NCPA - National Center for Policy Analysis


July 31, 2008

Toyota Motor (TM) is getting rave reviews for the on-site medical center it built at its truck factory in San Antonio.  The medical center, which cost $9 million to build in 2007, could save the company many millions over the next decade, says BusinessWeek.

The program has helped Toyota slash big-ticket medical items including referrals to highly paid specialists, emergency room visits, and the use of costly brand-name drugs.  Plus, there are big productivity gains because workers don't have to leave the plant and drive to a doctor's office for routine medical matters.

Other employers who have built similar medical centers say the cost savings come mainly from eliminating inefficiencies, including premium care that doesn't improve the patient's health:

  • P.H. Glatfelter (GLT), a York (Pa.)-based paper manufacturer, says the company reduced costs by $2.1 million last year using a Take Care Health-run clinic to serve 1,700 workers at a plant in Chillicothe, Ohio.
  • A large portion of the savings, says Greg Paradiso, Glatfelter's director of compensation and benefits, come from cutting unnecessary specialist referrals; at his plant, only 4 percent of patients are sent to a specialist, while 25 percent of patients in the surrounding community are referred out.
  • By avoiding 2,100 such visits, with an average fee of $250, the company shaved $525,000 from its total health care bill.

Companies running clinics also tend to save money on medicines.  At Glatfelter, the use of prescription drugs by employees fell by 5 percent after the clinic was opened, saving the company about $130,000.

The company-clinic movement faces an important test in November, says BusinessWeek.  Walt Disney Parks & Resorts plans to open a $6 million facility at Disney World in Orlando, which will serve more than 400,000 employees and their dependents. 

Source: David Welch, "Health Care Reform, Corporate Style," BusinessWeek, July 29, 2008.

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