Following a growth surge between 2000 and 2015, retail clinics are now entering a period of contraction as providers increasingly realize this business model is difficult to sustain. These clinics offer care for minor acute care visits, but also have experimented with tackling chronic disease management. This includes testing beyond influenza such as lipid panels, HbA1c, microalbumin, HIV, fecal occult blood, and methicillin-resistant Staphylococcus aureus.
Just a couple of years ago, Accenture Consulting predicted that by 2017, retail clinics would number more than 2,800, nearly double the number in 2014. But as of April 1, 2017, there were 1,978 clinics with those numbers expected to decline in the coming years, according to Thomas Charland, CEO of the research and consulting firm Merchant Medicine, which tracks the retail medicine market. “Most of the growth was driven by MinuteClinic, but they are no longer growing like they were,” Charland said. Operated by CVS, MinuteClinic is the largest player in this space, with 1,100 clinic locations in 33 states and the District of Columbia and partnerships with more than 70 major health systems. CVS closed nine clinics between January 1 and April 1 of this year.
Walgreens, the second-largest player, is also exiting the retail clinic space in some areas. Advocate Health Care, the largest health system in Illinois, has taken over 56 Walgreens clinics in Chicago, and in St. Louis, SSM Health has assumed operations of 26 Walgreens clinics. Walgreens currently operates 277 retail clinics, down from 400 just 2 years ago. Other retail clinics, including FastCare and Family Medicine Specialists at Walmart, have also reduced the number of clinics they operate this year (Table 1).
“Retail clinics are a difficult model to make work,” Charland explained. “It’s a highly seasonal business, with the busiest times during the winter months. Most of the clinics barely break even. Initially, retailers liked them because they brought people into the stores, helped them differentiate themselves, and drove prescription sales. But some of these retailers have decided it’s not worth it and that their capital would be better spent in other areas.”
Promised Cost Savings Prove Elusive
While retail clinics are beneficial for patients who are in need of immediate care for low-acuity ailments, such as colds or flu, they have not turned out to be as beneficial as expected when it comes to lowering overall healthcare costs. Though the cost of care at retail clinics is substantially lower than the same care at physician offices, urgent care centers, and emergency departments, a study appearing in Health Affairs found that 58% of retail clinic visits for low-acuity conditions represented new utilization and were associated with a modest increase in healthcare spending (Health Aff 2016;35:449–55). The remaining 42% of visits represented substitutions for visits to other types of providers. A separate study concluded that retail clinics do not reduce emergency department visits for low-acuity conditions (Ann Emerg Med 2017;69:397–403).
“Retail clinics have been viewed by policymakers and insurers as a way to decrease healthcare spending,” notes the Health Affairs study. “In total, the increased spending from new utilization outweighed the savings from substitutions. Instead of decreasing spending overall, we found that use of retail clinic visits was associated with 21 percent higher spending for low-acuity conditions.”
So, do retail clinics add value? According to Ateev Mehrotra, MD, MPH, an associate professor of healthcare policy at Harvard Medical School and one of the authors of both the Health Affairs study and the Annals of Emergency Medicine study, it all comes down to one’s perspective. “From the payer’s perspective, it’s unclear whether they add value since most of the illnesses are self-limiting and many of the visits represent new utilization,” he said. “But from the patients’ perspective, they are getting value. They love retail clinics.”
Jesse Pines, MD, FACEP, director of the Center for Healthcare Innovation and Policy Research at George Washington University School of Medicine and Health Sciences in Washington, D.C., said the answer is not to build more convenience settings but to improve the value of existing settings by increasing the connectivity among providers and with longitudinal care. “An example of such a system is Kaiser Permanente, which is paid for by capitated premiums that come from its members,” wrote Pines in an editorial accompanying the Annals of Emergency Medicine study. “Kaiser’s system includes emergency departments, convenience settings, and longitudinal care connected with the goal of efficiently managing both acute care needs and population health.”
Opportunities for Laboratories
Retail clinics offer a variety of CLIA-waived, point-of-care (POC) testing, from HbA1c tests to lipid panels to strep tests. Prices—often listed online—range from $22–$37, plus the cost of a general medical exam. MinuteClinic sends out two assays, a follow-up strep test and a urine culture. Patients are billed directly by the laboratory. Insurers cover most all of the testing.
Charland believes there could be opportunities for clinical laboratories to partner with retail clinics, perhaps to help them expand their scope of testing to offset seasonality. “Perhaps they could offer different types of testing, such as for sexually transmitted diseases or even bone density screening,” he said.
Nancy Stoker, vice president of product management for Orchard Software, also believes there may be opportunities for hospital laboratories and retail clinics to work together, especially in the area of population health management. Orchard offers software to bridge the information gap between POC testing and laboratory information systems. “If retail clinics expand beyond testing for seasonal illness, having an affiliation with a local health system would help,” she commented. “The clinics could get into population health management, but there would need to be patient follow-up, which there isn’t now.”
Clinics could also expand their infectious diseases POC testing, which has experienced significant growth in recent years, Stoker added. “Retail clinics already have a mechanism to refer to a reference lab,” she said. “But they probably want to avoid becoming just a draw station for another lab.”
Ultimately, partnerships between retail clinics and health systems may be the wave of the future, Charland said, noting that it is already happening. “In some markets, MinuteClinic is really leading the way by feeding data back to medical groups, such as how many patients the clinics have seen and for what conditions. The physicians are fully aware that their patients are going elsewhere because they can’t get in to see them. That has really changed the perspective of some of these medical groups.”
Kimberly Scott is a freelance writer who lives in Lewes, Delaware.+Email: [email protected]