Ferndale enters agreement with three other cities for employee clinic
Published April 23, 2014
FERNDALE — The Ferndale City Council approved two agreements April 14 that will see a health and wellness center open in the lower level of Madison Heights City Hall for Ferndale, Hazel Park, Madison Heights and Royal Oak employees to use.
The first agreement was an interlocal agreement between the four communities, and the second was with Cornerstone Municipal Advisory Group, which already provides medical insurance brokerage services to Ferndale, to help the four cities manage the health and wellness center.
“As you know, the cost of health care expenses is hard to keep up with, and there is only so much you can do outside of increasing prices, but to keep costs down, Cornerstone is helping us model this clinic after similar centers in other states,” Ferndale City Manager April Lynch said. “This will help deter costs that go to the employees, and we bypass the medical system and hire our own doctors. This is not for people with cancer or various other issues, but if an employee has an earache or a sore throat or something you would go to your primary doctor for, this is what this clinic is for.”
The four cities would pay a fixed center expense each year for the three-year agreement, based on the number of active employee contracts each city has. For Ferndale, with 118 contracts, the city would be looking at a fixed cost of around $85,000 out of the health care fund for the first year.
How much money is saved is determined by how many of the city’s employees utilize the clinic. With a projection from Cornerstone of 35 percent utilization, Ferndale would spend about $25,000 in variable clinic costs, including lab supplies and pharmacy, for a total of nearly $110,000 for the center in the first year.
If 35 percent of city employees utilized the center, Ferndale would save almost $15,000 in the first year. The savings would increase for the next two years so that the city could save about $111,000 over three years at 35 percent utilization.
“All our numbers are conservative, and if more use it, the savings are all driven by how many employees use it,” Lynch said. “We made the projections with significantly conservative numbers, and we want to be surprised in a good way. If all four cities agree this is not going the way we want, we can terminate, but the first year is opening, the second year has more people coming and the third year is at a point that you can tell if it is being utilized the right way.”
As part of the interlocal agreement, the four cities have selected CareHere! to administer the operational aspects of the clinic, though the contract with CareHere! is not finalized. The cost of retrofitting the lower level of Madison Heights City Hall also has not been finalized yet.
The contract with Cornerstone would see each city paying $4 per employee contract, so Ferndale would be paying $5,388 with 118 contracts in the first year.
“What we have done is we have worked together to really research with extreme depth the feasibility to host an employee-sponsored clinic for employees and their families to utilize,” Ferndale Human Resources Director Jenny Longthorne said. “An agreement between all communities and Cornerstone would see them assist with implementation and all the data with the clinic and continued wellness efforts as we move forward.”
Mark Manquen, one of the founders of Cornerstone, said the clinic potentially could be used for city retirees in the future, if it is viable. The clinic would be small — between 1,000 and 1,500 square feet.
“We are kind of bringing the doctor back to the personal-care touch of a family physician,” Manquen said. “This clinic won’t be overcrowded, as appointment times can be established online, so wait times are basically zero because it is electronically managed. Access is an issue, as you sometimes have to make an appointment 90-120 days early, so we want to drive traffic through this center.”
Lynch said the clinic is expected to be up and running by either August or September. City officials are looking to save the city and employees money, she said, and the clinic could be the answer.
“Employees won’t pay co-pays at the clinic, and so it will not only serve their pocketbook, but it will save us in health care costs, and employees won’t have to pay more,” Lynch said. “This first year will be learning and figuring things out and encouraging employees, but in year two and three is when we can start saving money.”
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