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Retail Clinics – Friends or Foes of Hospitals?

by Scott MacStravic

I just read what, if I recall correctly, is at least the third article on the subject of whether retail clinics are good or bad for hospitals published in the past year. (M.K. Scott “Retail Clinics – Friend or Foe of the Hospital? Part 1: The Opportunity for Hospitals to Win with a Retail Clinic Model” HealthLeadersMedia.com Jan 4, 2007] It brought to mind almost identically titled discussions of population health management (PHM) relative to hospitals, of which there have been at least an equal number, some written by myself.

The article, which is certainly worth reading, cited six positive impacts that retail clinics could have for hospitals, if they exploit the opportunity well:

* Diverting patients that would otherwise overcrowd the hospital’s emergency room (example: Aurora Health Care System in Wisconsin)
* Preventing rival hospitals from “capturing” patients for their own “networks” by offering their own clinics (example: AtlantiCare in New Jersey)
* Capturing new patients to the hospital’s own network, including outlying areas from which it may not be getting many patients at present (examples: Geisinger in Pennsylvania and Allegent Health of Omaha)
* Creating significantly more opportunities to interact with potential and current consumers/patients than is likely with just current hospital in- and out-patient services
* Improving the public’s health through health and wellness services
* Creating a new channel for other “business lines” (example: durable medical equipment sales and distribution for Atlanticare, and pharmacy business for Aurora)

The article also mentioned two indirect challenges/opportunities that accompany developing retail clinics: 1) piloting a “skunkworks” approach to innovation that can serve other opportunities for serving and capturing patients; and 2) gaining a greater understanding of the “generation X” patient segment, whose members (aged 28-42) are far more likely to use retail clinics than hospitals. The second article in this series will discuss specific tools that hospitals can use to assess the retail clinic opportunity.

Since the author is in the business of consulting with hospitals, as a “nationally recognized authority on retail clinics” (author’s bio at end of article), it makes sense that this analysis reaches a completely “friend” vs. “foe” conclusion to the question it begins with. But from a strategic perspective, the picture is not quite as clear, as is the case for hospitals’ engaging in PHM. [S. MacStravic “Alternative Ways to Gain Revenue from Employers” HFMA’s Managing the Margin Oct 2007]

Retail clinics’ primary business is “sick care”, i.e. the reactive treatment of patients who have symptoms of routine, non-emergent illness or injury, and hospitals depend on physicians for referrals and admissions that fill their beds. But physicians may not like retail clinics, may feel they deliver inferior quality of care, or simply compete with physician practices, particularly the clinics that are staffed by nurse practitioners or physicians assistants. Many physician organizations have publicly and vigorously opposed such retail clinics, for example.

And having such clinics (then usually labeled as “urgent care” clinics) staffed by physicians doesn’t calm other physicians’ objections. I still recall the case, now two decades old or sol, when a San Francisco hospital operated and heavily as well as effectively advertised its own retail/physician-staffed clinic. While it had created no great fuss when it started, the advertising and subsequent dramatic increase in patient volume greatly angered physicians who deemed this competing with their practices.

At the next board of trustee meeting, the angry physicians managed to capture the majority of seats, and both the administrator and the director of marketing, deemed responsible for such an unfriendly act, were tossed out peremptorily. Such a risk surely remains today, even though primary physicians are not as involved in hospital affairs nor as powerful on their boards as was once the case. There remains the potential that all physicians might be greatly exercised by the very idea of retail clinics.

An even greater objection among physicians may arise if the retail clinics that hospitals invest in or simply work with happen to be engaged in proactive health management (PHM) services, in addition to the sick care services that compete with physicians. In the “medical home” model that primary physicians are embracing, such clinics would be competing with those physicians in a wide range of PHM services, from immunizations to screenings, to coaching.

The RediClinic chain of retail clinics, for example, offers both “Get Well” sick care services and “Stay Well” PHM services, and promotes both to the public and existing patients. The new Convenience Care Clinics chain will do much the same. Hospital-sponsored might be less likely to offer, or at least advertise PHM services, since they operate against all physicians’ interests in the sense that they aim to reduce the incidence and prevalence of disease and injury, which form the foundation of the vast majority of specialists’ as well as hospitals’ revenue and profits.

Many hospitals already offer PHM services to some degree, though often limited to selected diseases or populations. Some offer just PHM disease management (DM) services, though most who offer seem to lose money at it. Some offer broader health/risk management to frail elderly population segments, to keep them from needing what often turns out to be unprofitable episodes of hospital care, which is in both the patients’ and the hospitals’ best interests.

