Retail clinics settle in for the long run
The outlook for retail clinics? Steady growth. Their numbers haven’t soared, as some of the players predicted they would several years ago. But these walk-in clinics, located mostly in drug stores, remain part of the healthcare scene, and their numbers continue to steadily climb. Meanwhile, hospitals continue to search for their niche in this new market.
And if the pundits are correct in saying that, regardless of what happens in Congress or the Supreme Court, healthcare will continue to move away from fee-for-service and more toward accountable care, then long-term growth among retail clinics is all but assured. What’s more, there are signs that physicians are accepting retail clinics as useful adjuncts to primary care.
Consistent growth ahead
“When you put all the pieces together, I think [retail clinics are] poised for growth,” says Tom Charland, CEO of Merchant Medicine, Shoreview, Minn., and former senior vice president of strategy and business development for MinuteClinic. “I don’t think it will be the wild growth of 2006 and 2007, but it will be very consistent growth.” Economics and growing consumer acceptance are two reasons.
It is estimated that approximately 1,350 retail clinics operate in the United States today, says Charland. The market leaders are MinuteClinic, the retail healthcare division of CVS Caremark, which reports more than 600 locations; and Take Care Health Systems, a subsidiary of Walgreens, which reports 360 locations. The Little Clinic, meanwhile, reports 82 clinics in Kroger, Fry’s, and King Soopers stores in Ohio, Kentucky, Tennessee, Arizona, Georgia and Colorado. Walmart, meanwhile, operates about 150 “Clinic at Walmart” locations in its stores.
The growth leader in 2011 was MinuteClinic, says Charland. “My observation of CVS is that, in general, they’ve always been aggressive in terms of strategy development. They seem to be willing to take chances on what I would call creative strategy approaches.”
MinuteClinic has announced that it intends to open approximately 100 clinics a year for the next five years, says Charland. “But if you look at all the pieces of healthcare and how it’s all going to come down, I think it’s a very solid risk.
“Two or three years from now, we’ll be in a completely different economic environment when it comes to healthcare, regardless of politics or legislation,” he says. Population management, as embodied in accountable care organizations, will continue to grow. “The purpose of that is to find the most appropriate venue of care given the acuity level of [the patient]. And cost is part of that formula.”
Retail clinics can be part of that accountable care movement, provided they can form relationships with hospitals, physician groups and ultimately, the patient’s medical home, that is, the primary care physician, he says. “The implication is, there is coordination [among various caregivers]. Retail clinics think they can provide services at a higher quality and lower cost than any other place, and that’s what will determine where [various procedures] are done.”
Whereas physician practices and retail clinics might have seen themselves as competitors four or five years ago, “both sides are moving closer together,” says Charland. “Both realize they have an opportunity to work together in this new world.”
Hospitals team up
Such thinking appears to be on the minds of executives at Take Care. “In the coming year, as the Take Care clinics form more and more relationships with the traditional healthcare environment – for example, health systems – we’ll see how we can use our front-line clinicians to work together in teams to make sure patients have access to the chronic care services they need,” says Gabe Weissman, spokesman.
“Now that reimbursement might get tied to outcomes, people are asking, ‘How can I figure out the best way to provide the best quality care at a low cost?’”
With today’s emphases on prevention and monitoring of chronic disease, the healthcare system – and consumers – want care that is convenient and affordable, he says. “That’s something that the retail clinics are built around.”
Forming relationships with local hospital systems has become an important strategy for Take Care and other retail clinic chains. In July 2011, for example,
Take Care announced an agreement with Louisiana State University Health Sciences Center and LSU Healthcare Network in New Orleans that includes the following components:
- Development of an interface between each organization’s electronic health record system to facilitate scheduling and information-sharing.
- Opportunities for students in the LSUHSC Nurse Practitioner Training Program to precept at Take Care Clinics in the New Orleans area.
- Take Care Clinic participation in LSUHN’s development of a regional medical plan for non-insured working persons.
- Establishment of a new Take Care Clinic in close proximity to the LSU Health Sciences Center.
- Participation of LSUHSC and LSUHN physicians as collaborating physicians for Take Care clinics in the region.
In addition, LSUHN health professionals will share information on Take Care clinics and other healthcare options when their locations are closed or they are unable to schedule an appointment within a patient’s desired timeframe. Professionals at LSUHN-affiliated practices will have access to information on Take Care clinic locations, evening and weekend hours and services available to patients and their families.
