Search Back Issues

MCN Case Study: Steel Warehouse

A Ton of Prevention

By on
By opening a company primary care clinic near its South Bend headquarters, Steel Warehouse enhances healthcare options for its employees, while lowering its costs.

Whether it’s Obamacare or Obamacare’s potential replacement, the old model or something new, healthcare is undeniably complicated. For service center operators, providing coverage to employees is among the most challenging responsibilities, and among the costliest expenses on the balance sheet.

It was no different for Steel Warehouse, one of the country’s largest distributors. The South Bend, Ind.-based service center company had annual expenses in the multi-millions, with no end to the escalation in sight. “We determined we had to get better,” said Michael Lerman, company president at the Platts Steel Market Conference in March. “We had to look at the health of our people ourselves.”

They found a way, one that created the long-sought but infrequently reached objective for any business – the win-win. Steel Warehouse discovered how to lower its healthcare costs while providing its employees a much better healthcare experience. It did so by opening its own clinic.

In 2016, Steel Warehouse signed an agreement with Activate Healthcare, a new type of entry in the healthcare field. Activate operates primary care clinics for businesses or workers, supplying a physician, nurse practitioner and two medical assistants in a full-sized clinic.

The company came across the clinic concept at a seminar. From there, Ron Schmucker, chief financial officer, and Vice President of Human Resources Charles von Herrmann sought out options for the development of an in-house clinic. They approached a local hospital, but the operation had no experience setting up such a facility. That’s when they turned to Activate, one of the country’s leaders in this type of healthcare option, with facilities located throughout Indiana and beyond.

“Activate’s been in this for a while. We went and toured three facilities and spoke with staff. We got to know what their model looked like, and their sales guy provided us with a basic justification from a financial standpoint,” von Herrmann recalls.

Once the contract was signed, Steel Warehouse and Activate investigated locations to place it, and the staff to run it. Finding a doctor was among the more challenging aspects, as many of the local physicians were locked into employment contracts with hospitals. Ultimately, they landed an experienced local physician, Dr. Michael Helms, who was interested in leaving the traditional method of primary care work for this new model. Jennifer Carapia had already signed on as the clinic’s nurse practitioner/health coach.

Another important early decision was where to locate the facility. Steel Warehouse executives considered placing it right on its South Bend campus, for ease of access to its employees. But they ultimately rejected that idea for one main reason—employee trust.

A crucial element in getting the clinic to operate successfully was convincing the floor guys that this new healthcare option was being done for their benefit, with no strings attached. The company wasn’t interested in obtaining medical data on its employees. “If you’re a worker out on the line, you might think they’re trying to get into my personal stuff, and the company is controlling this. That was the reason we didn’t put it right here,” says Schmucker.

Instead, the clinic operates off-campus, in a downtown office just a few miles from the plant. In a first for Activate, it is co-located with an identical operation for the City of South Bend. This “two-hub” set-up shares some resources and economies of scale, plus personnel if demand is higher for one operation than the other at a given point in the day, but otherwise the clinics operate independently.

Other than the noticeable absence of patients in the waiting room, Steel Warehouse’s clinic resembles any other primary care physicians’ office. It offers conference and examination rooms, plus lab space it shares with the city’s operation.

The clinic is for the employees and families of Steel Warehouse and affiliated company Lock Joint Tube. Steel Warehouse has also opened its use up to an unaffiliated trucking company, and the trucking company pays for its share of the expenses. The clinic operates at no charge to the employees – there are no copays. Patients know a visit will be spent in the examination room, not the waiting room. It is healthcare run on the model of serving patients’ needs to maximum efficiency, rather than serving the maximum number of patients. “Physicians elsewhere are on a production model. They don’t want to leave open spots in the schedule. We’re not on a production model, we’re on an availability model. The idea is to leave open spaces for acutes so they don’t have to end up in urgent care or the ER,” Helms says.

For patients, the difference between the Activate model and traditional healthcare services is obvious on the first visit. Since traditional primary care models profit by running as many people through the office as possible on a given day, time with the doctor and nurse practitioner is often limited. “It gets to be a little like herding cattle. You have three minutes with a nurse practitioner, she takes some vitals and asks what’s wrong, enters the stuff into a computer and you get a few minutes with the doctor. They’re in and out so fast, it’s almost like you didn’t see anyone at all,” Schmucker says.

Since the Activate model doesn’t run on billings, its nurse practitioner and doctor perform more thorough examinations. They talk to patients about everything health related – eating habits, work habits, goals, fears, etc. “They really get to know you and a lot of your traits,” Schmucker says.

The CFO isn’t just saying that as one of the driving forces of the clinic, but as someone who’s benefited from its services. Following his first visit to the clinic, Schmucker was diagnosed as pre-diabetic. Helms and Carapia put him on a simple program to improve his eating habits, and do some exercise. Within a few visits, he was clean, though he’s now maintaining the manageable new habits recommended.

