The proliferation of onsite medical clinics may have stalled during 2008 due to the economic downturn, but it is revving up again as employers realize their cost-savings potential, benefit consultants say.

While interest has been high for the past several years, last year many employers put plans to build new clinics on hold, usually after experiencing "sticker shock" in response to the costs outlined in providers' requests for proposals, consultants say.

However, many employers with clinics in place are going full steam ahead with plans to expand their scope of services offered to include wellness, health promotion and primary care, especially in cases where the facility's main focus had been on providing occupational medicine, consultants note.

"There was a noticeable decline--not a very large one--in the fourth quarter of 2008 between October and December. We saw fewer requests coming in from clients considering clinics, asking us to do feasibility studies," said Bruce Hochstadt, a principal at Mercer L.L.C. in Chicago who oversees the consultant's annual Survey on Worksite Medical Clinics. "But things began to recover in January. I'd say it's getting close to where it was last summer."

"We're still getting interest, but when they see what it's going to cost to get it up and running, that it won't yield a positive return on investment until one or two years later, and that the overall ROI will only be 2-to-1 or 2.5-to-1, they back off," said Jeffrey Dobro, a principal at Towers Perrin in Parsippany, N.J. "They say they think it's a great idea and that one day when business picks back up, they'll reconsider it."

While acknowledging clinic growth "hit a little bump in the road driven by the financial crisis," Paul Crowley, a senior consultant in Hewitt Associates Inc.'s health management group based in Boston, said he still is seeing activity among employers with existing clinics seeking to expand into primary care, wellness, health coaching or pharmacy services.

"It takes a lot of capital funding to build these clinics," he said, but costs are much less to expand services and hours of operation.

Kingsport, Tenn.-based Ordnance Systems, a subsidiary of BAE Systems Inc., is preparing to add primary care services to its seven-year-old worksite clinic, which had been providing mostly occupational medical care and wellness- and health-coaching services, said Michael Puck, director of human resources.

"The plan is to route 50% of the primary care office visits that are going outside the company into the health care system onsite and therefore generate significant cost savings," Mr. Puck said.

The clinic, which serves approximately 500 employees, is staffed with a full-time occupational medical nurse, a part-time dietician and part-time medical director, all of whom are under contract from Mountain States Health Alliance, he said.

Most early worksite clinics, like that at Ordnance Systems, focused primarily on providing occupational medical care, but as the workplace became safer and nonoccupational health care costs grew, an increasing number of employers have expanded their clinics' services to also include primary care, wellness and disease management, benefits experts said.

In many cases, the scope of clinic services is influenced by whatever is lacking in the community, said Hal Rosenbluth, president of Walgreen Co.'s health and wellness division in Conshohocken, Pa., which operates Take Care Health Systems Inc., a leading provider of worksite and retail clinics.

"We have health centers that have primary care, chronic care, optometry, pharmacy, dentistry, radiology," he said. One clinic at a Toyota plant in the Midwest "has all of the above, but more dentistry services are available there" due to a shortage of such services in the community, he added. Take Care's onsite clinic at an investment banking firm on Wall Street provides infusion therapy services, he noted (see story, page 13).

The primary reason employers have maintained interest in onsite clinics is their health care cost savings potential, benefit consultants and clinic experts say.

Clinic vendors usually are compensated on a "cost plus" basis, which means the employer picks up the total cost of building the clinic, equipment and supplies, as well as staffing, in addition to paying a management fee that ranges from 15% to 30% of staffing costs. The vendors supply the providers, either hiring them directly or under an independent contractor agreement, and pick up the tab for their medical malpractice insurance.

Even with this overhead, which can be as little as $50,000 for a small, part-time clinic, to several million dollars for a clinic that operates around the clock providing primary and specialty care, returns on investment range from $2 to $4 for every dollar invested, benefit consultants and clinic vendors say.

The savings come from having greater control over the care that is delivered.

"This is a gatekeeper model," providing "an integrated platform to manage both group health and workers comp," said Brian Klepper, managing principal of Healthcare Performance Inc., a consultant in Atlantic Beach, Fla., that helps smaller and midsize employers across the country establish worksite clinics. As a result, there are usually fewer specialist referrals, which are not only more expensive but often lead to duplicate lab and radiology tests, he said.

Worksite clinics also "fully empower the primary care physician to aggressively manage patients with chronic conditions, which represents 70% of the money" employers spend on health care, Mr. Klepper said.

In addition to medical care, some clinics offer e-prescribing via their Internet platforms, connecting the patient directly with an onsite pharmacy if it is available, a local pharmacy that is part of a discounted pharmacy network or a mail-order program. Because of its affiliation with Walgreens, Take Care offers its clinic clients access to discounted prescription drugs.

Worksite clinics are especially helpful in supporting wellness and disease management programs, according to Mike Thompson, a principal at PricewaterhouseCoopers L.L.P. in New York.

"The focus on the health center today is to attack the chronic disease states, prevent patients who are predisposed and, at the same time, better manage those that have chronic disease. When you're not on site, the only other way to get to that patient is over the telephone or Internet," said Stuart Clark, executive vp at Comprehensive Health Services, which recently opened a clinic at the Lincolnshire, Ill., headquarters of Hewitt Associates Inc.

Todd Sondergeld, Hewitt's director of clinic operations, said the Choose Health Wellness Center is part of the benefit consultant's overall wellness strategy, which includes providing employees with tools to keep them healthy, condition management for those who already have chronic diseases, and enhancing productivity by making medical services available in close proximity to the workplace.

The clinic, which also features an onsite pharmacy staffed by licensed pharmacists from CVS Caremark, also will serve "as a showcase for Hewitt to show other employers that it can be done," Mr. Sondergeld said.

"Ideally, if the on-site physician or clinician is able to gain the trust of employees...they probably have a better opportunity to influence health behaviors, whether it's weight management or adherence to medication, and then to monitor the ongoing health metrics that employers can be more assured that they're doing the right thing," Mr. Thompson said. "There's something about face-to-face interaction that makes a difference."