On-Site Clinics: A Smarter Approach to Healthcare Costs
For the past two decades, healthcare costs have risen at an alarming and unsustainable rate. Several factors drive these increases, including the rising cost of medical services, expensive prescription drugs, chronic disease prevalence, and administrative inefficiencies. In response, many employers have attempted to manage costs by shifting more financial responsibility onto employees—raising deductibles, copays, coinsurance, and employee premium contributions.
While these strategies may help limit employer expenses, they do little to address the root causes of rising costs or improve healthcare efficiency and outcomes.
For many Americans, the burden of high healthcare costs is overwhelming, forcing difficult decisions between medical care and other essential expenses. As costs continue to rise, it’s clear that traditional cost-shifting approaches are not a sustainable solution.
Historically, employers and the government have focused on making the price of individual healthcare services more transparent, aiming to help consumers compare costs and make informed decisions. The idea was simple: if people knew the price of a service, they could seek out the best value. But this approach assumes that every healthcare service provided is necessary and beneficial—which isn’t the case. In fact, an estimated $760 billion is wasted in healthcare, including redundant tests, ineffective treatments, and procedures that don’t improve outcomes.
Without addressing waste and unnecessary care, cost-shifting and price transparency alone won’t fix the problem. The challenge remains: how do we drive meaningful change in a system that prioritizes affordability, efficiency, and better health outcomes for all? That’s where on-site clinics come in.
On-site clinics are employer-sponsored medical facilities located at the workplace and are an increasingly common feature of employee benefit programs. They originated decades ago primarily as first-aid stations in industrial settings or used to provide easy access for employees, but today they deliver a full spectrum of primary care, preventive services, chronic disease management, and wellness programs. By bringing healthcare in-house, employers aim to remove barriers to care, such as time, cost, and access, while delivering coordinated, high-value services that ultimately reduce downstream medical claims and emergency visits.
While on-site clinics offer clear advantages, employers continue to ask important questions: Are employers utilizing the clinic enough to justify the investment? Is it truly improving workforce health and reducing costs?
Addressing these concerns requires a long-term strategy focused on maximizing engagement, ensuring high-quality care, and integrating clinics into broader healthcare and wellness initiatives. A key part of this strategy is partnering with an expert who can help you evaluate clinic outcomes and ensure the right care is being provided.
Before measuring outcomes, employers need to understand their workforce’s demographics and health needs to ensure employee engagement with the clinic. This insight helps make care more accessible and tailored to their needs.
Additionally, employers should assess the quality of care available in the community when deciding what services to offer at the clinic. For example, if local orthopedic specialists are highly rated, offering orthopedic services in-house could result in unnecessary costs and inefficiencies.
A proven approach to analyzing healthcare costs and optimizing care is using Episodes of Care. This model evaluates not only what was spent on the treatment of a condition but also what should have been spent. At M3, we use Episode Treatment Groups (ETGs) to analyze healthcare costs and align spending with expected treatment costs. With 65% of healthcare expenses driven by care efficiency and quality, ETGs provide a precise method for identifying cost drivers and improving treatment outcomes.
Our approach identifies issues in areas such as utilization, clinical pathways (e.g., physicians not following evidence-based practices), patient compliance, and overall cost inefficiencies. ETGs also allow for in-depth adjustments based on severity, comorbidities, and complications, ensuring a more accurate, data-driven strategy for optimizing healthcare spending.
By refining clinic operations, focusing on prevention, and leveraging data to track outcomes, employers can enhance the effectiveness of their on-site clinics, ultimately improving both workforce health and the bottom line.
Case Study: Preventing Diabetes Progression
Challenge:
A large employer sought to reduce healthcare costs by preventing diabetes progression. In the marketplace, 28% of level 1 diabetics progress to level 2, raising treatment costs from $4,000 to $9,000 annually.
Solution:
The employer implemented an on-site clinic focused on proactive diabetes management to prevent employees from advancing to level 2.
Results:
By keeping 85% of level 1 diabetics from progressing, the clinic saved $5,000 per diabetic over two years. The on-site clinic reduced costs and improved health outcomes by managing diabetes effectively, proving the value of preventive care.
One of the best ways to assess effectiveness is by comparing the cost of treating conditions within the clinic to the costs of similar treatments in the broader community. This approach not only helps gauge the financial return on investment but also highlights areas where the clinic may need adjustments.
Ultimately, a robust system for tracking and analyzing health data ensures that employers can continuously refine their clinic’s offerings, maximize its value, and drive sustainable improvements in both healthcare costs and employee health. With the right tools and focus, on-site clinics can become a cornerstone of a healthier, more productive workforce.
Key Takeaways
On-site clinics offer a promising solution to the rising healthcare costs employers face. By offering convenient, high-quality care and emphasizing prevention, employers can control costs and enhance employee well-being.
Realizing the full potential of an on-site clinic requires a clear strategy, ongoing evaluation, and expertise in tracking outcomes. Employers must ensure they’re engaging their workforce, offering appropriate services, and measuring the financial and health impacts effectively.
To learn more about how on-site clinics can optimize your healthcare program and improve both employee health and your bottom line, reach out to your M3 Client Executive today.
