Healthstat Employee Clinic 2016 Impact Analysis

Clinic Overview Implemented in April 2011 Operates 30 hours per week, staffed by Physician’s Assistant and Office Assistant Provides preventive care, acute care, laboratory services, generic prescriptions, and wellness services Service is provided for medical plan participants and their dependents ages 2 and up No out of pocket cost, fees, or copays for clinic services for participants Participants (employees and spouses) are required to complete a Health Risk Assessment in order to utilize clinic services For plan participants and their dependents (ages 2 and up) Operates 30 hours per week Staffed by a Physician’s Assistant and Office Assistant Provides: Preventive care, lab work, select prescriptions (bought in bulk for better pricing) and wellness services No cost, fees or copays for clinic services for participants Employees don’t need to use medical leave accrual for their own appointments. Appointments are strategically scheduled - keeping wait-times down to less than 5 minutes - to provide high risk & disease management, regular preventive care, acute/episodic care and coordination with the patient’s own primary care physician.  Participants must complete HRA to utilize clinic – part of wellness disease management initiative

Clinic Objectives Reduce the cost of medical care through controlled costs for office visits, prescriptions, and laboratory services Reduce healthcare inflation trend to help mitigate rising cost of healthcare Improve employee health through health risk and disease management programs Increase productivity by reducing time employees spend away from work for medical care Reduce the cost of medical care (control office visit, Rx, and lab costs) and time that employees spend away from work to get medical treatment. Reduce healthcare inflation/trend to help mitigate rising costs of healthcare. Partner with the existing wellness program to promote healthier lifestyles that will prevent future illnesses and lost productivity.

Healthstat Return on Investment Assumes without Clinic the City would have a 10% increase in claim costs annually from our baseline due to trend/medical inflation Excludes claimants over $75k Year Projected Claims Actual Claims Claims Savings April 2011 – March 2012 $5,776,836 $5,595,620 $181,216 April 2012 – March 2013 $6,207,360 $6,068,375 $138,985 April 2013 – March 2014 $7,042,743 $6,593,092 $449,651 April 2014 – March 2015 $7,999,457 $5,109,691 $2,889,766 April 2015 – March 2016 $9,089,855 $6,034,187 $3,055,668 Total $36,116,251 $29,400,965 $6,715,286 Projected claims by Healthstat uses a 10% trend to estimate cost savings due to the national trend falling between 9-11% annually. Costs include actual medical/rx costs - costs of Healthstat are not included (taken into consideration in the comparison) With total savings spread out over 4 year period we are saving almost 1M per year (cost of clinic just at 532k for 2015) *Per Healthstat Methodology – comparing total savings and program costs

City Analysis of Clinic Estimated Claims Savings Measures actual and projected claims and Rx costs versus total operating cost of clinic Clinic Utilization Examines participation (employee/dependent) versus total eligible Estimated Cost Diversion Savings Compares cost of a clinic visit versus the cost of a visit per our medical claims history Considers the differences in the length of time employees spend away from work for a clinic visit versus Physician visit. Health & Wellness Impact Examines the improvement of Risk Factors for those participants who have at least two Health Risk Assessment measurements. City Analysis is more prudent than HS analysis we look at following areas

Estimated Claims Costs/Savings* Assumes without Clinic the City would have a 7% increase in claim costs annually from our baseline due to trend/medical inflation Reduces claims savings by total clinic expenses Includes all claims net Stop Loss reimbursements Year Projected Claims (Cost)/Savings Actual Claims (Cost)/Savings 2011 ($158,184) ($429,225) 2012 ($40,883) $1,197,481 2013 $178,824 $195,846 2014 $608,470 ($330,842) 2015 $1,050,209 ($1,462,810) Total $1,638,436 ($829,550) The following represents the original projections that were provided to Council for the implementation/approval of the Clinic. (EXCLUDES STOP LOSS CLAIMS) The City didn’t expect a cost savings until at least year 3 after implementation – and a full ROI is not expected until we have a full 5 years worth of experience. The utilization projections/participation rates were also estimated prior to implementation – we were not expected to get up to 50% even within the first five years. Assumptions – 7% from baseline (2010 claims prior to clinic) - taking total claims/RX minus total operating clinic costs. 2012 we had an exceptional year, 2014 we had a rough claims year – as we are seeing this year as well. The 2015 is projected and could turn our better or worse than projected. 2011 includes implementation costs – which is why costs show higher than projected. This is a more conservative picture than the Healthstat ROI - Projected claims by Healthstat uses a 10% trend to estimate cost savings due to the national trend falling between 9-11% annually. We took a more conservative approach using 7% to be more reflective of our actual experience. Note: it is important to remember that basing a ROI on claims experience alone is difficult to do because claims can be so volatile from year to year – which is why we expect to have more reliable/verifiable information after having more years of experience to conduct the analysis. *Per City Methodology – not Healthstat

