Is private healthcare worth it for a small business?

This is the question most business owners are actually asking, even when they phrase it as a question about a specific product. The real concern is whether spending money on employee health generates a return, or whether it is a cost that benefits the employee without benefiting the business. The answer, for a well-chosen service, is that both are true at once.

What "private healthcare for employees" usually means

The term covers several distinct products: private medical insurance (PMI), employee assistance programmes, and private GP access. These do different things and carry different costs. A PMI policy covers specialist and hospital treatment. An EAP typically provides a phone counselling line and some signposting. A private GP service provides day-to-day primary care access: same-day appointments, on-site visits, prescriptions, and ongoing condition management.

Before asking whether any of these is worth it, it helps to be clear about which problem you are trying to solve. If the goal is to reduce short-term absence and keep your team healthy in the course of normal working life, a GP service is the most direct tool. If the goal is to provide cover for serious conditions or to use benefits in recruitment, PMI may be the right product, or the right addition.

What absence actually costs

The CIPD's 2025 absence data puts the UK average at 9.4 sick days per employee per year. For a salaried employee on £35,000, that is roughly £1,260 in direct salary cost per year, before covering their work, client impact, or any management time spent on the absence.

At more senior levels the numbers increase, but not linearly. A manager on £70,000 carries around £2,500 in absence salary cost on the same average, but their absence often has a larger operational impact than the salary figure captures. Work does not just pause when a manager is out. Decisions get delayed, teams lose direction, and client relationships absorb friction. The real cost of a senior employee being absent for a week is typically several times their daily rate.

Most businesses do not calculate this. They see sick pay on payroll and assume that is the extent of the cost. It rarely is.

What a GP service costs at team level

A named private GP service covering a team of ten people, with same-day access, home or workplace visits, and ongoing condition management, typically runs from around £500 to £700 per person per year depending on the level of service. For a team of ten, that is £5,000 to £7,000 per year.

If the service prevents an average of two sick days per person per year, which is a modest expectation given the evidence on early intervention, the absence saving for a team on average salaries broadly covers the cost before any other benefit is counted. The business also retains the presenteeism benefit: employees who get treated quickly recover fully rather than spending a week underperforming at their desks.

What makes it work at smaller headcounts

The businesses that get the most from employer-funded GP access are those where the service is actually used. That means communicating clearly what is available, making it genuinely easy to book, and not creating any cultural friction around using it for concerns that might feel minor. Minor concerns are precisely when early intervention pays off most reliably.

It also works better where the cost of someone being absent is material. In a business of eight people, one person being out for a week creates a disproportionate impact compared to the same absence in a team of eighty. Small teams often have the most to gain from keeping their people healthy and at work, which is one reason why the per-head economics of a GP service tend to look better at smaller headcounts than they might appear at first.

A practical starting point

Before committing to any product, calculate your current absence cost. Multiply your average annual salary by your average sick days and divide by 260 working days. That gives you a salary-cost figure per person per year. For a team of ten, multiply by ten. Then compare that to the cost of a GP service.

In most businesses I speak with, this calculation comes out clearly in favour of the investment. The more interesting conversation is usually about which service fits the business: the level of access, whether on-site visits are useful, and whether a named doctor matters for your team. Those are questions worth exploring before signing up to anything.