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Must Retail Clinics Relive the Dot.Com Bubble?

by Scott MacStravic

For many years, the news on “retail clinics” consisted almost entirely of stories of new ones opening everywhere. But recently, we have seen a series of stories of existing clinics closing, in a wide variety of places for a variety of reasons. It may be that, like so many innovations, retail clinics will follow the same kind of boom and bust history that has affected others, due to the fallacy of composition.

While there are many versions of this logical fallacy, its application in this case is the expectation that since the first examples of retail clinics are successful, all subsequent examples will be, also. Such optimism has affected investors in automobiles, where in the early part of the last century, literally hundreds of different companies emerged making cars, with only the “big three” having survived till the present, and their future not guaranteed. While retail clinics started slowly, they have burst into the hundreds with predictions of thousands in recent years.

There had been an earlier “boomlet” in retail clinics starting in the 1970s and 80s, when “urgent care” clinics, staffed by physicians, and operating primarily on evenings and weekends, emerged in many large cities. These served much the same market as current retail clinics, and there has been a resurgence in this kind of retail clinic, along with the ones staffed by nurse practitioners or physicians assistants. Indeed, the most recent example of the Medical Mart’s demise, closing over a dozen clinics in retail outlets if Illinois. Missouri, Utah and Virginia, was a physician-staffed model. [B. Japson “Medical Mart Clinics Close in Suburbs” Chicago Tribune, Mar 12, 2008]

Physician-staffed models have avoided the criticism by physician associations that has affected the NP/PA-staffed versions, since they have physicians present at all times, who can therefore treat all the illnesses they are likely to see, while NP/PA versions have been criticized for their limited capabilities. The trouble is, of course, that physician-staffed models tend to have far more staff on hand at each, often a couple of physicians along with support staff, so they are far more expensive to operate, and therefore far more at risk if they do not attract enough patient volume.

The Medical Mart clinics, for example, had four staff on hand, two physicians supported by two medical assistants or licensed practical nurses. This meant they automatically had over four times as much staff costs, along with larger space they were paying for. Moreover, they typically have the kinds of equipment that physicians want in diagnosing and treating patients, adding still further to their operating costs. Without perhaps five times more patients being seen than needed for NP/PA-staffed clinics, they could not survive.

There has always been a complementary function that retail clinics could serve, one that could offer many more reasons for patients to visit many more times each per year. That is the proactive health management (PHM) function, which consumers are increasingly being expected as well as “incentivized” to adopt. Both the cost shifting by employers and the move toward “consumer-directed health plans”, with their high deductibles and consumer-owned health savings accounts, provide significant motivation for consumers to do more about protecting their health and preventing disease and injury where possible.

While all retail clinics may offer minimal preventive care, including annual check-ups, flu shots and other immunizations, for example, there is already a model for significantly more comprehensive continuous PHM services that has grown almost as fast as retail clinics. So-called “concierge medical practices” most of which include a major PHM component as justification for charging a thousand dollars or more in annual “retainers”, have grown to include over 600 physicians, by my count.

In addition, there is at least one retail clinic chain, the RediClinic examples, that combines what it deems “Get Well” reactive sickness care with “Stay Well” PHM services. Having convenient locations in popular retail superstores and pharmacies, with onsite free parking, as well as something else to do while waiting, when necessary, to see the practitioner, are at least as valuable features for PHM as for routine sickness care. And for patients who really need the coaching of a professional, in person, whom they know and trust, the retail clinic can generate perhaps a dozen or so PHM visits each year per patient, at modest fees, to supplement sickness care visits.

Moreover, in my experience, and as strongly suggested by research, NPs and Pas may be better at delivering PHM services than are physicians, trained as the latter are in the challenging diagnosis and treatment of illness. And they certainly will not need to charge as high fees as are needed to support physicians.

Retail PHM-including clinics can easily combine their PHM services with sickness visits, using these as added opportunities to ask patients how they are doing with their PHM goals, even checking their weight, blood pressure, cholesterol, blood sugar, and similar common biometrics as commonly involved in PHM efforts. Until physicians work out their own competing versions of a “medical home” that can combine reactive and proactive services while generating enough income to support such a model, retail clinics may be in the best position to do so for patients unwilling or unable to pay for the concierge medicine model.

In any case, the success of onsite medical clinics, also staffed by either physicians or NP/PAs, or a combination of the two, in meeting the PHM as well as sickness care needs of employee populations, is a clear indication of the potential. The first “customers” for this combination in currently sickness-focused retail clinics may well be the employees of the superstores where the clinics are located. After all, they are already onsite medical clinics for such employees, and if their employer wishes to contract for free or subsidized PHM services along with sickness care, that will generate a substantial patient volume, by itself.

While the fallacy of composition will still threaten or at least limit the extent to which retail clinics can expand before closures become even more frequent, the option of combining PHM with sickness care should offer another avenue to support as many and even more such clinics as sickness care alone would be able to. The combination may not suit all or even a majority of consumers or employers, but it represents a proven model in its existing forms, and should be at least worth considering where sickness care alone doesn’t provide sufficient success and survival.

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