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TO: Mayor Richard C Irvin
FROM: Alex Alexandrou, Chief Management Officer
Chris Minick, Chief Financial Officer
DATE: December 5, 2024
SUBJECT:
A resolution authorizing the execution of a Five-Year Health Services Agreement with Marathon Health, LLC for the Establishment of a Near Site Clinic in the City.
PURPOSE:
To establish a City of Aurora Near Site Clinic at the Bloomhaven campus to allow for enhanced access to medical services and to allow for cost savings for the City and for employees in the provision of occupational health and traditional health care services.
BACKGROUND:
The City staff has been researching opportunities and benefits to establish a near site medical clinic for occupational health and workers compensation facility. The City has a need for routine occupational health and workers compensation services such as pre-employment physicals, drug testing, and immediate treatment and care for injuries sustained at work. The City has utilized various providers for these services over time, but challenges have arisen in cost structure and dwindling choices as providers have closed their occupational health clinics. As the process unfolded, an opportunity arose to simultaneously provide enhanced access to medical care and services for the City's health insurance plans, cost savings for the employee and the City and much needed occupational health services for City employees.
A Near Site Clinic is essentially a medical clinic operated by a contractual partner who provides a wide range of medical services at a location near to a single employer or small group of employers. The goal is to provide quicker access to basic medical services such as primary care visits, basic medical testing, care of chronic conditions, dispensing of various prescriptions, basic first aid treatment, and occupational health services at lower cost for workers compensation claims and on a more convenient basis than traditional health care models allow.
Costs are based on a fixed monthly service charge plus variable costs for medicines and testing supplies. The costs for the medications and supplies will be at a lower cost than the City is able to obtain in the retail market. In fact, the claims savings increase and the financial model becomes more advantageous the more that insured employees and dependents utilize the clinic from a health insurance perspective.
Staff has been working with our health insurance consultant, Assured Partners, to investigate the various opportunities and existing models. Marathon Health, a national operator, was identified as a potential partner to for the provision of a Near Site Clinic which could combine occupational health and traditional health care services. They operate a very successful clinic in Rockford that is the model for the proposed Aurora location. Staff wishes to partner with Marathon Health for clinic operations. The proposed service agreement is included as an attachment.
DISCUSSION:
The City of Aurora’s HR team has been reviewing the benefits to providing a near-site medical clinic for the employees and dependents to access occupational health, medical, Rx and behavioral health services for the past 5 years. The following are continuing current challenges facing the city and its employees that we believe will be positively impacted by the proposed clinic:
Healthcare inflation at 9.5% remains above general inflation and increasing
Pending shortage of Primary Care Physicians causing difficulty accessing same or next day appointments
Behavioral Health Providers access- difficulty scheduling mental health appointments
Navigating the complex healthcare system
Referrals to top specialists
Benefits of Direct Primary Care and Occupational Health Care for the City and Employees:
Same-day / Next-day appointments
Immediate triage for workers compensation injuries
Behavioral health provider access on-site
Focus on patients with expertise in both Primary and Occ Health care - not billing and volume
Improved health outcomes - assist members to top specialist for their respective condition
Reduced healthcare and occupational health spend for both employees and the city
No cost visits for PPO employees & dependents
$25 visits for HSA employees & dependents
200 + Prescription medicine dispensed for free at clinic for PPO members and IRS approved Rx are free for HSA members
The clinic and above benefits will also be available for pre-65 PPO retirees and their dependents
Costs are fixed versus increasing based on medical inflation
The clinic will be in the Bloomhaven development and staffed with a MD, 2 medical assistants and a licensed behavioral health provider.
The City would benefit from a fixed cost for services model to staff the clinic as compared to the current model including occupational health services. Currently, medical trend is approximately 9.50% annually, much higher than the pace of inflation. The contemplated Medical Services Agreement with Marathon Partners would increase costs at approximately 4.76% annually, which is half of the current increase in medical trend cost increases.
In addition to the monthly staffing charges, the City would be responsible to reimburse Marathon for rent incurred at the Bloomhaven site totaling $75,000 per year as well as reimbursement for costs related to supplies consumed and prescription drugs dispensed by the clinic. There is also the possibility that the clinic could be opened to additional area organizations in the future to provide revenue and additional medical savings opportunities, further offsetting City costs for the clinic. Any such opportunities would be brought back before the Council for additional consideration at the appropriate time.
The goal is to have the new clinic open by next October 2025 in time for open enrollment and fully operational after that. The city would then no longer require the services of an outside medical provider for occupational health/workers compensation services, which would save an additional approximately $300,000 per year.
Next steps if this resolution is approved is to put an RFP out for a general contractor to construct the approximately 2500 sf space required for the clinic and bring the recommended contractor back to City Council for approval.
IMPACT STATEMENT:
The build out of the space and first year costs will be financed with the improved pricing the city received from Blue Cross Blue Shield of Illinois on the medical plan for 2025 and savings from claims costs incurred. The city is receiving credits and savings from BCBS that total $1,662,000 for 2025. The total first year costs for the Near Site Clinic are estimated to be $2,397,719. Cash Flow savings of $1,266,666 are also anticipated in early 2025 as the changeover to all BCBS plans occurs. As utilization of the clinic increases the claims savings from the medical plan and occupational health expenses are anticipated to increase because of the lower costs of supplies and prescription drugs dispensed. The projected net savings to the city over the next 5 years is $6,412,238.
If the agreement is not approved, the City and its employees will incur higher occupational health and traditional health insurance claims costs and continue to suffer with delayed access to necessary services.
RECOMMENDATIONS:
Staff recommends approval of the resolution to approve a five-year Health Services Agreement with Marathon Health, LLC for the Establishment of a Near Site Clinic for the City of Aurora.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution authorizing the execution a five year health services agreement with Marathon Health, LLC for the Establishment of a Near Site Clinic in the City.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, The City has actively sought new opportunities for its occupational health and workers compensation services partners, including Near Site Clinics, and
WHEREAS, Near Site Clinics offer a viable alternative for the provision of occupational health and traditional health insurance care services, and
WHEREAS, Marathon Health, LLC provides services for Near Site Clinics and can provide both occupational health and traditional health care services at its clinics while also offering cost savings and enhanced access to medical care to the City and its employees, and
WHEREAS, medical Insurance benefits are an important tool for employee attraction and retention, and
WHEREAS, the current system of insurance has high costs and can result in poor patient outcomes, and
WHEREAS, obtaining access to necessary occupational health and traditional health care services and providers on a timely basis is frequently challenging, and
WHEREAS, Near Site Clinics serving individual employers offer an alternative for lowering medical costs, providing better outcomes, and enhancing access to medical care, and
WHEREAS, Space is available for a Near Site Clinic at the Bloomhaven development in the City, and
WHEREAS, the City is desirous to obtain health care services at lower costs and offer additional savings to its employees and wishes to avail itself of Marathon's services, and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: that a five year agreement for health services with Marathon Health, LLC for the Establishment of a Near Site Clinic for the City shall be and hereby is approved; and further
BE IT RESOLVED, that the Director of Purchasing shall be and hereby is authorized to execute said agreement with Marathon Health in substantially the form presented to the City Council for its approval pursuant to this Resolution; and further
BE IT RESOLVED, that upon the execution of this Resolution and the agreement authorized by this Resolution, the City Treasurer is authorized to pay on behalf of the City all charges related to the agreement in accordance with the Local Government Prompt Payment Act, subject to the limitations of the City's annual budget and appropriations by the City Council.