The agreement with LSU is one of several that Take Care has announced, says Weissman The others are Ochsner Health System in New Orleans, and Memorial Health in Jacksonville, Fla.
MinuteClinic is pursuing a similar strategy. In December 2011, for example, the company formed a relationship with UMass Memorial Health Care in Worcester, Mass. Under the agreement, UMass Memorial Health Care physicians will serve as medical directors for MinuteClinic locations in central Massachusetts. In addition, MinuteClinic and UMass Memorial Health Care will collaborate on patient education and disease management initiatives and will inform patients of the services each offer. Signage at MinuteClinic locations will inform patients that each site has a clinical affiliation with UMass Memorial Health Care. In addition, the two organizations will work toward fully integrating their electronic medical record systems. (MinuteClinic declined to participate in this article.)
Not to be overlooked in the discussion about retail clinics is Walmart. With 150 clinics in operation today, the Bentonville, Ark.-based retailer hasn’t come close to the 400 clinics it said it would open by 2007. But the company remains a defining force in the market today.
The company’s strategy has been to enlist local hospital systems to outfit and staff the Clinics at Walmart, which are located inside Walmart stores. In the model, the hospital system is the one at financial risk, not Walmart. The Journal of Healthcare Contracting spoke with several distributor reps who were personally involved in setting up various Clinics at Walmart over the past several years, most of which subsequently closed, as local hospital systems found they couldn’t run the clinics profitably.
It’s no surprise that Walmart experienced some bumps in the road, says Charland. “Walmart does things on a large scale,” he says. But setting up retail clinics in conjunction with hospital systems cannot be done on a large scale. “They’re dealing with individual hospital systems. That’s small scale.”
Walmart also likes doing things its own way. But that’s difficult to do when one is working with hospitals, notes Charland. “Hospitals are so regulated, [Walmart] can’t do things on their own terms.”
But despite the speed bumps, Walmart is tenacious. “When everybody else kind of stalled – except in the past year, 2011, when MinuteClinic got into a growth mode – Walmart continued to open two, three, four, sometimes five clinics a month with hospital systems,” notes Charland. “They have continued to grow.”
In October 2011, the company sent shivers down the spine of some providers when an RFI was leaked in which the retailer said it was seeking partners to help it become “the largest provider of primary healthcare services in the nation.” In the RFI, the company said it wanted to build a nationally integrated, low-cost primary care platform, and was seeking partners to help it provide patient care services, such as monitoring patients with diabetes, obesity, etc.
On Nov. 9, John Agwunobi, M.D., Walmart senior vice president and president of Walmart U.S. Health & Wellness, issued this terse statement: “The RFI statement of intent is overwritten and incorrect. We are not building a national, integrated, low-cost primary care health care platform.” (Walmart would not respond to questions for this article.)
Charland doesn’t believe the industry has heard the last from Walmart concerning its ambitions in primary care. “Where they go from here is the point of the RFI,” he says. “They don’t know exactly what they want to do, but they want to understand better what their options are, to do things that fit more in the way
Walmart does things. In some ways, because of their size and scale, that’s the way they have to do things.”
Walmart isn’t the only one exploring its options. Retail clinics are doing the same. Take Care now allows consumers to schedule appointments online and to view estimated wait times at each clinic. In addition, the company’s website offers access to a cost menu of services, as well as local and up-to-date information on patient satisfaction scores and market-specific quality of care scores based on National Center for Quality Assurance Health Effectiveness Data and Information Set (HEDIS) guidelines.
It’s likely that retail clinics will continue to attempt to play a role in chronic disease management. In November 2011, for example, MinuteClinic signed an agreement with Axis-Shield (recently acquired by Alere) to outfit each of MinuteClinic’s locations with an Afinion analyzer, so diabetes patients can obtain access to hemoglobin A1c test results within three minutes. MinuteClinic’s health condition monitoring services include monitoring of asthma ($79 to $89), diabetes ($79), high blood pressure ($79) and high cholesterol ($79).
But the retail clinic industry can’t take its obligations in chronic disease management lightly.
“The value of biometric screening is repetitiveness,” says Jim Poggi, director, laboratory category management, product and supplier management, McKesson Medical-Surgical. The goal is to establish a baseline, then the change from baseline, he points out. “Bringing people into your medical family means there’s an obligation to stay in the game and do what needs to be done to keep clients returning, and to transmit information to their primary care provider.”