Navigating health reform
Health Systems See Opportunities in Retail Clinics
Health care providers that were originally hostile to a retail clinic model are now partnering with clinics as an effective way to provide quality care and grow market share. These collaborations with retail clinics offer health systems access to newly-insured patients who don’t have a primary care physician and provide basic health care for patients to who might not otherwise receive it.
Retail clinics provide alternative to slow service and high cost
In 1999, Rick Krieger, the founder of QuickMedx, brought his son to an urgent care clinic for a sore throat and sat in the waiting room for over two hours. He was frustrated by the slow service, cost, and over-engineered process to treat a common ailment. The next year he opened his first clinic in a retail strip mall. Krieger’s QuickMedx ultimately became what we now call MinuteClinic.
The retail clinic strategy combines convenience and affordability to attract patients to traditional retail locations — big box retailers, drug stores, and strip malls. These clinics provide a multitude of basic services including:
- Treatment for minor injury and illnesses
- Screening and monitoring
Staffed by physician assistants and nurse practitioners, these clinics accept insurance and make their pricing transparent and affordable, often posting prices on a sign behind the counter. Retail clinics also offer attractive hours and are open nights and weekends.
Physicians challenge early models
Early on, many physicians were the most vocal critics of the retail clinic health care model, challenging the model as fragmented and lacking physician management. In fact, the American Academy of Family Physicians continues to recommend that patients view retail clinics cautiously, preferring the physician-centered management of a more traditional clinic setting.
Between 2006 and 2015, the number of retail clinics grew from 200 to more than 1,800, according to Merchant Medicine, a consulting organization that tracks retail clinics. The largest providers to date are CVS’ MinuteClinic, Walgreens Healthcare Clinic, The Little Clinic (located in Kroger stores), Target Clinic, and RediClinic (affiliated with Rite Aid stores).
One challenge retail clinics face is their high fixed costs and low profit margins, especially for seasonal vaccinations, which make up the majority of treatments.
Traditional providers see opportunities
In recent years, however, the paradigm has shifted. Retail clinic organizations are now partnering with medical systems, health plans, and employers to address the problem of fragmented patient care. Now retail clinics can be viewed as points at the end of a hub and spoke system, with the primary care physician at the center.
Proponents of retail clinics argue that they provide an opportunity to increase access to lower cost care for newly-insured or under-insured patients, potentially directing patients to a primary care relationship with a health provider. In addition, they believe they can become important promoters of population health as partners within traditional health systems.
Over the past few years, this shift in strategy has become apparent:
- In February 2009, Cleveland Clinic and MinuteClinic announced a partnership where MinuteClinic would provide coordinated care for Cleveland Clinic patients, including electronic medical record sharing.
- In July 2014, CVS Caremark partnered with traditional health care providers in five states—Hartford Healthcare and ProHealth Physicians in Georgia, Lahey Health and Baystate Health in Massachusetts, Texas Health Resources in Texas, Palmetto Health in South Carolina, and The Baton Rouge Clinic in Louisiana. CVS went out of its way to point out that its clinics should not be viewed as primary clinics, but complementary to the work of primary care physicians.
- In November 2014, Target Corporation and Kaiser Permanente announced a partnership to provide primary care services in selected stores in Southern California. Four Kaiser-staffed clinics opened in November and December. Then, in summer 2015, Target turned over its remaining clinic operations, along with its pharmacy operations, to CVS who will operate the clinics under its CVS MinuteClinic brand.
- Walgreens announced in August 2015, that they would allow Providence Health & Services to own and operate clinics in 25 of its Oregon and Washington stores starting in 2016.
These developing partnerships demonstrate that the foundations of health care are shifting to embrace the concept of accountable care organizations and the changes to the old fee-for-service, volume-based reimbursement system. As population health strategies continue to evolve and develop, health care organizations will be looking for non-traditional health care providers, like retail clinics, to provide efficient and cost-effective care.
How we can help
CLA can analyze your situation and help determine how your organization can develop a strategy that could include retail clinics. We can also help you evaluate and leverage other opportunities that may emerge as a result of the changing health care environment.