness services for several
hundred clients and a total of approximately 50,000 employees.
According to the University of Michigan Management Research Center, executives
In addition, Atlantic Health System offers employers an Executive Health
who undergo physical exams have 20 percent fewer health claims and lose 45
Program, a flat-fee medical evaluation for corporations’ top executives. This percent fewer workdays than those who do not.1 Statistics like these have led
assures companies that their highest paid employees are going to stay healthy some top companies to seek healthcare providers to offer such exams. Atlantic
and productive. Health System in Morristown, N.J. is one that has stepped up to fill the need.
“Atlantic’s Executive Health Program is what we refer to as a ‘smart physical,’” Located in a metropolitan area with a large number of Fortune 500 companies and
says Damion Martins, MD, the system’s medical director for the program and corporate headquarters, they offer a flat-fee medical evaluation of corporations’ top
executives. Known as an “executive health program,” it and others like it are usually
Atlantic’s sports health services, as well as director of internal medicine for the reserved for top company executives and paid for by the executive’s employer.
NY Jets. “Our unique program includes conducting genetic testing, lab work and
The convenience of such programs is obviously a time-saving perk for the busy
health history profile in advance of the patient visit. Every test and assessment we executive and they provide tangible health benefits. For example, Atlantic Health
do is tailored to the individual’s unique physical blue print and current health System’s Executive Health Medical Director Damion Martins, MD, cites two
status. Each exam we conduct and each subspecialist seen is for a specific finding situations where their health screenings found potentially life-threatening
that emerged from our analysis of the client’s pre-evaluation, a good deal of conditions among executives. Neither had symptoms, but both needed
which we get from the client’s genetic test results.” intervention — one for high risk for blood clots and another for the “widow-
maker” blockage of a coronary artery having fatal consequences.
This approach allows the executive to complete the comprehensive exam in
As for the employers, they want to assure the health and optimal performance of
one-day, without the hassle of booking and waiting for appointments, the highest paid employees who are often critical to the company’s success.
waiting for test results or return visits to specialists to discuss findings. Executive health programs can also save companies money in the long-run by
Success for smaller markets preventing serious illness, or at least detecting these illnesses early.
One assumption in the industry regarding corporate health is that larger Programs like this executive health program require a very specific set of skills
hospitals/health systems in metropolitan areas will be more successful when plus dedicated resources, including a medical director, subspecialists with
availability several times a week, high-levels of nursing staff and administrative
selling services like these to employers in their area. But we see smaller
support. This kind of executive health program is resource intense, so profit
hospitals succeeding in this arena, too. margins are slim. But for hospitals like Atlantic, the investment in these resources
For example, Indiana University Health Goshen in Goshen, Indiana, with about are a way to keep their community healthier, save money for local companies and
125 beds, offers area employers its “Get Fit, Get Healthy” employee wellness strengthen relationships.
program. It includes health risk appraisals such as standard blood tests and Atlantic Health System, a non-profit organization serving
screenings at the employer worksite and also provides onsite wellness Northern and Central New Jersey.
clinicians/health coaches to share the confidential results with the participants
1
Source: Forbes.com, “How the Wealthy Get Healthy (2006)
as well as summary reports (aggregated) to the employer showing changes
and improvements.

Case Study: Indiana’s Indiana University Health Goshen Employees and Employers Succeeding Together

The “Get Fit Get Healthy Wellness” program of Indiana University Health Goshen GFGH develops individual wellness programs for each participant, provides quarterly
has been up and running for close to four years. Although the learning curve brought educational programs and continually reinforces and when needed, revises wellness
challenges and frustration, a strong commitment by executive management, service strategies for participants. In order to incentivize staff to participate, employees are
providers and wellness consultant, Krista Thomas has kept the program moving often granted a reduction in health insurance premiums for joining and staying
ahead. In her role, she works directly with employers to review and address actively involved in the program.
aggregated health outcomes for employee populations. After three years, the health system began creating healthcare clinics within the
On the surface, Get Fit Get Healthy may look like other wellness programs — sign- employer facilities for the employee and their family members.
up is voluntary, employees complete lifestyle questionnaires and undergo BMI tests, As a result of these programs, employers have seen their healthcare cost reduced.
blood labs and waist circumference measurement. However, the GFGH team is deeply Goshen provides a service and supports its financial stability through downstream
committed to “how” they run the program and to helping employees get healthy. So, revenue created by GFGH.
in the beginning they took a “one-person-at-a-time” approach to creating healthy
employees who would eventually become the in-house wellness coordinators.


