From: Brian Klepper [mailto:bklepper@gmail.com]
Sent: Monday, May 17, 2010 2:56 PM
To: Brian Klepper
Subject: WeCare’s Tom’s River, NJ Clinic: First 3 Months’ Performance
On Friday, I reviewed initial (i.e., first three months) claims data from Integrity Health’s and WeCare’s Partnership Health Care for the School District in Tom’s River, NJ. Here are some general observations.
I compared total paid claims for November-Jan 2008-09 and 2009-10. I excluded claims greater than $10,000, because it is unlikely that the clinic had any impact on these shock losses, especially during its first three months of operations. Nor does this part of the analysis consider drug costs. I am still working on those.
In November-January 2008-09, total claims <$10,000 for an average of 2,195 employees (or 5,648 covered lives) equaled $5.116 million, or $2,330.60 per employee ($9,322.38 per employee per year (PEPY)). Factor in a 6% health care inflation rate for 2009 (per the KFF/HRET Survey of Employer Health Benefits, 9/2009), and we would expect the present value of the 2008-09 PEPY cost to rise to $9,881.72.
In November-January 2009-10, total claims <$10,000 for an average of 2,223 employees (or 5,720 covered lives) equaled $4.404 million, or $1,981.17 per employee ($7,924.70 PEPY).
In other words, the annualized average cost per employee, not including drugs, has dropped by $1,957 or 19.8%. At the current number of employees, this impact can reasonably be expected to translate into annualized savings of $4.35 million.
In the first 3 months of clinic operations, the PEPM operational cost + management fee averaged $69.24, or, annualized, about $1.85 million. This projects an estimated first year net savings of $2.5 million ($1,125/employee) due to the clinic. It also projects a return on investment of 2.35:1, not including Rx impact.
We’ll do more targeted analysis to determine which cost areas were impacted most, but this overview provides the most salient information for clinic prospects, which is significant bottom line savings.
Brian
Brian Klepper, PhD
904.343.2921, bklepper@gmail.com
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