Standalone or Blended Occupational Medicine Clinic?

Should you [continue to] operate your occupational medicine clinic as a standalone practice or in a blended model, combining with your urgent care services? If you have a hospital-affiliated occupational medicine clinic, it may have operated the same way year after year, never in the black because of expected “downstream revenues.” Or an urgent care chain may want to add occupational medicine to your service line – do you start a new separate office or blend it into your current operations? As with most such questions, the answer is “it depends.”

Hospital Affiliated Occupational Medicine departments

These take several forms:

  • Primarily employee health for the hospital/health system’s own employees
  • Employee health extending some services to outside employers
  • mostly on the “occmed side” vs the work comp side, such as for drug screens, ,MRO services, screening/testing, preplacement exams
  • both occmed and workers compensation, usually with work comp seen first in the ED or maybe at urgent care, then referred to occupational medicine for follow up
  • Standalone occupational medicine center on hospital campus but with separate employee health center
  • Blended model urgent care/occupational medicine

Community Based Occupational Medicine practice

Also several forms:

  • Standalone occupational medicine center, usually in an industrial area
  • Blended occupational medicine with urgent care, usually in industrial area
  • Blended urgent care with occupational medicine, usually in residential/shopping area

Criteria for a standalone occupational medicine clinic

A standalone occupational medicine clinic works best when both the doctors/NPs/PAs and staff are trained and oriented specifically for occupational medicine practice, and there is enough volume of patients for occupational medicine and worker’s compensation services to pay the staff, the overhead, and  hopefully have something left over we call “profit.”

When the practice is privately owned or “for profit,” it obviously has to run in the black or it  will not be viable (forever.)

If it’s institutional/hospital/health system owned, there has been a historical tendency to allow these practices to operate at a loss.  The question here is what is an acceptable level of loss?

Employee Health

If the hospital takes care of it’s own employees in the clinic, then it may run at a “loss,” however, a couple of considerations make this viable.

One is would the hospital have to pay an outside vendor/clinic for the same services, e.g. drug screens, pre-placement exams, TB tests, HepB, Varicella, MMR, flu shots and other rather mandatory employee services.  Usually “yes,” so that accounting needs to be done and credited to the clinic, and expensed to Human Resources.

Another is the gain in productivity of the hospital employee staff by having employee health right there.  This may vary widely depending on how extensive are the health, wellness, EAP, mental health, and similar programs.  A well run employee health program should demonstrate it’s own value-added to the organization.

Then there is case management for worker’s compensation care, having more intimate knowledge of modified duty assignments and return to work expertise.

Downstream Occupational Medicine Revenue

The more traditional reason for tolerating operating losses at a hospital-affiliated standalone occupational medicine clinic is to capture downstream revenue.  Most of that will be reflected in these services relating to the worker’s compensation side of the practice:

  • Diagnostic Imaging
  • Physical Therapy
  • Specialty care – mostly orthopedic
  • Surgery/inpatient care

Many privately owned practices particularly rely on physical therapy revenues for a significant portion of the profit margin.

So when is there enough downstream revenue to make this viable?

When first setting up these programs 20 or 30 years ago, there was little concern that the downstream was adequate.

But what I hear increasingly from hospital CFOs is that due to declining reimbursements and increased staffing costs, the margin squeeze on those services leaves little, if any, offset to substantiate large losses from the occupational medicine practice.

And with many worker’s compensation insurance carriers contracting with third parties to manage the imaging and PT referrals, the hospital either doesn’t get that business at all, or it is at a much-reduced rate, so goodbye margin.

Summing it all up

So there needs to be a very good handle on the baseline P&L of the clinic, the referral patterns with associated net fees collected, minus the expenses for all downstream revenue departments, and credits for employee health, both direct (what would have been paid to outside vendors) and indirect (productivity.)

The Blended Occupational Medicine Clinic

The standalone model assumes there is enough volume of both hospital employees and outside customer employees to support a dedicated occupational medicine staff.

If not, or if a typical community based urgent care center is to add occupational medicine services, this gives rise to the blended model.  We also see this with the predominant occupational medicine clinic wishing to add urgent care services (think Concentra.)

For new services, usually the existing urgent care staff will now care for occupational medicine and workers compensation patients.  The downside here is often there is little background knowledge of or training for occupational medicine.  With proper training and starting with “entry-level” services, this can work out just fine.

Cross-training is key

A successful blended clinic model is absolutely dependent on extensive cross training of staff.  Too often I’ve seen some try to have “dedicated” occupational medicine staff, and too often I’ve seen this result in the “us vs. them” feud.  You must create a culture of “we” provide urgent care and occupational medicine services.

This is not to say that individuals can’t be given certain responsibilities or “ownership” of occupational medicine tasks, like drug screen, physical exam, testing, and workers’ compensation written reports to employers, or front desk keeping a tally of commercial driver exams coming up for recertification.

Rather, MAs, nurses, techs, and even front desk staff should understand the culture & attitude of providing work related services to an employer client, and be cross trained in scheduling exams, performing drug screens, audiometry, spirometry and uploading DOT exam results to the national registry, among many other tasks.

I’ve found this is an excellent way for radiology techs to expand their technical skills and be more productive since in most blended practices only about 15% of their time is devoted to taking x-rays.

Provider Cross Training

Even though you may have a physician or NP/PA occupational medicine “champion” – someone who takes the lead on being the most up to date and knowledgeable for the practice, all the providers should also be “cross trained” and have a basic understanding of occupational medicine and workers compensation concepts.

There  is a much longer list but some of the very basic concepts that all must learn are:

  • Although our primary concern is for the patient, we also must address issues and concerns of our client, the employer (as well as the claims adjuster, case management nurse, DER, among others)
  • The pre-placement or fitness for duty exam is a different animal than a family/internal medicine exam – knowledge of ADA laws, essential elements of the job and “reasonable accommodations” is mandatory.
  • Drug  screen or pre-placement exam results must be reported in a timely manner – when lab results come in requiring a physician sign off, the doc on duty that day has to take care of it – the client doesn’t care to hear “Dr. so-and-so isn’t in until next Tuesday”
  • The difference between a First Aid and an OSHA recordable workers compensation case
  • Early return to work philosophy

Occupational Medicine Market Analysis

How do you know if you have enough volume for standalone vs. blended?

An occupational medicine specific market analysis will give you the data needed to assist in this determination.  Elements of this analysis should include:

  •  A count of employees in each industry sector
  •  Injury rates calculated using the specific industry mix in your area for each sector
  •  Competitive analysis
  •  Estimate of potential market share
  •  Financial projection of your potential annual revenues from occupational medicine services
  •  Provider and staff hours needed to accommodate the increased volume
  •  Predicted Profit & Loss analysis. 

Get the OccMed Analyzer

Once you know the hours of staffing requirements you can determine if this supports a full time standalone clinic or should be merged into a blended clinic model.

Bottom Line

The decision to operate a standalone occupational medicine clinic or merge it into a blended clinic model with urgent care depends on multiple factors.

Hospital/health systems must consider employee health benefits, service to outside employers and the viability of downstream revenues.

Urgent care centers can add significant revenues by adding occupational medicine services.  Whether to create a new standalone clinic amongst it’s current urgent care centers or add those services into a merged clinic model depends heavily on the occupational market analysis.

Next Steps:

OSHA recordable

Train your providers for occupational medicine

Schedule a free strategy call with Dr. Earl

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