Retail Clinic Revolution: With 900-plus clinics, sustainability becomes focus

It has been about eight years since in-store clinics became a blip on the radar screen, and since that time, the concept has quickly grown from an industry anomaly to a viable access point for affordable, convenient, quality health care. Recent developments strongly indicate that such clinics are not only here to stay but are becoming an increasingly important player in today’s—and tomorrow’s—healthcare landscape. One could even say we are in the throws of a clinic revolution.

“The industry has made tremendous progress over the past few years in the sense that consumers have embraced it, retailers have embraced it and payers are in the process of embracing it. Even the medical community today is starting to understand that convenient care can play an important role in giving consumers easier access to affordable health care,” said Web Golinkin, president of the Convenient Care Association and chief executive officer of clinic operator RediClinic. “That doesn’t mean that we have an easy path ahead, but I think that convenient care is clearly here to stay.”

As of press time, there were more than 900 clinics in operation and, depending on whom one asks, the projections vary. CCA estimated that by the end of this year the industry could see between 1,500 and 1,600 clinics in operation. Taking a more aggressive position, Citigroup analyst Deborah Weinswig has said that she believes there could be more than 4,000 clinics by 2009.

Whatever the number, some industry sources said it is likely that over the next few years the industry will see a slow down in clinic growth and, at some point, it will hit a plateau as the market shakes out those unable to survive—a phenomenon that is already starting to play out. After all, entering the market is one thing, but overcoming the barriers to success and turning profitable is another.

While clinic operators have remained tight-lipped about their patient ramp up, sources suggest that clinics need to see nearly two patients an hour to break even.

For example, Tom Ryan, CVS Caremark chairman, president and chief executive officer, told analysts during a recent conference call that he expects its MinuteClinic business, which is leveraging CVS’ PBM business to develop new services, to turn profitable in 2009. Minute-Clinic is the largest clinic operator, ending 2007 with 462 clinics in 25 states.

CVS’ September 2006 acquisition of MinuteClinic is one example of why many sources agreed that retail clinics are here to stay. Retailers not only are partnering with them but—as seen with CVS and MinuteClinic and Walgreens and Take Care Health Systems—actually are acquiring clinic operators. This shift clearly demonstrates the value perceived by retail pharmacy.

“Since retail-based clinics take two or three years to break even, it appears that retailers have a competitive advantage as they benefit from higher traffic, more prescriptions and higher front-end sales,” Weinswig stated in a research note.

Once again using MinuteClinic as an example, CVS stated in its 2006 Annual Report that the clinics drive more traffic to its stores and that approximately 25 percent of MinuteClinic patients are new CVS/pharmacy customers.

Other indicators that clinics are not a fad but a mainstay include: payers are increasingly contracting with clinic operators; employers are promoting the clinics, if not establishing employer-based clinics, to help ease rising healthcare costs; and patient satisfaction is high—CCA members boast a 98 percent patient-satisfaction rate.

Underscoring patient satisfaction and acceptance, and signifying room for growth, the 2008 Survey of Health Care Consumers produced by Deloitte Center for Health Solutions found that 16 percent of consumers have used a walk-in clinic in a retail setting, and 34 percent said they might do so in the future. Nearly half of respondents said they would be comfortable with the accuracy, safety and quality of care offered in a retail clinic that is staffed by a nurse practitioner. The survey of 3,031 adults, conducted from Sept. 10 to 23, 2007, also found that today’s consumers overwhelmingly want convenience. In fact, more than 80 percent of respondents are interested in access to same-day appointments.

While the convenient care industry remains in transition, all signs point to growth, as rising healthcare costs, as well as overbooked doctors’ offices and overflowing emergency rooms, prompt those patients suffering from acute ailments to seek the services of affordable, walk-in retail clinics.

“I think you will see some diversity in some of the services and they may be community specific [or] company specific,” said Tine Hansen-Turton, CCA executive director. “We are moving forward and have a great partnership with all of the retail members, which is key.”

Added Golinkin, “There is every reason to be enthusiastic and optimistic about the industry’s future. I think the challenges we have are certainly manageable, and it is the role of the CCA to help support the industry’s growth in areas where there are common interests among its members. And we will continue to do that.”