Why Employers Are Turning to Primary Care as Health Care Costs Soar

Note: This transcript has been created with a combination of machine ears and human eyes. There may be small differences between this document and the audio version, which is one of many reasons we encourage you to listen to the episode above!

Dan Gorenstein (DG): All told, U.S. companies spend more than $1 trillion every year on health care for employees and their families – more than 150 million Americans.  It’s a huge part of a company’s budget. 

But what’s the payoff for that big spend? Even many employees with generous health plans complain it’s tough to find a doctor for affordable, primary care.  

Workers are frustrated. Employers are fed up.

Raymond Tsai: Nowhere else in their business they would say that it is okay to give worse and worse service and charge more and more. But we’ve allowed that in health care. 

DG: Several large U.S. companies are trying to fix the broken system themselves –  giving employees low-cost, primary health care right in the workplace. 

Today, a look at one big bank’s plans to ensure its employees get convenient, regular check-ups and other routine care — and why these experiments have stayed small. 

From the studio at the Leonard Davis Institute at the University of Pennsylvania, I’m Dan Gorenstein –  this is Tradeoffs. 

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DG: Thirty-year-old Lee Sagraves – whose pronouns are ‘they, them’ – prides themselves on being a problem solver in their personal life and in their finance job at the bank JPMorganChase.

Lee Sagraves (LS): Mostly I yell at spreadsheets. It’s something different every day. Lots of data, lots of analysis.

DG: But one problem they have struggled to solve this year  –  why were they hungry, thirsty and tired all the time? 

LS: My energy levels were so down. I was just so fatigued all the time. I was starving all the time and I’m drinking more water. That’s healthy, isn’t it? I kind of justified and normalized everything to myself because it came on so gradually.

DG: Lee had health insurance through JPMorgan, but like an estimated one hundred million other Americans, Lee did not have a go-to nurse or doctor they saw regularly for checkups. 

And the sticker shock of $100 for a single urgent care visit led Lee to avoid most routine care.

LS: Who can afford that when you’ve got the flu? Like, no, I’ll just lay on the couch and suffer. Thank you.

DG: That all changed for Lee last July.

That’s when Lee finally paid a visit to a clinic that the bank had opened back in 2022.  

LS: I hadn’t been to a doctor in a very long time. So, I was like, almost chickened out. I’m like, no, this could potentially be serious. You need to do this. It’s free. It’s convenient and it’s right here on-site.

DG: Employees could go to the lobby, get a coffee and a quick health check that included basic blood tests – all on JP Morgan’s dime.

In 2021, the bank had launched an initiative called Morgan Health – with the purpose of investing at least $250 million in companies that are trying to help employers address their health care needs. 

The effort also has an arm that tests and pilots new health benefits within JPMorgan itself. 

That was how Lee could so easily get seen. 

The bank had contracted with Vera Whole Health to run five, full-service clinics complete with physicians, nurse practitioners and mental health workers for its 35,000 workers and dependents in Columbus, Ohio. 

JPMorgan is placing a bet that over five years, this intensive preventive care will keep employees healthier and slow how much the bank spends on health care. 

And if they can pull all that off they think they can sell the model to other employers. 

DG: Lee’s results alarmed nurse practitioner Amy Cooper. She reached out to Lee immediately. 

Amy Cooper: I said, listen I would send you to the ER to get on an insulin drip right now because your blood sugar is so high. 

DG: Or Lee could come in to see her. Based on the results it seemed like the 30-year old had diabetes. 

Within 24 hours of taking their test, Lee was back in the clinic at work.

LS: I was definitely a little scared. I was like, I now have something wrong with me I guess. That isn’t just going to go away. That I can’t just ignore or power through.

DG: Amy and the team took their time with Lee. Answered their questions, taught them  to use a glucose monitor, how to inject themselves with insulin.

And, Amy says, talked to Lee straight.

AC: I don’t want to scare them, but I had to be honest with them. I said, listen, I need you to take these medicines, or your kidneys are going to die from diabetes and you’re going to be on dialysis, and you’re like, your life is going to be shortened.

DG: This is Vera Whole Health’s philosophy: treat every interaction with a patient as an opportunity for preventive care.

For example, when a JPMorgan employee comes in with a sinus infection, Amy also makes sure that person’s vaccinations and cancer screenings are up-to-date. It’s what she did with Lee. 

AC: It’s a shift in focus that we’re proactive and not reactive.

DG: Vera’s goal is to help people better manage their health under the assumption that when people like Lee do that, they can avoid expensive emergency room visits and hospital stays. 

Nurses ended up spending 90 minutes – an hour and a half  – with Lee. Something that is virtually unheard of in most primary care offices around the country.

Vera staff can do that, in part, because they are not paid based on the number of patients they see and the procedures they perform.

Lee says that investment has paid off.

LS: Here I am a month and a half later, able to stick myself with a couple needles every few days. It’s a big deal for me because I’m also fun fact, just a little bit needle phobic. And I’m also just like trying to be more active. And trying to be more mindful of what I eat.