PHM for employee populations has been strongly recommended by consultants who help hospitals develop programs that do so. The rationale is that hospitals should be able to capture enough added sick care business from employers who establish working relationships with the hospitals offering such services, to offset the loss of sick care business, though I know of no study that has compared such gains to losses.

Another argument may be that employers who save considerable money through improving their employees’ health are likely to be more generous when PHM is a “cost-savings/profit enhancement center” for them than they will ever be with sick care, which will always be thought of as an expense, and one which is already annoying employees severely. The trouble is that PHM is already replete with specialty suppliers offering already proven strategies and initiatives, so hospitals may prove to be weak competitors, or may not make as much profit as predicted in such a competitive market.

In any case, there have certainly been no studies thus far as to the extent to which retail clinics, including those operated or paid for by employers at their worksites, which deliver far more PHM services than do the usual retail clinics, and have reported significant reductions in sick care use and expense. Moreover, the MDVIP concierge practices have already shown reductions in hospital and ER use that range from 30 to 90% among the populations they serve.

When primary care practices — whether offered by nurse practitioners, physicians’ assistants, or primary physicians – offer PHM services to any significant degree, they will automatically be operating against the financial interests of procedure-based physician specialists and the hospitals they use as their “workshops”. If hospitals engage in or otherwise support any form of primary care that includes, and particularly those that emphasize PHM vs. sick care, those specialists upon which their sick care revenue may be even more likely to compete with the hospital by creating and operating their own specialty hospitals and free-standing ambulatory care centers.

In any case, while it may be possible for hospitals and retail clinics to be “friends”, it will be a major undertaking to achieve all the market responses and successes that such clinics offer, while maintaining success in hospitals’ current dominant sources of services demand, revenue and profits. There may be some way to get the level of enthusiasm among specialists all the way up from antipathy to apathy, but winning their enthusiastic support seems a bit unlikely.


  Mike Critelli wrote @ January 7th, 2008 at 5:41 pm

Patients need retail clinic choices, if, for no other reason than that they need access to routine services outside of normal physician office hours.  They also are easier places to get routine screenings and immunizations, which do not tend to be favored by primary care physicians as a good use of their time and resources.

Our walk-in clinics at Pitney Bowes work well because our health care professionals spend more time with each employee, they are not burdened with all the administrative costs of running an operation that is trying to do outbound marketing and to make a profit, and they have been designed to support, rather than compete with, local physicians.  When our professionals refer a patient to an outside doctor, that patient is well-screened and well-informed.  We also invite specialists to have office hours one day a week at our clinic, to make things more convenient to both patients and doctors.

Overall, we have made patient interaction with the health care system a much more positive experience, which makes patients more willing to take more ownership of their health.

  Dr. Lawrence Stiffman wrote @ March 11th, 2008 at 2:40 pm

The retail/in-store clinic movement is more than a highly beneficial strain of “disruption” to the primary healthcare delivery system. Looking forward, it should also be a significant catalyst and test-bed to improve community health status.

This strategy entails e-collaboration with a robust referral care network harmonizing enabling tools related to consumer-directed wellness, early disease detection and disease management services. Add a hefty dash of one-on-one customer rewarding based on health risk appraisal completion. Follow up with sequential adherence-based economic incentives fulfilled through behavioral target marketing with customized couponing triggered by the HRA findings, seasonal drivers, and respondent demographics. Similar reward triggering could be based on benchmark attainment within disease management protocols.

Win-wins arise building loyal families in touch with new teams of wellness providers. It’s opt-in and HIPAA immune, and is freed from the babble generated by a zillion committees, taskforces, and “working” groups intent on cyber transacting everything. To the extent progressive local and regional health systems are included, the smoother the political sailing. For example, a Blue Cross plan could co-venture production of selected services. Local VNA and health departments would continue to make excellent staffing partners for short-lived campaigns such as back-to-school vaccinations. With insurance coverage arising and rising, the customer is the beneficiary regardless of the chosen production function.

Service demand can be continuously driven by demographic (gender and age) thresholds per U.S Public Health Service guidelines. Such info is captured within the HRA completion process to trigger sentinel announcements (for example, 50th birthday) and invites along with customized coupons to promote visiting the clinic and the store. Intervention opportunities also arise seasonally. Examples include the promotion of back-to-school and vacation-prompting vaccinations, flu season shots with pneumonia piggy-backed on, spring and fall seasonal allergies, and national body part (i.e., Breast Cancer) of the month campaigns.

