hospital impact - Retail Clinics - coming to a drug store near you?

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Retail Clinics - coming to a drug store near you?

July 19th, 2006

Matthew Holt has some good info/links on the CVS acquisition of MinuteClinic. Are retail clinics the "disruptive innovation" Southwestern Airlines model for healthcare? Offer limited services, cut all the stuff folks don't really want, and do it cheaply. The entire business model (like most) rises and falls on market demand (check out the great white paper from Mary Kaye Scott of the CHF). It comes down to this:

Can we get 2 or 3 people to utilize the service per hour? If yes, cha-ching.

Local newspapers are reporting that the deal went for $170MM - that's about $2MM per site. Keep in mind that this is for a unprofitable $20MM business. Some MBA exec in CVS Corporate is obviously seeing some compelling positive economics to make such a big investment. They are adding 200 more sites this year, and then few hundred more per year after that.

Also, $77MM in VC funding just went into Take Care Health Systems, the biggest competitor of MinuteClinic. They plan to open 200 locations in the next year and 1,400 more by the end of 2008.

So, in 3 years time, just with these two biggest players, we can expect to see 2,000-2,500 of these - 1 for every two or three hospitals. And we're just getting started, right? If Walgreen's and CVS both jump abroad, that's another ~10,000 potential sites to be considered. Add also grocery stores, malls, or any other retail setting (banks? new tagline: live long and prosper?).

Related, we've probably all heard that a group of investors almost bought out HCA. It would have been one of the biggest leveraged buyout deals in US history. If it weren't for the $11B in debt, the deal would have been sealed. Regardless, this just goes to show - despite all the negative trends we always talk about, lots of folks are putting their money where their mouth is. Within our messed-up, red-taped, media-bashed healthcare industry, non-healthcare people truly believe that there are lots of opportunities to add value and make a real buck.

one more thing: speaking of non-healthcare types, the CEOs of both MinuteClinic and Take Care are retail service experts. MinuteClinic's Howe was Arby's CEO; Take Care's Rosenbluth (yes that Rosenbluth) built & sold off travel management giant Rosenbluth International. They are experts in location selection and service excellence.

What do they see that we healthcare drones don't? (or is it vice versa)

100 comments

Comments:

Comment from: Gary Falcetano, PA [Visitor] · http://www.advancedprac.com

While retail clinics are certainly not the answer to all of our current healthcare woes, they do address a subset of problems that plaque family practice offices and emergency departments. The minor urgent care problems that disrupt most practices and overload the only alternative, emergency departments. Staffed by highly trained nurse practitioners and physician assistants these retail clinics offer patients exactly what they need and have been seeking for way too long...A convenient, economical method of dealing with urgent but minor healthcare concerns without enduring long wait times to obtain appointments a their local family practice office or waiting for many hours in emergency departments. ERs which by their very nature have to be prepared for the most critical patients are the least cost effective method of dealing with these type of health problems. NPs and PAs have proven themselves as excellent clinicians since the birth of their professions 41 years ago. They practice in almost every medical specialty and setting. The Veterans Administration (recently cited as the best healthcare system in the US) is the single largest employer of NAs and PAs. I will most definitely utilize these retail clinics for myself and members of my family. They are exactly what our healthcare system needs.

07/20/06 @ 17:34

Comment from: adam [Visitor]

I wonder what, exactly, they will treat? In other words, for what will they write Rx's?

Will the undiagonsed/improperly treated asthma patient be allowed to visit for an albuterol inhaler every week?

Will they give antibiotics? In my practice, we have seen numerous cases of community-acquired MRSA. Give the wrong AB, and you've got trouble.

Also, these clinics must have a portable electronic medical record, so that the patient's regular physician can know what has happened.

07/20/06 @ 19:55

Comment from: hospitaltony [Member]

Keep in mind that services will be very very limited. (I believe they specifically have said that they don't treat asthma) We're talking vaccines, pink eye, styes, poison ivy, cold sores, pregnancy testing, and the like.

But I do see your point- regulations of such enterprises will make this opportunity less attractive. I would have to imagine that those who spent $170MM have thought all this through.

07/21/06 @ 10:10

Comment from: TH [Visitor]

From the report, Health Care in the Express Lane: The Emergence of Retail Clinics, the following quotes.

