Implementing an Onsite Clinic vs. Telemedicine

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An interesting question came across the table from an employer at a conference a couple of weeks ago: “What can a telemedicine solution do that an onsite clinic can’t?”

As employers look to provide convenient and affordable care to their employees, some of their options include, implementing an onsite clinic and providing telemedicine. What employers should be considering, however, is what are their company’s goals in providing convenient and affordable care, and how much time and money are available to devote to those goals?

Coverage

Onsite clinics.  Clinics deliver comprehensive care for employees who can access it. They can provide both preventive and episodic care to employees and their families, including some prescription drugs. Vaccinations and lab tests are easy to administer and patients can follow up in the same location for chronic conditions. But depending on how much a company wants to spend running the clinic, hours can range from just a few hours a week to a full schedule that includes Saturday hours. Typically, an onsite clinic is rarely open in the evening or over the weekend for urgent care needs.

Telemedicine.  Typical telemedicine providers offer 24/7/365 access to doctors, while some providers triage patients using nurse practitioners. In all cases, telemedicine is limited to treating illness that can be diagnosed without physically touching the patient. Lab tests are not available and online physicians cannot complete routine preventive care or administer vaccinations.

Service

Onsite clinics.  Most clinics are appointment-based, providing employees with a specific time within clinic hours. With only one provider, however, if the schedule is full for the day, the patient will either have to wait to see the physician another day or spend time in the waiting room to see if the physician can squeeze them in. In the quickest of cases, a patient can see the onsite physician and be back to their desk in 30 minutes.

Telemedicine.  The best on-demand telemedicine providers have very short wait times to talk to a doctor (between two and 20 minutes) and support an on-demand model where patients simply call when they need to talk to a doctor. The best patient experiences occur when a telemedicine consultation can be completed in under 10 minutes so that busy professionals can reap the benefits of the convenience.

Cost

Onsite clinics.  Opening an onsite clinic is a commitment that requires considerable time and money. The onsite clinic provider usually takes over once the space is “dust free” at the employer location. This means that an employer has to find a space to accommodate at least two rooms, but in most cases three distinct areas—a waiting room and two exam rooms. Once the area has been constructed, the clinic operator will outfit the rooms with exam tables and all the medical equipment necessary to operate the clinic. The start-up cost for a clinic can run between $30K and $40K. In additional to the build out, the company will pay a fee per employee per month (PEPM) to administer the clinic and will usually also pay for the physician’s time and ongoing supply costs.

First-Year Costs for 1,000-employee company:

Startup Cost for equipment

$35,000

PEPM fees ($20 PEPM)

$20,000

Physician fees ($150/hr for 40 hrs/week)

$300,000

Pharmaceutical costs

Variable

Total Cost

$355,000

Not listed is the build-out cost for the onsite location, which can vary considering the client.

Telemedicine.  Implementing a telemedicine benefit can be as simple as sending a census file of eligible employees to the telemedicine provider. With the best companies, you can be up and running in a matter of weeks. The onboarding cost is usually included in the PEPM price. Some companies charge extra for marketing and engagement materials, but telemedicine providers with the highest utilization will provide comprehensive and customized engagement included in the PEPM. PEPM rates for telemedicine can range from $0.85 to $8.95 and may or may not include a copay due from the patient at the time of service. The corresponding year one costs to implement telemedicine are on average $59,000.

Usage

Onsite clinics. Utilization rates for onsite clinics are hard to pinpoint, but we know they are high. Some studies have rates approaching 70%, but these metrics include preventive care, chronic care management, and are usually after many years of operation. For smaller employers (less than 5,000 employees), coverage and capacity can be an issue with onsite clinics. The hours set by the clinic are fixed. If the clinic is open only part time or closed outside of business hours and the employee or a dependent is sick at a time when the clinic is closed, they will be driven to an outside provider for care. There will also be times when the usage of the clinic is low and the employer is spending the same amount of money while demand for services is below capacity.

Telemedicine. Telemedicine utilization has typically been low. But if telemedicine is implemented correctly, utilization can be higher than 40%. This means that for a 1,000-person company, 400 calls will be generated in a year. It is critical to focus on this metric when choosing a telemedicine provider. The utilization rates for most employer-provided solutions are 5% to 10%, while those embedded in the major medical plan are down near 1%.

Value

Onsite clinics. Providing a convenient and affordable clinic where employees can access biometric testing, physicians, dieticians and wellness coaches should drive down healthcare costs in the long term, especially among populations with chronic conditions. The issue comes in making the commitment to start-up and ongoing costs as well as the internal resources this solution demands. Calculating ROI is complicated at best.

Telemedicine. The value generated in diverted in-person visits as a result of patients seeking care via telemedicine is easy to calculate. It is simply equal to the direct costs avoided from each call. The value generated in productivity gains and employee satisfaction is great, but is not easily quantifiable.

The Diagnosis

Onsite clinics and telemedicine both have their perks and pitfalls, but when it comes to efficiency and cost containment, the onsite clinic is a costly solution regardless of employee utilization. If the employer finds a telemedicine solution with high utilization, on the other hand, the solution can actually pay for itself.

For more, check out our breakdown of which costs more, urgent care or telemedicine.

And to learn more about how telemedicine can drive 6x more savings for our clients than any other telemedicine provider, dow
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