A unique offering from Goshen is how they work with current employers under Potential and pitfalls of hospital-to-employer sales
contract to take the next step in providing employees the most convenient access to As the examples above illustrate some hospitals sell health services to employers as
care. After several years of impressive health-related behavior changes, along with a way to create a new revenue stream. Others use them as “feeders” into other
improved health results, employers now contract with Goshen to provide them hospital services. As such, the key to success in these ventures is to consider and
full-time onsite health clinics for employees and their family members. clearly define early on what you want your hospital to be for area employers. Do you
According to Krista Thomas, wellness consultant for GFGH, “the outcomes were so see a specific area of need where your hospital is uniquely qualified to increase
positive after a few years that employers approached me to see if there was more screening access for employees at-risk, or perhaps, reduce specific disease incidence
we could do to further the health of their employees. The on-site clinic has turned that can lead to reduction in healthcare premiums? You may see the employer
out to be just the right service, and we have many other progressive employer business objective set purely to drive downstream revenue to the hospitals in your
solutions coming in the future.” system where occupancy rates have fallen below a certain level.
Words to the wise
Full service, mature market
Once the hospital is clear on purpose and establishes program objectives, be sure
Perhaps the most unique of all offerings that a provider can sell to area employers
the objectives — whether in the form of revenue, units of sale or costs — are truly
are the services of a health management entity, or health insurance plan. An
achievable by the team assigned to meet those objectives. The greatest risk we see is
example of this is a subsidiary of four-hospital, 786-bed CoxHealth in Springfield,
when inexperience in sales forecasting drives expectations far beyond what is
Mo. Cox HealthPlans offers employers of every size fully insured products — HMO/
achievable. Conversely, if expectations are too low, your program may sputter along
POS and several options for PPO — and complete administrative services for the
without ever truly launching.
self-insured.
Equally debilitating is a sales staff that does not get clear sales goals because the
“It’s important to realize that having your own health plan is not a guaranteed
responsible hospital manager wasn’t clear about setting projections for hospital-
money maker,” says Jeff Bond, CEO of a health plan developed by CoxHealth. “
to-employer services. In addition, there can be a risk to your professional
But if it’s done right, everybody wins — patients, businesses, hospitals and
reputation and to whatever investment in capital and staff that the hospital
the health plan.”
has put into the endeavor.

Case Study: Missouri’s Cox HealthPlans

A big (ad)venture Getting off to a great start
When it comes to selling health services to employers, none is more unique nor As with any venture where a hospital is providing services to businesses, success
perhaps, more challenging than the health system selling a health plan. Though it’s a comes with commitment and careful planning. Mr. Bond says the plan has enjoyed
complex service to create and to sell, Cox HealthPlans, part of CoxHealth in unwavering support and commitment from the system’s senior management,
Springfield, Mo., has been succeeding for well over a decade. through good times and struggles, However, CoxHealth placed a substantial
administrative “firewall” between itself and the health plan, which has allowed the
Jeff Bond, president and CEO of Cox HealthPlans, says that a key to success has been health plan to contract with hospitals and other providers outside of CoxHealth.
the commitment of the parent organization. “They committed research, resources and Additionally, to minimize expenses, the plan calls on consultants with specific areas
a long range plan,” he says. “We’re now in our sixteenth year in business.” of expertise, rather than hire full-time staff (for example, for actuarial review and
Cox HealthPlans provides companies in the region its expertise as a full-service legal counsel).
medical insurance carrier, providing medical management, claims processing, Another key to the plan’s success, according to Mr. Bond, is the fact that the health
underwriting, member services and a provider network. With approximately system and the health plan work as partners, not in the adversarial way that many
45,000 lives under contract in both fully insured and self-insured agreements, providers and insurance companies operate. The plan and the hospital share key
Cox HealthPlans offers employers of every size a competitive line of products statistics about quality and costs, giving each an opportunity to improve patient care
— HMO/POS and several options for PPO — to meet every employer need. and to cut costs.
As part of CoxHealth’s on-going commitment and planning to this endeavor, the Looking ahead
leadership team met recently with Dr. Glenn Steele, president and CEO of Geisinger
Health System in Danville, Pa., which has several health plan products. “In a meeting Because Cox HealthPlans is not a publicly held company with extensive overhead and
just last year, he told us that the most important thing we did was not to sell our shareholders to please, they are able to hold the administration expenses to
health plan,” says Mr. Bond. “The result is that today, Cox HealthPlans, like Geisinger’s employers to a rate substantially below the larger carriers in their market. Looking
successful plan, is better positioned to navigate and benefit from current changes in ahead, Mr. Bond says the plans should readily meet medical loss ratio requirements
the healthcare industry. set by the healthcare reform law.
For CoxHealth, the strategic decision to stay in the health plan business should pay off
more than ever in the years ahead. The same factors that have helped the plan thrive
CoxHealth is a three-hospital organization with more than 60 15 years in the rocky healthcare industry will surely help them navigate the current
physician clinics in the Springfield, Mo. region. http://bit.ly/nv67Ue} and coming changes the industry is experiencing.