DG: Lee’s experience hits home for Dan Mendelson. 

Dan Mendelson (DM): When you have an individual whose life is transformed. It’s exactly why we’re doing what we do.

DG: Dan directs Morgan Health.

As pleased as Dan is for Lee, he knows the bank has plenty of work left to do to improve health for the company’s 285,000 employees nationwide and tap the brakes on the $2 billion dollars JPMorgan spends every year on health care costs. 

DM: Anecdotes are wonderful. It shows us that we’re on the right track. But the ultimate test is whether they’re improving outcomes and reducing cost.

DG: Morgan Health is two years into its five-year experiment. So far a third of employees in Columbus have used the clinics which Dan is pleased about. 

But he says the company needs more data to fully understand how much impact this program is actually having. When we come back, what research says about how much money primary care programs can save companies. And the limits to this approach. 

MIDROLL

DG: Welcome back. Before the break we heard about how the clinic at JPMorgan office in Columbus, Ohio had helped Lee begin to manage their diabetes. 

The promise of free care and the convenience of having a primary care clinic located right at work made it much easier to address their health.  

A growing number of employers who oversee their own insurance plans are beginning to offer their workers more preventative care.  

We’ve asked reporter Alex Olgin to look into this strategy of investing in primary care and how well it works. She joins me now to talk about it. Hey, Alex.

Alex Olgin (AO): Hi Dan.

DG: So Alex, let’s start by talking about why companies are bullish on primary care as a way to improve worker health and reduce overall health care spending.

AO: Yeah, Dan. There are really two basic ways that companies think investing in primary care could help employees and save money. 

First they are cutting out the middleman – the insurance company – and agreeing on prices directly with the doctor or hospital. 

Matt Ohrt (MO): When you have less hands in the cookie jar, it becomes much more affordable, less costly.

AO: That’s Matt Ohrt, formerly the head of human resources at Merrill Steel in Wisconsin. 

Merrill cut out the insurance company and worked directly with a primary care physician to treat the 1,000 employees and family members in their Wisconsin and Missouri facilities. 

Matt found that the combination of building an onsite clinic, paying a primary care doctor directly and steering workers away from high cost, low quality specialists he was able to save more than $5 million in five years. 

He now runs a company that tries to duplicate that success for other firms.

DG: So let’s take a look at that for a second. On first pass, this sounds pretty counterintuitive because, of course, businesses hire insurance companies with the idea that the insurers will negotiate much better rates than they could ever get  on their own. 

AO: Right, but based on my reporting there’s some evidence that working with insurers may have less value than you might assume. 

There are more than a dozen case studies of individual companies showing that they can get lower prices by working directly with the doctor or hospital. 

Then there are at least three other studies published in Health Affairs and JAMA, that show cash prices were lower than insurance negotiated rates. 

DG: I see and that’s why Merrill Steel paid doctors directly. Is this a strategy other companies are doing as well?

AO: Yes they are, but it’s still a relatively small proportion of companies overall. 

Shawn Gremminger is the CEO of the National Alliance of Healthcare Purchaser Coalitions. His organization represents public and private employers that buy healthcare for 45 million employees. 

He told me there’s enough return on ditching insurers that 20% of his members work directly with doctors and hospitals and based on the groups annual survey 30% more plan to in the next few years. 

Shawn thinks the pressure companies are facing as prices continue to rise – may lead to more businesses making the leap. 

Shawn Gremminger (SG): The fascinating question for me is the carriers, how are they going to respond to this?

AO: What Shawn is saying there, Dan, is that the ‘carriers’ – the insurance companies – might start to feel the heat if some of their biggest clients start walking out the door. 

And he wonders if the Uniteds, Anthems and Blue Crosses will do anything to sweeten the pot.

DG: Ok you said there were two ways companies think investing in primary care will save money. The first is contracting directly with providers. What’s the second? 

AO: Paying doctors and nurses to spend a bunch of time with patients to help them manage their diseases. 

This as opposed to paying for every appointment, every needle prick, every service.  

DG: Like with Lee and their diabetes. 

AO: Exactly. 

At the highest level, the idea is to pay doctors and hospitals to keep people healthy rather than to see a lot of patients and that’s where the primary care part of this comes in. 

Under this different payment model – providers have more incentive to focus on preventive and primary care. 

The buzzword, Dan, is value-based care – and people have been talking about it for 20 years. 

DG: Right, like what JPMorgan is doing with Vera Whole Health – instead of paying per visit, providers get paid to work on managing patients’ diabetes and high blood pressure and all the rest and minimize expensive specialists and hospital visits. 

AO: I talked to the nationwide health care firm Premise Health that runs these clinics for around hundreds of employers nationwide. They told me that they’re claiming savings, on average, of 25% per person every year. 

