Is an Onsite Health Clinic Right for Your Company?

When the COVID-19 pandemic was escalating in 2020, several large employers closed their onsite health clinics because in-person contact was discouraged in hopes of limiting the spread of the illness. More recently, however, worksite clinics have regained popularity, with 53 percent of large employers offering them in 2023, according to the Business Group on Health.

There’s good reason for the interest: Both employees and employers can benefit from onsite clinics.

O.C. Tanner, an employee recognition company based in Salt Lake City, opened its employee health clinic in August 2019 and kept it open through the pandemic. The clinic provided big benefits to staff, said Dana Rogers, vice president of people and great work.

In 2020 and 2021, Rogers said, “Health center staff made a conscious effort to reach out to our employees virtually and via telephone to check in with them. This was a source of great support for our people.”

Today, 60 percent of the headquarters’ staff work a hybrid schedule, so virtual and telephone appointments continue to be used.

But employers with a high percentage of remote workers should think carefully about whether an onsite clinic is right for them, noted Erin Lau, director of service operations with Insperity, an HR solutions firm based in Kingwood, Texas.

“On the one hand, easy access to preventive care can be a major draw for employees to come into the office,” she said. “On the other, if much of your workforce is committed to working from home or does not live near your office, then an onsite health clinic may not be worth the time and costs.”

Still, many employers are finding that convenience for employees and potential cost savings for them can make onsite clinics an attractive benefits option.

Convenience and Cost Reduction

O.C. Tanner’s decision to offer an onsite clinic, Rogers said, was driven by a desire to increase convenience for employees seeking physical and mental health care—and to ensure that they were prioritizing regular care. Employees and their families incur a very low cost, if any, to use the health center, depending on their choice of health care plan. Preventive care is always 100 percent covered.

“During our implementation phase, we quickly realized that not only did we need to provide easy access for our people, but we also needed to enable them to use it,” Rogers said. To do this, the company established a paid-time-off bank for nonexempt employees called “Health Center Time.”

“The cost of this bank of hours is easily offset by the work time the employee saves by not having to take several hours off for an appointment,” Rogers said.

O.C. Tanner partnered with Marathon Health to staff the health center. “While we do incur costs for this partnership, they are offset by savings to our self-insured health plan,” Rogers said.

In addition to ensuring convenience and ready access to quality health care services for employees, saving on health care costs is a driver for companies deciding to offer this option.

“There is evidence that onsite clinics can reduce employer health care spending,” Lau said. She pointed to a study that found that one major company with an onsite health program, for example, saw average annual growth in medical spending decrease by 3.7 percent compared to similar organizations.

Drawbacks to Onsite Health Clinics

There are some potential drawbacks to be aware of, however.

Privacy concerns are one issue. “Some employees may feel uncomfortable accessing care through an onsite clinic,” Lau said. “They might question whether their health data is fully confidential, which makes it critical for you as their employer to create a robust data privacy policy.”

Upfront and ongoing costs may be another concern, Lau said.

“There can be high costs associated with the construction of an onsite clinic, not to mention the ongoing costs of managing and staffing your onsite clinic.” If employees don’t use the clinic enough, those costs could eliminate any savings, she said.

Sadhna Paralkar, national medical director at Segal, an HR and benefits consulting firm with offices in the U.S. and Canada, agreed that the biggest challenge employers face when considering an onsite clinic is the expense.

“The largest cost is staffing, as a typical model assumes about 4,000 visits per physician or nurse practitioner per year,” Paralkar said. “Keep in mind that vendors that provide onsite clinic services typically charge on a cost-plus basis, so management fees could increase costs as much as 30 percent over direct medical costs.”

On average, Paralkar said, first-year startup costs for a dedicated clinic can be about $300,000, with annual operating costs of $800,000 to $1 million annually, based on membership size. Still, she said, “a well-run clinic can yield an ROI [return on investment] of $1.50 on every $1 they spend after three to five years.”

A worksite health center, Paralkar said, “should be one component of a benefits strategy.” When properly integrated with other benefits, an “onsite clinic can play quarterback and can be used to direct care to the right specialists, point solution programs, centers of excellence, and narrow networks,” she said.

Monitoring Results

Paralkar said the ingredients for success with an onsite clinic include “the right staffing model, a virtual visit component with telemedicine services during and after hours, integration with disease management programs, solid integration with wellness programs, or—even better—when the clinic serves as the wellness hub.”

In addition, she said, it’s a best practice to put in place “onsite health promotion with proactive outreach to members, offering classes and events that attract people to the clinic.”

It’s also important to establish measures of success and monitor the performance of the program over time.

“Creating performance metrics and monitoring them on a regular basis is key to making constant improvements,” Paralkar said. “The clinic operator should be held accountable for best-practice performance guarantees such as reduction in ER visits, urgent care visits, and specialist visits; customer service; compliance; and reporting. Claims data can suggest improvement areas such as adding physical therapy or behavioral health services.”

As access to health care becomes increasingly scarce in many parts of the U.S., onsite clinics can help to address some of this burden while offering ease of access and convenience to employees.

“If I could tell HR leaders and benefit administrators one thing, it would be that clinics are an investment in the future of your employees,” Paralkar said. “As the clinic matures, the ROI increases.”

Lin Grensing-Pophal is a freelance writer in Chippewa Falls, Wis.