There have been cases where the hospital-to-business programs did not get the The meeting preparation time is also greater for the high-level business sell.
resources required to build the infrastructure for an employee wellness program The seller knowing details of the corporation (such as public or private, financial
because the attitude was, “if business development sells it, then we’ll put in state, number and locations of other offices or facilities, number of employees,
personnel to fulfill the agreement.”When that “sell” day came, the hospital staff employee-friendly company?), any existing wellness or healthcare services being
scrambled to assign the personnel and to provide staff necessary training in the offered, who and the position of each meeting attendee and each person’s purpose
provision of wellness services. Needless to say, the program didn’t have the required for being in the meeting is a good place to start.
lift to get it off the ground.
With all these differences and these are just a few, healthcare leadership cannot
What do hospital-to-employer sales look like? expect a physician liaison to transfer directly to this type of sales position. And, they
In terms of business development and sales approach, the health system to may not have the capabilities to make the transition, in the same way that not all
employer interaction requires a business-to-business sales model. This model is sales people can be successful in the role of physician liaison. In both scenarios,
very different from what hospitals may be more familiar with, which is hospital additional knowledge, training and skills are required.
liaison staff calling on physicians. Because we find “the sale” is a key Achilles’ heel to
success, it is important to consider the differences and understand what makes the What type of business development is right for your health system?
employer sale successful. Hospitals and health systems that successfully sell any of these types of
services start slowly, with a well-conceived plan and realistic goals. They give
Selling to many the program the attention and commitment greater than a new service line
Selling to employers typically involve several people and not one individual. In launch because of the unknown factors associated with development and
smaller companies the decision-maker may be the owner, but in larger companies, expansion. A couple of points to keep in mind if you are planning to launch a
the chief of human resources with key stakeholders will make the decision. The CFO business-direct health service:
will probably be involved, and the employer will likely seek comparable proposals
• A marketing campaign alone will not stimulate interest on the part of the
from other providers or vendors. The key in any team-buying situation is to try to
employer decision-makers. This business is introduced and won via direct
meet with each or at least some of the individuals separately to win champions for
sales, with marketing supporting the sales program.
your proposal. There are variables to consider that can change the decision-maker,
and cost of services as it relates to the company’s procurement policies is a big one. • Use important sales channels, such as insurance brokers and insurance
consultants. It will be difficult, particularly in certain markets, to do it
Decision-maker expectations are different with the sell to an employer group. For without them.
example, the company chief executive and the finance chief want to talk dollars and
• If those responsible for the program are at the service line management level
results — cost savings, revenue and productivity. The HR people want to hear
with only hospital experience, they need an understanding of the greater
about how the program will help the employees. They may consider whether the
corporate (non-healthcare) environment, how to evaluate employer needs,
program is meaningful enough to serve as a value-added perk in recruiting
how to evaluate the competition, and how to message your advantages in sales
prospective employees. And, they too are interested in productivity.
conversations with employers are all required skills.
Longer buying process • Employers will want proof of value and results, so you will need an electronic
The “buying process” is typically longer and the larger the company, in many cases tracking and reporting system that is closely monitored — even if it is home
the longer the process. We use the term “buying process” to suggest that the seller grown using Excel. If you are starting out, without employer results to point to,
align the “sales cycle” with the employer’s internal process for buying or contracting. consider giving price reductions to get in the door and build “success cases”
Other factors that affect buying process have to do with the employer’s familiarity of tracking program activity and positive changes to employee behavior and health
the service you are selling. If the employer has never considered a wellness or metrics. Those can be used to bring in more business. In time your program and
provider-direct program and is not up-to-date on what these services can offer, you employee changes can result in decreased healthcare costs.
would have to plan for a longer sell cycle. Likewise, if the prospective company
currently has a program they are looking to switch from, there may be existing Employer-direct programs have the potential to create a healthier, more productive
contractual agreements that will prolong your ability to bring in the business. workforce while, decreasing employer healthcare cost, and increasing hospital/
health system market share. Perhaps, the most important aspect of employer-direct
Generally you can expect more meetings in this type of sale than other “simple programs for the health system is building relationships and collaboration with the
sales.”This is not a one or even two-call sale, so you can’t expect to close the sale actual purchasers of commercial healthcare, employers and their employees.
after the first couple of meetings. Part of the sales planning process entails knowing
what the next couple of meetings are likely to entail based on a variety of distinct Kathleen Harkins, principal of Harkins Associates, works with health systems and
outcomes from the first meeting. Obviously, there are different acceptable protocols health services companies in healthcare sales strategy, training and management
in different selling situations, for example, you won’t want this sales person, development. With a sales management and training background in health insurance,
“stopping in” to see if the HR chief is available. We encourage more effective capital equipment, Pharma, medical IT and professional contract services, Ms. Harkins
methods in the physician sale as well, but at least in that arena the “stopping in” is brings the successful sales strategies and methodologies of top-performing companies
more acceptable. to healthcare services, employer sales and physician relations through Harkins
exclusive model, Healthcare Consultative Selling™.


Hospitals Selling Direct To Employers Harkins

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