The entrance of retailers like Walmart and CVS into the world of healthcare services has some health and hospital systems scrambling to find new business models.
Tapping into long-heald patient dissatisfaction over long wait times and obscure pricing, retail clinics, which offer convenient service and transparent pricing, are growing both in number and the types of services offered.
Over 2,000 are doing business across the United States, and some estimates project that there will be as many as 2,800 by 2018.
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Ultimately, it's about convenience. While a patient may need to book an appointment with a primary care provider days or perhaps weeks in advance, they can pop by a local Walgreens and be treated that very day, knowing exactly how much it's going to cost.
"Time is money, and everyone's multitasking," said Jane Sarasohn-Kahn, a health economist and advisor at THINK-Health, a health consultancy she founded in 1992. "At least half of people earning over $100,000 have Amazon Prime subscriptions. It's a high number. We're now living in a world where we can get what we want when we want it. We're not a society that wants to wait. So the old ways of booking a primary care appointment days or even months away doesn't fit the profile of the new consumer."
The new consumer, she said, now looks a lot like the mom with the soccer-playing children and an aging father: A time-crunched parent who wants her healthcare on-demand.
"These retail clinics have become extremely attractive to that particular cohort of consumer," said Sarasohn-Kahn. "She can accomplish multiple things at once, and not get out of the car more than once. Ther retail clinic is that opportunity for her, because it's a purpose-oriented setting."
What's more, clinics are growing both in number and in the roster of services offered, going beyond urgent care toward more population health and chronic disease management services. According to the Robert Wood Johnson Foundation, "Some delivery systems seeking to improve primary care access and manage total cost of care are using retail clinics to reduce unnecessary emergency department visits," given that retail clinics' costs are lower than EDs and some hospital-based ambulatory departments.
Partnering with retail clinics has been one option for hospitals and health systems looking to leverage the new type of consumer. Another option has been to compete with them directly. Some systems are opening up their own clinics in malls and grocery stores, even though retail clinics aren't yet a huge moneymaker.
Ateev Mehrotra, MD, an associate professor of healthcare policy and medicine at Harvard Medical School and a hospitalist at Beth Israel Deaconess Medical Center, said systems going into direct competition have so far struggled to find their footing.
"The experience has been relatively negative," he said. "They've struggled with the business model itself. It's a low-volume business. They're good at hospitals, not so good at operating these kinds of stores. There was a number of these clinics around the country that closed. Some still have them -- Heritage Valley has their own, Sutter has their own, Kaiser -- and not everyone's had a negative experience, but it's not easy. It's a big learning curve."
One of the big dilemmas, said Mehrotra, is how to draw patients into the business, which he suggests may be partly due to a lack of advertising acumen. Outlets like CVS and Walgreens may be at a competitive advantage over health systems in that they've long been adept at getting themselves in front of consumers' eyes.
"We should also recognize that, for a hospital system, the economics are a little bit different," he said. "For the CVSes, it's about getting patients' loyalty, it's about getting new people into their stores, it's the spillover -- you go in there for care and you buy something over the counter. For hospitals, it's about whether they can bring new patients into their system. Some report they can get more patients into their primary care operations through a retail clinic. It could be a loss leader."
So far, said Mehrotra, these clinics haven't been a threat to hospitals' finances. About two-thirds of visits to retail clinics are new utilization, and only one-third are patients who otherwise would have gone to their doctor's office. Because the demand for primary care is high, there are plenty of patients to go around, which means chances are low that a significant portion of consumers would leak into the retail space.
But some physicians remain worried, which has led to many systems partnering with their retail counterparts.
"For the provider, if you can develop a relationship with a retail clinic, or a group like CVS or Target -- and if you can ensure interoperability between the IT system at the clinic and the IT system at the provider's office -- you don't lose the patient," said Sarasohn-Kahn. "And now, as a provider, you can take on value-based payment and deploy primary care in the community as long as you've got the technology infrastructure in place."
She said pharmacists are ready to take a more hands-on role in medication therapy, giving advice on conditions ranging from COPD to chronic heart failure, and this has been reflected in licensure boards licensing them appropriately for that type of care approach.
The models that are emerging are market-dependent, she said. Rural areas that suffer from a lack of doctors may see retain clinics that are more successful since they fill that particular gap.
Sarasohn-Kahn predicts that provider-clinic partnerships will be the key to future success.
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"I've been speaking to hospital associations at the state level about this," she said, "and what I'm beginning to hear is hospitals recognizing they need to have a lower cost base given that their reimbursements will not be increasing over the next several years. We're entering an era of doing more with less. My prediction is that hospitals who get that will develop relationships with retail providers so their patients can enjoy resources in the community for primary care, urgent care, etc."
Of course, IT systems will be an important part of that transition, she said.
"You can't do this unless there's that level of interoperability between systems. You really need that IT infrastructure."