Royal Oak, Madison Hts. &Ferndale Team Up on Wellness Center

Royal Oak, Madison Heights and Ferndale Team Up on Wellness CenterJudyPalmer01

(Judy Davids, City of Royal Oak, June 5, 2014)

While climbing costs of health care continue to be a major concern nationwide, the cities of Royal Oak, Ferndale and Madison Heights are optimistic the creation of a health and wellness center for government employees can save hundreds of thousands of dollars on health care costs.

On Monday, the Royal Oak City Commission passed a resolution to approve an interlocal agreement that authorizes the build out of a clinic within Madison Heights City Hall to be managed by CareHere, a Tennessee-based management company specializing in providing on-site health care. The City of Madison Heights previously approved the venture. Ferndale has already approved the concept and two of three agreements. They will consider the third agreement June 9.

“Royal Oak has worked hard to control our health care,” said Royal Oak City Manager andrew cissel ad in suitDonald Johnson. “We have increased deductibles and co-pays. We require employees to pay 20 percent of their health care premiums. We eliminated retiree health care entirely for new employees. All of this this merely moved costs from the city to our employees.”

Under the program, city employees and their families will be able to see a doctor, get lab work, diagnostic testing and generic medications at the health and wellness center with no out-of-pocket expenses.

The clinic, expected to open in the fall, is on the cutting edge of health reform. It will be only the second seed023_petcare_au_pairpublic employer-sponsored health and wellness center in Michigan. The first such center opened in Battle Creek earlier this year. Such clinics are popular in the south, particularly in Tennessee.

~Costs are controlled through bidding and negotiation up front and are passed through directly to the cities without markup.

~Physicians at the clinic are paid an hourly rate rather than a traditional-fee-for-service model.

~Only the acquisition cost of medication is paid by the cities. There are no mark up costs.

~Clinic waterworkvisits typically do not have additional third party lab, diagnostic, pharmacy or insurance company fees.

In addition to efficiency savings, the center is expected to reduce catastrophic claims by offering free health screenings, wellness coaching, disease management and healthful lifestyle programs.

“The cities will benefit by avoiding the costs associated with the inefficiencies, markups, and incentives for unnecessary tests and procedures that are a fact of life with traditional, fee-for-service based health insurance.”

Based on past experience, CareHere projects a 35 percent utilization rate in the first year; 45 percent in the gallowaycollens1second and 55 percent in the third, which could add up to more than $1.5 million in savings for the three neighboring communities.

“It’s a huge opportunity for us to shift the face of health care,” said Ferndale City Manager April Lynch, adding, “It’s what makes Oakland County unique. We are not afraid of new ventures.”

Feedback from city employees has been very positive, Lynch said.

seed015_kathryn_balcer“They’re excited and engaged,” she said. “We get to be on a team that includes not only the city and our employees but our neighboring communities, too.”

Cornerstone Municipal Advisory Group, which specializes in serving municipalities and other public sector employers, is the agent/consultant for the cities of Madison Heights, Ferndale, and Royal Oak.

“Our business has been built on bringing innovative solutions to our clients to help them contain the rising costs of healthcare, yet preserve and protect valued employee benefits,” said Cindy Pavella of Cornerstone. “The concept of employer-sponsored health and wellness centers is one we strongly believe will achieve those goals.”Street-Eatzz-Ad

Cornstone is discussing the wellness center concept with several clients and prospects, according to Pavella.

“Many are interested, but most want to wait to see how a real health and wellness center would fare.  It is not surprising that these three cities, with taglines and logos such as Life Now Playing, Ferndale Moves! and City of Progress would be the trail-breakers in southeast Michigan,” said Pavella. “We are excited to continue our collaboration with these three cities in the next phase of this project and look forward to the opening of the first municipal employer-sponsored health and wellness center in southeast Michigan.”

Read the full agreement here.

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