Businesses have a big incentive to keep their employees healthy and to curb their health costs and spending. Premiums for employer-sponsored insurance for families almost doubled in the past decade, with the employer’s share of premiums increasing from $5,866 in 2002 to $11,429 in 2012. Data from the Health Care Cost Institute (HCCI) showed that health care spending in 2010 rose three times the rate of inflation for people under 65 years old and covered by private employer-sponsored insurance.

In response, employers have implemented a variety of measures to control employee health care costs, from promoting price transparency, looking at shared decision-making between patients and physicians, and instituting employee wellness programs.

Legal Issues for On-Site Health Clinics for Employees

Some employers have gone a step further and opened on-site health clinics to serve their workers and sometimes to serve retirees. The clinics typically offer a range of services, including consultations for weight loss and chronic disease management, cancer screenings, and pharmacies.

But employers should be careful. In an excellent column for the New York Law Journal, Francis J. Serbaroli lays out several potential issues to consider when setting up on-site health clinics.

“While the employer may have the best intentions in offering these services, it must comply with a variety of laws and regulations, or it could open itself up to serious potential liabilities.”

Francis J. Serbaroli, JD, of Greenberg Traurig

Here is a quick overview of the potential pitfalls Mr. Serbaroli describes:

  • Any medical malpractice suit against the on-site clinic and its staff likely would name the employer as a defendant, opening the organization to significant liabilities.
  • A strict set of laws – namely the Health Insurance Portability and Accountability Act (HIPAA) – govern the privacy and confidentiality of health records and information, including electronic health records (EHRs). Employer-based clinics would need to comply with those laws.
  • On-site clinics with comprehensive services could require the employer to follow the same benefit, reporting, and disclosure rules as it does for employer health plans.
  • Typically, the cost of on-site clinics is tax-deductible, but clinics that serve mainly high-paid employees could constitute a taxable benefit to those employees.
  • In New York, companies must dance around laws preventing the corporate practice of medicine. Unlicensed clinics could face penalties or other punishments, and aiding and abetting the unauthorized practice of medicine is a felony.

Attorney Serbaroli concludes by saying that the easiest way for companies to set up onsite clinics, at least in the State of New York, is to contract with a physician professional corporation or partnership to operate the clinic. Another resource for companies is Global Media Dynamics, which organizes an annual Congress on On-Site Employee Health Clinics.