One lesson that companies and health policy wonks are learning is that doubling down on primary care can help both employees be healthier and help employers lower costs.  

DG: Ok. That makes some intuitive sense if only because younger folks tend to be healthier and preventive care can help them stay that way longer.

AO: There’s lots of interest in new payment models. The federal government has been testing them for over 10 years. So-called accountable care organizations have had success. That’s jargon for a group of primary care doctors and specialists who work together to prevent hospitalizations and avoid unnecessary tests. 

These deals have saved Medicare money for six straight years.

DG: But the savings have been much lower than some had hoped. 

AO: That’s true. And it’s important to call out the limits of what primary care can do alone. 

Models that just increase funding for primary care are falling short.  

One of the nation’s biggest, most ambitious experiments – we’re talking a 5-year study with 17 million patients – focused on beefing up primary care. Turns out it did not save any money. 

Ann O’Malley who works at Mathematica, a research and consulting firm has spent 12 years evaluating these programs. 

She says the reality is that 95% of our health care dollars go to other stuff like hospitals, surgeries and drugs. So any program trying to save money needs to tackle those costs as well. 

Ann O’Malley (AO): It’s not an either or. It’s important to both invest in primary care and at the same time, reduce costly, unnecessary services. 

DG: Ok, Alex.

So those are the two ways that companies think investing in primary care can help improve worker health and save the business money.

Contracting directly with doctors and hospitals and paying them to keep people healthy. 

But we’ve been hearing about those strategies and other efforts to try and solve this intractable health care cost problem for years. 

Even JPMorgan has tried to tackle it before. 

Back in 2018 there was a lot of hype around a partnership with Amazon and Berkshire Hathaway.

AO: Yes, that project was called Haven. And it ended up falling apart after three years. 

Honestly Dan, there are plenty of reasons to be skeptical that we are on the cusp of some private sector primary care movement. 

Bob Galvin (BG): It takes a lot of expertise in employers.

AO: Bob Galvin would know. He spent 15 years leading the change for General Electric. He now is board chairman for the Catalyst for Payment Reform, an organization that helps employers be more savvy health care buyers. 

BG: They’re making jet engines. They’re doing software. Health care is not what they think about. So I don’t think it’s nationally scalable.

AO: And, Dan, Bob told me even when companies, like JPMorgan, do make these big investments, it helps their own employees like Lee. And that’s great. 

But has the unintended consequence of exacerbating a two-tiered system. 

One where some employees like Lee get robust, low cost primary care. And others are struggling to even find a doctor when finding primary care is already hard to come by. 

And I actually saw that up-close myself reporting this story.

Remember Lee, Dan. Lee’s getting a lot of good care for diabetes right?

DG: It sure sounds like it. 

AO: It’s a totally different story for Lee’s mom, Gwen who also gets insurance through work at a clothing company and has diabetes, too. 

Lee has had five appointments with providers over the last three months. All for free. 

Lee’s mom only sees a doctor for 10 minutes every few months. 

Gwen Sagraves (GS): I’ve never experienced the medical field as anything other than we get you in, we give you a pill and we send you on your way. And then if you’re sick again, we bring you in, we charge you again.

AO: Unlike Lee, Gwen feels isolated. No medical provider who is checking in, or rooting for her or helping her. 

Case in point – Gwen has struggled to afford a glucose monitor to check her blood sugar. 

That leaves her guessing whether she’s high or low. Her doctor’s advice: eat less chips and cut out the soda. 

GS: If you don’t feel cared for, sometimes you don’t care for yourself. Your morale is down, you don’t feel good, so you don’t eat dinner when you come home from work. That’s not good, but you just don’t feel good. And I think it’s all, you know, part of. Feeling like you matter and that you are cared for.

AO: Gwen thinks if she had the same low-cost, high-touch care as Lee, she’d have her diabetes in check.

DG: So, Alex, this is the two-tiered system.

And so – even if JPMorgan has success here it’s hard to imagine too many employers following their lead and getting deeper into primary care. 

At the end of the day we’ve just historically seen so little innovation.

AO: Yeah, that’s how Bob Galvin with Catalyst for Payment Reform sees it, too. 

He’s spent years trying to convince companies across the country to leverage their enormous buying power. They largely haven’t. 

A solution for more affordable care for everyone – the thinks – needs to be more heavy handed. Like the federal government stepping in and actually capping prices for surgeries or hospitalizations.

BG: I think employers are going to get much more interested on the policy front, controls prices than they ever have been before. I think that’s the next frontier.

AO: This is an idea that some health care economists have started to come around to as well. 

Now whether limits on expensive care would lead to shifting more spending into preventive primary care – like what Lee gets — is an entirely different question. 

DG: Thanks for your reporting on this Alex. 

AO: You’re welcome Dan. 

DG: By the end of 2026, Morgan Health expects to learn whether its primary care focused experiment in Columbus is working – improving care and saving JPMorganChase money. 

I’m Dan Gorenstein, This is Tradeoffs.