“Carapia became my accountability partner. It’s not like she’s trying to run what you do, but just asks whether instead of eating French fries five days a week, we limit it to two. You agree to several simple goals, and work from there,” Schmucker says.

The knowledge that’s derived from these extensive visits isn’t just a one-way street. Given more time, the doctors and nurse practitioner can make their patients fully understand the whys behind their suggestions. That gives patients a greater sense of control over their own health, Carapia says.

That’s the essence of the clinic, from both sides of the typical employer-employee divide. By identifying health concerns early, it can prevent catastrophic incidents later. That leads to healthier employees, and it avoids the enormous expenses for the employer that often accompany catastrophic events. To date, the clinic has identified a number of pre-diabetics such as Schmucker, and has caught some diabetics in the early stages and began treatment. In one case, a worker had previously experienced a heart attack, and hadn’t been aware of it.

“Whether you catch it before you get it, which is optimal, or catch it before it becomes a bigger problem, that’s the name of the game,” von Herrmann says.

In addition to the visits, the clinic offers free medications of up to 50 commonly prescribed medications, which is particularly beneficial for those drugs being used to manage chronic conditions. Moreover, because the clinic is delivering the medications directly to the patient, it clears one of the hurdles to effective health management. “There’s a barrier. Sometimes when you give someone a prescription, they just never show up at the pharmacy,” Helms says.

Once again, for Steel Warehouse, the initial expense of these medications dwarves the later costs that occur when the conditions are not effectively addressed.

Children’s sports physicals, free insulin strips for diabetics and free flu shots are some of the other complimentary services. Beyond those, Activate also offers a service known as Twine, a phone app that allows a direct line of communication between the clinic and the patient, and also makes important data accessible to both parties. Patients upload some of their health figures into the app, which is available to Carapia, who checks the app twice a day.

“I can see how someone’s numbers are tracking. If I notice someone’s blood-sugars are a little higher and he tells me ‘I forgot my meds,’ I can point out the difference when they’re not being taken,” Carapia says.

Rubicon, an online referral system Activate operates in conjunction with major medical facilities, is another service available through the clinic. If Helms notices an odd skin lesion, he can send it on to a dermatologist who can provide a quick analysis and determination whether further examination is warranted. “One of the goals of minimizing costs and maintaining quality is to minimize referrals,” says Activate’s Cathy Jarvis, manager of practice operations.

The service saves time and money. “This subscription service pays for itself very quickly. You get your reports within 24-48 hours, and the consultants have already been paid,” says Nathan Mowery, president of Activate Healthcare of Indiana.

Employees who use the clinic are not asked to abandon their primary care physician, should they prefer to keep them. However, as time goes on and the employees begin to see that the clinic is going to be around for the long term, they often migrate their primary care needs for themselves and their families to the clinic. The convenience, and the cost savings, makes it an easy call.

It also serves as a valuable retention tool for the companies that offer it. “From a client’s POV, it makes it much more difficult to leave for down the street and 25 cents an hour more,” Jarvis says.

All of the medical information remains confidential, just as it would in any physician’s office. Steel Warehouse has access to numbers, but not names. “I would not know if an employee was there unless he chose to tell me,” von Herrmann says. And, as Helms says when skeptical patients ask him whether he shares information with Steel Warehouse, “I tell them I’m working for a healthcare company, not a steel company.”

On the other hand, there are benefits to working so closely with a distinct cohort of patients. Helms and Carapia have both made multiple tours of Steel Warehouse and Lock Joint Tube, which provides additional information useful in their practice. “When you get a look at the work area, you can get some ideas on what health issues there could be,” he says.

Carapia even examines the break room vending machines, and offers suggestions on changes that could lead to better health. Implementing that change is easier when it’s combined with events such as the Activate-led, companywide weight-loss competition.

Establishing a standalone health hub such as Steel Warehouse’s does require a certain-size company to justify the costs. Smaller companies would not likely be able to create a single operation that caters strictly to its employees. However, Activate’s model is constantly evolving to meet the needs of organizations of differing sizes, with smaller companies able to piggyback with other large-hub operations. “We’re a model of flexibility. Once you have the basic core principles, you can usually find something that works,” Mowery says.

While Steel Warehouse and its employees both save money, the wins aren’t just theirs. For Helms and Carapia, this new model represents health care the way it was intended. There are no issues with billing insurance companies or trying to shoehorn more patients into a day’s schedule than common sense allows.

“It’s patient-centered, not numbers-centered,” Helms says. “It’s quality over quantity, and the patient load isn’t as high. We’re much more focused on prevention than treatment.”

“We’re doing what we’re trained to do. In school, we’re taught one way, but in reality, you’re told to do more for less. Here we devote more of our time to patients, and when you go home, you feel like you’ve done justice for those patients,” Carapia says.

Lerman is equally pleased. “We take an enormous amount of pride in this initiative, providing an opportunity for employees and their families while helping the company,” he says. “We hope everybody (in the industry) does something like this.”

Current News