Recent Activity
With a couple of weeks left in the year it looks like we’ll
end it with just over 900 clinics across the country.
We ended last year with just over 200 clinics.
And as 2007 comes to a close, we stand at 868 clinics -
with 42 operators in 36 states.
At this time last year, all of us in the retail clinic market
were expecting explosive growth in 2007. One
announcement after another from well-known and
not-so-well-known operators predicted rollouts across
the country. Those rollouts began with a burst in
the first quarter and, with the exception of MinuteClinic,
ended almost as quickly as it began.
The chart below shows how flat growth was in the second
half of the year, separating MinuteClinic and Take Care.
In fact, during the second half of 2007, MinuteClinic opened
more than 200 locations compared to a net of 94 opened
by all other top-25 operators combined. If you take out the
late burst from Take Care in the fourth quarter the
comparison is even more striking.
It was the year of establishing a basic footprint and
then seeing what happened.
The phenomenon reflects operators learning quickly
that they would not be able to fund further growth
with operating cash flow; it takes at least 18 months
on average to reach break even. For many locations,
it is closer to 24 months.
The good news for this young industry is that many
new operators did establish significant footprints,
which created critical mass and competition.
Critical mass is important for large employers who
like retail clinics as a way to promote convenience,
lower cost and consumerism in healthcare.
But employers have difficulty promoting something
to one group of employees in one region when it
isn’t available to others. They also have difficulty
promoting one medical provider over another,
which is why competition is important.
With almost 900 clinics now operating in nearly
all of the top 50 metro areas by more than
40 operators, we now have the critical mass for
employers to get behind this industry without
worrying about showing bias.
The Physician Protest
(What Physician Protest?)
Does anyone remember the press release the AMA
issued in June of this year? Take a look at this release
and let me know if you have the same reaction I had
after six months have passed.
AMA calls for investigation of store-based health clinics
Here’s what it says:
“The AMA's call for investigations was driven by
retailers who have stated that store-based health
clinics help drive additional store traffic, which
can increase sales of lucrative prescription drugs
and other non-health related products.”
If blogs are the place to air your pet peeves, here goes.
It is unfortunate that this happened when the majority
of physicians practicing out there recognize the
opportunity to improve outcomes in the area of episodic
illnesses, an area of healthcare where we have
overprescribed antibiotics for decades.
Take a quick look at the following link on the
subject of patients presenting with sore throats.
American Family Physician: Problem-Oriented Diagnosis
The AAFP article provides strong evidence and
guidelines for treating strep throat. The bottom line
is that practitioners should not prescribe antibiotics
without a positive lab test. “No single element in
the history or physical examination is sensitive
or specific enough to exclude or diagnose
strep throat,” the article states.
This next link I just discovered from the
Family Medicine Digital Resources Library.
Quality of Care in the Retail Health Care Setting
Using National Clinical Guidelines for Acute Pharyngitis
It is a study authored by three individuals with
direct links to MinuteClinic. The study shows
what can happen when an entire medical system
applies strict evidence-based guidelines to a
given set of symptoms for sore throat. The result
is very high compliance (99.15%) with the
recommendations from the above AAFP studies.
The fact that the authors are all linked to
MinuteClinic is unfortunate, because the
conclusions will be criticized by those against
retail medicine. Nevertheless, the study directly
refutes the assertion by the AMA that these clinics
are prescribing medicine only to increase the
profits of retail pharmacies.
The binary nature of many episodic illnesses
represents a great opportunity to apply strict
guidelines, and I would suggest that retail clinics
are applying these guidelines with far more
discipline than many primary care physicians.
This rigorous approach also represents the primary
reason the AAFP has taken a more cooperative
path on retail medicine compared to the AMA.
Any primary care physician who takes a swipe at
retail clinics might first consider how their practice
stacks up on compliance to published guidelines
and be ready to provide data to back it up.
Placing a clinic inside a pharmacy is no different
than placing a pharmacy in a medical office
building. Should those pharmacies be removed
because their foot traffic results from people
visiting the doctor’s office? Give me a break.
Hospital Systems Enter the Market
This year also marked the entrance into retail
healthcare of many hospital systems. The trend
began with Aurora in 2005, but gained significant
momentum in 2007. The table below shows health
systems now operating retail clinics.
The significance of this trend: hospital systems
and medical groups have a number of motivations
beyond clinic operating profit, which means that
will remain standing for much longer than those
who are in the business for operating profit alone
(i.e., privately financed groups).
Walgreens Acquired Take Care
We have to mention this acquisition as a
significant development in 2007.
It was significant because it marked unwillingness
by Walgreens to let CVS and MinuteClinic run
awaywith the retail clinic market unchallenged.
It also represented additional legitimacy for retail
medicine, with two multi-billion dollar companies
now full participants in the industry.
This acquisition also raises some questions.
2007 did not sort out whether Wal-Mart and Target
are long-term players. We all assume they are.
But the number of clinics inside Wal-Mart
(we count 78) and Target (we count 23) compared
to the number of stores they operate shows
they are still sorting out their strategy.
The biggest obstacles for them include finding
an operating model and operator that is
consistent across the country as well as a
consistent approach on where to put these
clinics inside their stores. Next to the pharmacy
would make the most sense from a consumer
marketing perspective, but that doesn’t
necessarily mean it is the most cost-effective
place in terms of construction and relocation.
Finally, this acquisition raised some questions
about the future direction of RediClinic.
When 2007 began, the four clear front runners were
MinuteClinic, Take Care, RediClinic and
The Little Clinic. At that time MinuteClinic was
already married to CVS Pharmacy and
The Little Clinic had built strong relationships
on the grocery side with both Kroger and Publix.
But TakeCare and RediClinic both had a
relationship with Walgreens and that ended
in May with the TakeCare/Walgreens marriage.
RediClinic was booted out of 16 Atlanta
Walgreens stores this fall and has opened very few
new stores since this spring when it opened
in Wal-Mart stores in Richmond,VA, and HEB stores
in Austin. RediClinic is owned by Steve Case’s
Revolution Health, an organization that wouldn’t
typically allow its ventures to stand still for very long.
Bottom line: 2008 will be pivotal years for Wal-Mart,
Target and RediClinic.
2008 Predictions
- RediClinic will be sold.
- Target and Wal-Mart will sort out their strategies
and begin to ramp up clinic openings more rapidly. - Primary care physician groups will come to
accept retail medicine as a permanent fixture
in the health care economy. - Employers will begin to promote retail clinics
without reservation creating a boost in volume
across the board. - Health insurance companies will publish their
negotiated retail clinic fee schedules as the first
visible move toward price transparency.
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