Clinic Utilization Overall current clinic participation is 76% We expect to continue to increase the participation with our compliance and incentive programs, which began in late 2015 Year Projected Participation Actual Participation 2011 31% 45% 2012 36% 56% 2013 41% 66% 2014 46% 70% 2015 76% 2016 70% is our average for 2015 through month of august – last year in our update we had projected 76% for 2015 We expect to see a significant increase in participation next year as we have implemented an incentive/compliance programs beginning 2016. Participation is counted as anyone that has used the clinic for life of clinic –not by month or even year (overall use by anyone at any time) Clinic participation percentage is not by month or year; it includes total participation (employee/dependent) usage versus total eligible

Cost Diversion Analysis (2015) Physician Visits Average cost of visit per claims* Primary Care $163.00 Specialist $187.00 Estimated average cost of a clinic visit $133.39** Total cost of clinic per visit $160.35*** Total cost per encounter $142.56*** Lost Time Savings Average physician office visit takes 2 hours including travel time Clinic office visit takes 30 – 45 minutes including travel time Estimated lost time work savings of 1.5 hours per visit Per 3,117 visits, estimated work hours saved equals 4,675.5 hours Estimated lost work time saving equals $145,501.56 Physician Visits – Using 146.03 as the comparison for the clinic visit. (ER Urgent, special) procedure codes that can be treated at clinic Cost of clinic is annual total costs in 2015 = ($532,485.70 – HRA/rx/labs costs)= 415805 /3117 total visits in 2015) The $$ is based on total cost of operating clinic, building, utility, etc. cost would be $$. 499824.7/3117 Cost per encounter 499824.7/3506 2 – Lost Time: 1.5 hrs (saved time) * number of visits Looking at average wage of 31.12hr = dollar savings of $145,501.56 *Per historical claims data **Clinic costs/number of visits ***Clinic costs/number of visits – Includes labs/Rx

Wellness Impact (2015) Risk Factor Changes Improved Health 18% of monitored participants improved health risks with no increase to the number of risk factors Maintained Health 54% of monitored participants maintained health risks with no increase to number of risk factors Declined Health 29% of monitored participants increased health risks

Wellness Impact (2015) High Risk Participants Illustrates improvement in 7 of 8 measured risk categories within top 20% of high risk patients/participants. Total Cholesterol Improved by 4.1% LDL Cholesterol Improved by 4% HDL Cholesterol Improved by 2.8% Systolic Blood Pressure Improved by 2.7% Diastolic Blood Pressure Improved by 5.3% Triglycerides Improved by 20.8% Glucose Improved by 2.6% BMI Increased by .5% By focusing on 20% of claimants who are at highest risk of spending more than 80% of healthcare dollars, the employer's cost for providing employee insurance is reduced*. (i.e., currently 20 claimants costing 60% of claims budget)

Summary Cost reduction/control Employee satisfaction/wellness The savings as calculated by the Healthstat method demonstrates we are receiving a return on our investment Recent claims experience is driving reduction of ROI in City’s methodology when comparing ALL claims Compliance program is expected to drive higher participation and risk mitigation Employee satisfaction/wellness Valued benefit – can assist with recruitment and retention Significant impact in several situations for employee health and well-being Compliance program is expected to increase positive results in risk factor movement and disease management Recommended Service Model Transition Utilization: We will have 3 full years in April 2015, and will be at five years in April of 2016

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