"If clincs are going to realize their full potential... some regulatory barriers... will have to be torn down." - RediClinic CEO Golinkin

"If [retail] clinic expansions play out according to projections, they will undoubtedly attract more regulatory attention." - Mary Kate Scott

While these two quotes appear to be in direct conflict the report points out that they do not know the what/how/when of the "regulatory attention". Could it be that CVS sees enough immediate short-term profitability to make it worthwhile before the beauracratic regulators can catch up to the trend? By that time the whole concept could be so popular and efficient that additional regulations would only be a bump in the road. According to the report, retail clincis are currently regulated the same as private practices, which good news as it makes it difficult for regulators to treat the two differently. But with growing malpractice and prescription misuse already today I would expect more regulation and believe there will be high rate of civil action. At least short term though - yes, cha-ching!

07/21/06 @ 14:27

Comment from: Tim Gee [Visitor] · http://www.medicalconnectivity.com

Let's see, more convenient, priced less than my private practice physician - when will my neighborhood get one?

Certainly, high deductible insurance customers like me will use them. I would imagine that payors and CMS will end up looking at shifting patients to them as well.

I see other health care stakeholders as a bigger risk than potential regulations. Community hospitals and physicians could both become power detractors to retail clinics. How these potential detractors are handled will be critical.

Companies outside health care see the potential win, but I seriously doubt they understand the Byzantine relationships in health care and how detractors might facilitate their downfall.

07/21/06 @ 20:11

Comment from: massage school [Visitor] · http://www.nmsnt.org/

With the emergence of retail clinics, many consumers are finding lower prices, more convenience and better hours of service compared to doctors' offices. Retail health clinics offer convenience for basic care, but aren't for everyone.

07/23/06 @ 11:21

Comment from: hospitaltony [Member]

regardless of the potential regulations, if we just look at healthcare in the classic two by two matrix: low/high for complexity of care, low/high for out-of-pocket expenses,

for the low complexity/low out-of-pocket expenses, there is a ridiculously large gap, and I think this mini clinic idea will have enough consumer value to have a significant place in the spectrum of healthcare delivery.

07/24/06 @ 11:26

Comment from: MSA [Visitor]

Only problem with these clinics, truly, is that all of them are being run by retailers, not healthcare delivery experts. Therefore, they really do not know how to deal with the docs, they do not know how to get paid by insurance and they don't understand true patient flow. Healthcare is a relationship business. These clinics will definitely work, but only when the clinic operators become a complement to physician offices, rather than competing with or challenging them.

10/12/06 @ 12:26

Comment from: History [Visitor]

Disruptive technologies are not new, and they have been shown to carve markets away from existing businesses. Rather than a problem, I think it is a strength to be retail-run. Insurance payments are complicated, but it's an electronic problem. (Take cash or credit and it goes away.) And patient flow is like quick lube, restaurant, or any other service business (which are also relationship businesses.) Finally, when did relying on govt. regulation to stave off competition ever work?

10/12/06 @ 16:51

Comment from: Jennifer [Visitor] · http://www.aanp.org/Publications/AANP+Position+Statements/Documentation+of+Quality+of+Nurse+Practiti

http://www.aanp.org/Publications/AANP+Position+Statements/Documentation+of+Quality+of+Nurse+Practitioner+Practice.htm

For a list of annotated bibliographies for the quality of care provided by Nurse Practitioners, please go to the above website. Nurse Practitioners are an effective and efficient method for providing primary care and first aid type care.

11/02/06 @ 23:39

Comment from: Gena Saunders [Visitor]

About time. Add a doc for more complicated cases and move to a cash only model to eliminate the insurance problem and improve cash flow, and retail clinics could go a long way toward stemming the highly inflated cost of healthcare and tap the huge market of uninsured/underinsured middle class for common medical problems.

11/20/06 @ 18:45

Comment from: John [Visitor]

The American Way. Another way to make a buck without any regard to quality or ethics. What a shame !

02/01/07 @ 20:43

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03/25/07 @ 03:29

Comment from: Bryan [Visitor]

These clinics are regulated by the same standards any CNP would be had they opened an office outside the store or if they were working in a physicians office. Some clinics even offer a chance for local physician involvement and a chance at investing in there future. What most of these physicians don't realize is that the majority of these people they are not now or will ever see in there office. They go to Urgent Cares or ER's or treat themselves because they cant afford or find a physician who will take them. On one hand physicians want to be selective when taking new patients based on ability to pay and there insurance carrier contract, yet when someone offers an alternative to these people they think your "skimming" the easy patients that still has a 2 day wait to get in. Wake up America don't think for 1 second that these Doctors aren't as worried about their pocket books as they are your care!

