Clinics in the Workplace and the Communist Experience

March 21, 2007

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The Kansas City Star is the latest newspaper to cover the growing trend toward onsite health clinics for large employers. They cite a Watson Wyatt study that indicates 23% of large and midsized employers operate onsite clinics and 6% plan to install one in the coming year.

The Star piece goes further than other recent coverage in citing objections to the clinics based on concerns about confidentiality and the disruption of the care relationship between employees and their regular physicians. I doubt either concern will slow the growth of these clinics, however, and I suspect neither will ever become a serious problem.

I was part of a World Bank/USAID group helping Eastern European countries convert their health care systems from Communism to a Western social insurance structure. One of the greatest challenges these countries faced was the fact that so much health care delivery had been provided through onsite clinics in the workplace under the Communist system.

The employers that provided this healthcare – and other social services – were state-owned and operated, of course. They tended to be large industrial enterprises. As these countries decommissioned these unprofitable companies, and/or sold them to private investors, the clinic system was suddenly dismantled. Large groups of employees had to find new ways to obtain healthcare.

Not that I’m saying this is a Communist plot. On the contrary. It seems like a good idea. It’s unlikely that workplace clinics could ever supplant traditional healthcare delivery the way they did in Eastern Europe, or that an economic trend away from large and midsized employers could ever threaten to disrupt the delivery of healthcare.

It’s just an observation.

From an investment point of view, I can only identify one substantial political risk for the owners of clinic management companies. That’s the possibility that the U.S. will move away from both employer-based healthcare and the insurance model. In my opinion, that’s not reason enough to avoid investment in this area.

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