The city of Round Rock is staking a claim in the health care business in an effort to reduce its employees' insurance claims.

On Dec. 23, Round Rock City Council unanimously approved creating a health clinic to serve city employees. The city hopes to have the clinic—which will be staffed by a part-time physician, two nurses and a customer service specialist—open by May.

The city will require staff to use the clinic for work-related services, such as workers compensation assessments, fire and police department physicals, drug testing and vaccinations. The clinic will also offer no-cost acute care and health maintenance services to staff enrolled in the city's health insurance plan. However, city employees will continue to have access to the same primary care, specialized and emergency care services as they have in the past.

"We are hoping that instead of going to the emergency room or their own doctor, [city employees] will be able to use this health clinic," Round Rock Finance Director Cheryl Delaney said. "Theoretically the goal is for [the clinic] to save us money."

Cost of care

In 1993, the city began utilizing a self-funded employee health insurance plan. To fund the system, the city and enrolled members pay a monthly contribution into Round Rock's self-funded insurance fund. The city in turn pays all of its enrolled employees' health, dental, vision and prescription claims from the fund's balance, thereby eliminating the cost of contracting with outside insurance agencies.

In 2013, the city and participating employees paid $7.8 million into the fund. The total cost of claims last year, however, totaled $7.9 million—meaning the system operated at a loss. The $100,000 difference was made up from the program's reserve balance, which currently totals close to $6.8 million.

The fact the city was spending more than it was taking in for insurance, however, meant staff had to either consider raising rates or find a solution to reduce claim costs.

"We had been looking at our medical costs and trying to do everything we could to make changes so that we can continue the benefits we have ... but at the same time try not to raise rates," said Valerie Francois, Round Rock human resources director. "The only thing we could look at to try and save some dollars is claims costs from outside services."

Francois said the city expects to pay about $578,000 to operate the clinic for the first year, although the cost could rise as the number of participants increases. She said the city believes the amount it saves by providing employees' basic medical services will more than pay for the cost of running the clinic.

"The first year there are not going to be significant savings, but it will be close to the cost we are already spending," she said. "After year one we will probably see a greater savings."

Similar models

Round Rock is not the first city in Texas to institute an employee health clinic. Other cities, including Garland, Mesquite and Waco, have already set up operations similar to what Round Rock intends to develop.

The city of Waco began operating an employee health clinic in 1982 primarily to serve as a first stop for workers compensation claims. In the time since, the Waco clinic has expanded to offer acute care, screenings and health education services.

"[The clinic] has proven to be valuable to us," Waco Human Resources Director Gary Johnson said. "It just helps us control some of the costs that can escalate with workers comp and [minor claims]."

Among the initial challenges of establishing the clinic in Round Rock will be convincing employees to use it as an alternative to their primary physician for minor medical needs. Francois said once the clinic has been open for one year and employees become more comfortable with its use, the city plans to begin offering its services to dependents.

"We did a feasibility study and looked at other cities in Texas who have clinics, and they said year one is always rocky because employees are still trying to feel it out," she said. "Once they get familiar [with the clinics] they become the employees' primary care facility, and we are hoping that will happen here as well."