The Anchorage School District plans to hire a Seattle-based health care company to run a new medical clinic for district employees and their dependents to cut exploding costs and catch health problems early.
The clinic will provide primary care, health-coaching, basic lab services and some prescription medicine. The district will pay the contractor, Vera Whole Health, a flat annual fee of about $2.3 million.
The contractor-owned clinic will be available to thousands of classified employees and dependents enrolled in ASD's self-funded health-care plan, but not teachers or bus drivers, who are covered by union benefits.
The clinic is a way to control spending by turning a variable cost into a fixed one, said district officials.
"The steps that we're taking in terms of addressing health care costs are nothing short of revolutionary," said Anchorage School Board member Kameron Perez-Verdia during Monday's board meeting. "We're stepping out and essentially creating our own clinic and have the potential of saving millions of dollars a year in health-care costs."
The board authorized award of the district contract to Vera Whole Health to manage the clinic during the meeting. The district selected the company's proposal out of six submitted.
The contract will mark Vera Whole Health's first foray into Alaska. CEO Ryan Schmid, said he hoped it was just the beginning of the company's presence in the state.
"I really believe we can make a profound difference up there," Schmid said, noting Alaska's high health-care costs. "So we're very excited for the opportunity, and hopefully we're just getting started."
The rapidly expanding Seattle health-care company provides health management to large and midsized employers. The company currently runs eight clinics in Seattle and Arizona, Schmid said. By the end of the year, he said the company's goal is to have 15 clinics in at least six states.
Todd Hess, the district's chief human resources officer, said the Anchorage clinic should open by the start of next school year and would serve employees like district administrators, principals, maintenance staff, food services employees and teaching assistants.
Under the self-funded model, the district operates its own health plan using a third-party administrator that handles claims. The district pays its share of medical bills out of its general fund.
In the 2013-14 fiscal year, the district spent $34.4 million in medical claims. The next year, those costs climbed to $36.6 million and increased by 10 percent in 2015-16, said Jim Anderson, ASD's chief financial officer.
Hess said the district had tried to work with medical providers in the past to control costs, but were "rebuffed."
"I believe in competition and free enterprise to the very bottom of my soul," he said. "This is a response when an individual believes that they're being taking advantage of, so we're exercising our free enterprise rights."
The district estimates the new medical clinic will reduce costs by 12 percent during the initial three-year contract, though Hess described that estimate as "conservative."
Hess said the clinic will be optional.
According to a memo approved by the board Monday, the district may offer incentives to employees who use the clinic, including reduced out-of-pocket costs for visits and reduction in premiums for employees and dependents who complete wellness evaluations.
Schmid said he could not speak specifically about the Anchorage clinic, including its fees, because the contract was still pending. But he said the company's clinics typically have medical teams that include physicians, nurse practitioners, medical assistants and health-coaches.
Schmid said the teams provide family medicine as well as address patients' psychosocial needs to get to the root of medical issues.
Hess said the clinic would refer patients to other medical facilities for problems it cannot treat.
He said Vera Whole Health would choose a convenient location for district employees to use the clinic.
Superintendent Deena Bishop said the district spent over a year planning and researching a clinic.
"It's done in other places in the country, so we've learned from the wisdom in the field," she said. "We want to bring value back to the people who work for our organization and that value is found in the services they receive as well as their personal cost."
State health–care officials reached this week said they did not know whether similar employer-sponsored health clinics exist in Alaska. But Lori Wing-Heier, director of the Alaska Division of Insurance, said high health-care costs had prompted employers to look for creative solutions.
An Anchorage-based company, Beacon Occupational Health and Safety Services, provides near-site health clinics to employers for a fixed rate and had bid on the district contract.
Beacon clinics in Anchorage and Fairbanks serve employees and dependents for Carlile Transportation and members of the Health Care Cost Management Corp. of Alaska, including the Fairbanks North Star Borough School District, said Mark Hylen, vice president of Beacon.
Hylen said the clinics can provide services at cheaper costs because they're not billing a third-party insurance company.
"We're not managing the cost of billing primary insurance. We're not trying to chase down deductibles from employees," he said. "We're billing the employer or the health trust."
The board first moved forward with the clinic last month, voting to spend $500,000 on startup costs. Board President Tam Agosti-Gisler said she supported the clinic, viewing it as an opportunity to continue to provide employees with good health care, but in a less expensive way.