04/19/07 @ 15:25

Comment from: fade [Visitor]

What a great thing to have. I am a nurse and a month ago I had an upper URI problem, and it ended up with bacteria infection. I went to see my doctor because I need antibiotics. Actaually I already diagnosed myself. I got a bill from the clinic for $190 for a doctor because they sent the claim to my old insurance and ended up they could not collect the money. If I have a mini clinic in my area, I would have gone there...absolutely.

05/24/07 @ 19:36

Comment from: james [Visitor]

North Carolina Medical Board is looking into this and does want to shut them down, it cuts into the physician's pocketbook, it is a good alternative to the high price healthcare and is being deamonized, by the medical community. The medical community needs to get out of the 19th century and into the 21st century when it comes to practicing medicine.

09/06/07 @ 15:29

Comment from: Phil [Visitor]

If the services of these clinics are going to be so very very limited (pink eye, styes, poison ivy, cold sores, pregnancy testing etc) then isn’t there a bigger threat from telemedicine companies that can provide the same solution but with even less inconvenience. Not only are there already well established online resources such as Google Health, WebMD or RevolutionHealth but also phone based services that offer 24x7 access to a Doctor from anywhere using your mobile phone are already widely available eg. TelaDoc, 3G Doctor or Vitaphone.

09/07/07 @ 05:29

Comment from: Greg Marmes [Visitor]

Does anyone know how these clinics are able to take patient money without being entirely owned by doctors?

09/26/07 @ 08:52

Comment from: Phil [Visitor]

Greg: these clinics have exactly the same abilities because the care is provided by registered and regulated Doctors. Because Doctors are still self regulated they can do what they want so long as they are accountable. The clinic doesn't have to be owner operated.

11/03/07 @ 08:34

Comment from: Grem Marmes [Visitor]

Does anyone know how much a physician is paid to work at these clinics? Or to just be on call?

11/12/07 @ 15:46

Comment from: drug treatment [Visitor] · http://www.casapalmera.com

That would be a good thing. Considering the health care plan we're having...

01/17/08 @ 16:26

Comment from: pete [Visitor]

If you haven't noticed, hospitals and conventional healthcare are becoming dinosaurs. The majority of cases that go through a hospital emergency room are minor. The patient/consumer usually has a long wait and receives a big bill. Where is the value. We haven't even considered the quality of the care received. Whether you like it or not healthcare is becoming commoditized and it should be.If you are in healthcare you know where the excesses and inefficiencies are. Free markets are going to put an end to the extravagant costs and dubious outcomes. I say let these clinics compete based on the value they bring to patients. In a normal market the competition i.e. hospitals/providers should come back with a better product. Regards.

01/25/08 @ 06:40

Comment from: jeve [Visitor]

These clinics are purely money making schemes. Do you think they will provide charity care to those who can not pay, but need the help? If you don't have insurance, you can easily look up a doctor in the yellow pages, call and tell them you will pay cash for their services and be seen that day. The prices are generally reasonable as long as you explain you will be paying cash. Americans want every service to be like Mcdonalds, quick, and cheap. But quality be damned. The providers of medical care are highly trained and work much harder than most can ever imagine. I would never shirk a doctor bill, as they are responsible for my health. They are the only ones I would take my ill child too. Jeve

01/30/08 @ 13:54

Comment from: Drug Rehab Program [Visitor] · http://sniperangel.pinoygaming.net/the-second-chance-of-life/

It is a very good idea and I sincerely hope that it gets implemented because this would really help the tax paying citizen. I haven't heard about such a good project in a while and it was about time someone had a genius idea.

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Hospital facilities built today do not include asbestos, but many older buildings still have asbestos components in them. Steam pipes, boilers and furnace ducts were often insulated with an asbestos blanket or asbestos paper tape because of their fireproof and insulating properties. Resilient floor tiles were made from vinyl asbestos. Asbestos cement was employed in roofing, shingles and siding materials. The hazard of this carcinogen increases when the fibers become airborne, and untrained contractors can inadvertently increase risks by cutting, tearing, sawing, scraping, or sanding asbestos materials. Elevated asbestos levels can occur in hospitals where old materials are damaged or disturbed. It is best to leave undamaged asbestos material alone if it is not likely to be disturbed. Inhaling asbestos fibers is known to cause mesothelioma and other diseases. Be sure to use an experienced asbestos removal contractor when you need to get rid of old materials that might contain asbestos.

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