Companies Considering Outsourced On-Site Health Care

With health-care costs expected to rise by 10% this year (pharmaceutical costs increases are even higher, between 15% to 20%), more and more companies are considering adding an on-site health center. But rather than operate them themselves as they have in years past, the companies are increasingly turning to outside providers. There are three reasons: lack of in-house expertise, the opportunity to lower costs, and the ability to distance the company from decisions involving the treatment of occupational injuries. "Companies do not have the time or expertise to manage health care themselves," says Will Gilliam III, director, business development, CHD Meridian Healthcare, Latham, N.Y., one of the largest providers of on-site health-care centers, medical centers, and corporate pharmacy services in the U.S. By using a third-party provider, says Gilliam "it puts [companies] at arm's length when it comes to occupational injuries" and medical decisions. In addition, providers such as CHD -- whose clients include General Electric Co., Bridgestone/Firestone Inc., Bethlehem Steel Corp., and Goodyear Tire & Rubber Co. -- often can point to a history of lowering medical and pharmaceutical costs by at least 15% and workers compensation costs by 25% or more.