There is a current trend for corporations to switch from in-house medical departments to outside contract organizations for provision of occupational health services. Although this may be driven by a desire to reduce expenses, there is little objective data on which to base this decision. This study compares the costs to a corporation of an in-house medical department with the costs for the same services if rendered by outside providers. Costs of the in-house department were obtained from company records. Prevailing charges for outside provider services were determined by an invoice survey and from other sources. We found that the cost for the in-house medical department was 42% less than that of the outside providers at the prevailing rates. Thus, the in-house medical department is more cost-effective than the outside providers. We also discuss other advantages of an in-house department that are more difficult to quantify.