Why Retail Clinics as the Locus for Change?

Incumbents in the retail clinic space grow because their business case is compelling, enterprises are sufficiently capitalized and customer experiences are highly scored by all relevant satisfaction metrics. These operations are still in early growth facing normal start-up woes:

Uncertain ROIs and break-even points, staffing, information capture and work-flow patterns

“Without the doc” risk-averse service menus, voluntary script dispensing/selling firewalls, constrained spatial layouts and low-ball pricing.

Thus, there is plenty of wiggle room to now plan additional functionality as the kinks get worked out and consumer acceptance grows. As competition increases, investment drivers include the need for continuous product improvement and differentiation as well as for satisfying large customer cohorts shifting from latent to expressed demand for diagnostic, immunization and screening services. In-store worker-focused risk assessments add icing to the convenience cake, especially by filling in off-peak appointment slots, smoothing work flow and reducing queues and wait times. (Workers’ rewards must be nondiscriminatory per U.S. Department of Labor regs compared with customers’ rewards.)

Like Lipitor, the “daughter products” released after its ingestion are more beneficial than the original dose. Sensible protocol-based and decision-supported adult primary care is the core retail clinic output platform now in place. Providing appropriate consumer-assisting programs with health systems co-venturers builds upon sunk investments at low marginal cost.

In many urban and rural communities, the default locus for free “medical advice” has traditionally been the neighborhood pharmacist. The retail clinic can expand this tradition with one-on-one assistive and practical care in terms of fuller primary prevention services that are disease- or body-part specific.

Many screening and testing services have been battle-tested in drug stores, at health fairs and convention lobbies and within assorted clinics of all stripes. More recently, based on strong empirical evidence from workplace wellness settings, providing customized incentives and rewards is essential to “get people to the last mile” to initiate behavioral change. This might become an especially compelling strategy with the deployment of emerging home-based disease management products incorporating remote monitoring. Incentives could take many forms from reward programs to price discounts on in-store goods and services.

Convenient Primary Prevention Would Gain Equal Footing with Convenient Care
Given pervasive techno-chaos within the overall healthcare industry, it takes business discipline and standardization to harmonize appropriate processes and technology. Just consider the hundreds of options flowing from web-based and traditional programming in risk assessment and personal auditing and tracking programming including health risk appraisals, HSAs and derivative financial products, mini personal health records, electronic medical records, chronic disease management with remote monitoring, behavioral targeting and one-on-one relationship marketing and loyalty card systems.

Each of these now operate under different parentage – from health departments, governments, self-insured large employers, progressive unions, managed care organizations, classic insurers, marketing services firms and, increasingly, by customers themselves. Many have or will become zero-priced commodities. The good news is that all are adjunctive to enhancing the retail clinics’ care and caring missions.

The retail clinic could assume employers’ traditional role in health risk appraisal to get incentive packages, monitoring and benchmarking locked and loaded. Then, many follow-through tests and procedures are done in store with out-referral when appropriate. Record keeping would be online and really simple. It’s like installing training wheels for the emerging PHR and EMR systems. These convergent systems are typified by early developer groups such as WebMD while Google is constructing a PHR system.

Caring Processes are Inseparable from Care Processes

Retail Clinic 2.0 positioning is not glitzy PR to deflect the opening blows by organized physician groups that wrongly perceive negative competition from nurse practitioners and others. The reality is all PCPs (and, more importantly, their patients) will be universally better off if they begin to mimic some of the critical convenience, staffing, IT and pricing success factors put in place by the retailers.

The docs are far from being disintermediated; they can be emancipated from the routine sniffles and scratches while remaining wired in, utilizing their time and skills more appropriately and productively. Ditto for our under-funded public health clinics that will face huge work flow and staffing problems as prevention and wellness eventually obtain public and private core financing. Latent demand for the 55-year-olds and kids is likely to explode if Medicare expands down and SCHIP widens.

Recent AMA opening moves challenging the emerging retail clinic industry’s usurpation of physician roles and functions were inevitable. It’s fuming again but will lose the battle because:

Their economic self-interest becomes more visible than their patients’,

The inherent cost-effectiveness of the current approaches is readily apparent to customers (especially where services are insured), and

Business groups, governments, employers, public health associations and insurers all welcome price and quality competition wherever and whenever they find it.

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