Franklin city employees will have access to new health services under a new partnership with Johnson Memorial Health and PMR Healthcare
The Franklin City Council unanimously voted to enter an agreement with the companies during their Monday meeting.
City officials pride themselves on offering good insurance for a low price. City Attorney Lynn Gray described the city’s offerings as the “Cadillac of all plans.”
The city’s health care costs are increasing and the city paid about $3.5 million in claims last year. That’s an amount that Mayor Steve Barnett says is not sustainable. Health care costs will only continue to rise and claim costs will mount as the city adds new employees, he said.
Even though the budget covered the $3.5 million, the city typically spends between $2.5 to $3 million on insurance claims each year, which continues to exert pressure on their budget. They also pay for additional insurance under a stop loss policy in the instance of a catastrophic medical claim, which is included in those payments, Barnett said.
Instead of passing the cost to the city employees, the administration pursued this partnership to cut costs while hopefully providing better services. JMH and PMR will offer an umbrella clinical service for the city’s covered individuals and will lock in claim expenses to a set or reduced price.
“The idea behind PMR is to have that clinic available to city employees,” Gray said. “The employees will continue to have the option of going to any health care provider they wish, but it will help if we can get the employees to go to the clinic for routine things such as physicals for children, when you need poison ivy medication, when you need to get cold medicine or any of those kinds of things. Plus, many employees across the board don’t have primary care physicians.
“If you can get people to have a relationship with a primary care physician or with a facility, you can often times detect medical problems before they become big medical problems which cost us a lot more.”
Evidence shows that it is traditionally more expensive for employees to seek treatment at other medical carriers because there is not a collective agreement in place as to what the cost of each provided medical service should be, she said.
This will not change the amount city employees currently pay for their insurance. They will operate under the same plan but they will be encouraged to use PMR’s clinic instead of personal physicians or urgent care providers. They could potentially save on copays for prescriptions, Gray said.
She says the other incentive for employees to utilize this service is the clinic’s location and availability.
“If somebody comes to work in the morning, they can call and go out there rather than have to schedule a day off and make an appointment with a doctor two weeks out, even if they can find a primary care physician,” Gray said. “That is the reason why statistics say that many people don’t have a primary care physician because there is no availability. They end up going to the urgent care and to the hospitals which are not very cost effective for many of the routine things.
“Generally speaking, if you have an agreement with a provider for a fixed amount for a service, you usually get the benefit of an agreed-upon amount that you don’t have without a collected agreement with the health care providers out there,” she said.
Currently, 38% of the city’s employees do not have a primary care physician, including Mayor Steve Barnett. His physician had retired and he discovered the high costs associated with urgent care facilities.
“I had an earache and went to an immediate care center that cost double what I would have paid,” he said. “That is what opened up my eyes. I found out you could do it a better way.”
The agreement with JMH and PMR will cost the city $31,000 per month, which will save the city money when it comes to employee claims, said Gray. Some months, the city pays a six-figure number to cover claims, she said.
PMR claims that this change will save the city about $400,000, but the actual savings amount would be roughly $100,000 to $200,000, said Barnett. The city committed to a two-year agreement with PMR, who are allowed to raise the cost of the monthly bill up to 10% in order to adjust for prescription and service costs before the city would be able to exit the agreement.
The city was told that it may take up to 18 months to see if they are actually able to save money with this agreement. They will also pay about $8,500 in setup fees.
PMR agreed to cover 580 individuals including the family of city personnel. Barnett said it is extremely important that the city’s department heads encourage their employees to use the clinic.
“If we can’t get our employees to try this out and get them to see that it is a good deal to them, then the cost is simply going to have to be passed on to them,” he said. “We can’t sustain this. In the end, if we can’t find out how to save money, we are going to have to be like every other business that have their employees contribute more.”
There are ongoing discussions to incentivize employees to attend an initial physical with the clinic. The first checkup would be 90 minutes with a 60-minute follow-up for bloodwork and lab studies to establish a sturdy baseline of the status of each person’s health, Gray said.
Rick Kester, chief operating officer of JMH, said the hospital has been working alongside PMR for over a year.
“We see where this model is sustainable and we are trialing this out,” Kester said. “We are doing three tracks: one with JMH employees, one with [Franklin Community Schools], and also one hopefully with the city of Franklin. We are going to be watching and studying this like hawks. Between [the city of Franklin] and us, we are going to hold them very accountable to their promises.”
Tina Gross, a Board of Public Works and Safety member and Franklin Community Schools employee, said school employees have a similar agreement in place for the same type of services with JMH. In her experience, it is a convenient service, she said.
PMR would like to have the clinic available for city employees at the beginning of next year. Hours of the clinic will be flexible depending on need, but they will be reliably available throughout the work week.