Look who’s buying retail

Displaying an “If you can’t beat ’em, copy ’em,” attitude, hospitals and health systems are getting into the retail clinic game.

While the clinics usually aren’t staffed by physicians and might be found across from the produce department or the laundry detergent aisle in the local grocery store, healthcare in retail settings is acquiring a new layer of legitimacy as more of these “convenient-care” clinics are being opened or operated by traditional providers. Initial questions about fair competition with physicians and whether hospitals operating retail clinics are poaching from their own referral base appear to be disappearing as everyone gets into the act.

“This is all about market share,” says Tim Ward, a partner with management consulting firm Tefen USA, who compared today’s retail clinics with the early ambulatory surgical centers, which hospitals first opposed before eventually purchasing themselves.

The Convenient Care Association, a trade group formed in October 2006 that represents retail clinic providers and affiliated companies, says it expects that there will be more than 700 retail clinics by the end of the year, and twice that number by next December as new business models emerge. These include: healthcare systems such as the Mayo Clinic opening their own facilities; systems like Memorial Hermann in Houston partnering with convenient-care companies like RediClinic; and facilities such as California’s QuickHealth or Florida’s Solantic walk-in clinics, which are touting their competitive advantage of having on-site physicians supervising the nurse practitioners on staff.

“That’s certainly one of the trends that we’re seeing around the country,” says Tine Hansen-Turton, the association’s executive director, commenting on the rise of hospital-retail clinic alliances. She describes these arrangements as a win-win for hospitals, which get to grow their primary-care practices through retail clinic referrals while easing the burden on their emergency departments—where many of these patients say they would have sought care if they didn’t have the retail clinic option. She says that five of the largest organizations that belong to her group are healthcare systems: AtlantiCare, Egg Harbor Township, N.J.; Aurora Health Care, Milwaukee; Geisinger Health System, Danville, Pa.; Memorial Hospital & Health System, South Bend, Ind.; and Sutter Health, Sacramento, Calif.

Still some pockets of resistance remain. Steve DeToy, director of government and public affairs for the Rhode Island Medical Society, says his state appears to be retail-clinic free.

“They’re skimming easy cases off the top and that’s going to affect primary-care offices financially and will interfere with the physician-patient relationship,” DeToy says, who added that his organization’s members are not necessarily anti-retail clinic. “I don’t know if ‘opposed’ is the right word,” he adds. “They have a great spiel about ‘We help people find medical homes,’ but it’s more of a ‘trust me’ than it is a demonstrated fact—at least as far as our physicians are concerned.”

The rapid growth of convenient care—which usually involves physician-supervised nurse practitioners treating simple cases and referring serious problems to doctors—coupled with recognized access-to-care problems have led many systems to take a closer look at the retail clinic business model. American Hospital Association spokesman Richard Wade says the basic message about retail clinics that his organization sends to its member is if the circumstances are right, it might be a good strategy to consider.

Partnering with local hospitals helps an outside retail operation’s standing with a community, but—for the hospital—there is increased responsibility, Wade says. “If you partner with a hospital, it gives you a seal of approval,” he says. But hospitals will “want to make sure they provide the right oversight. When the local hospital puts their brand on it, it puts a higher expectation in the public’s mind.”

If that’s the case, then expectations will be high when the first Mayo Express Care opens early next year in Rochester, Minn. Unlike other retail clinics, Mayo’s will not be located inside a store or pharmacy, but it will be in a stand-alone storefront in a strip mall, spokesman Adam Brase says, adding that “a few more” similar facilities may also be in the works.

Although it has a different name, one clinic is already open and testing the Mayo model. The Mayo Health System-affiliated, 129-bed Albert Lea (Minn.) Medical Center sees about 15 to 20 patients a day in its ALMC Express Care clinic, which is a stand-alone facility in the town’s Northbridge Mall.

“We looked at a lot of different options and this turned out be an appropriate place for us,” says Tricia Dahl, associate clinic administrator for the Albert Lea facility. “Our physicians feel like they have some involvement and oversight, so they have confidence that the care we provide is care that they’d recommend.”

She says that the clinic’s nurse practitioners work closely with Mayo Health System doctors and that the clinic is connected to the Mayo electronic health record, so the clinic’s files are accessible to the system’s primary-care, urgent-care and emergency physicians.

“Express Clinic is not designed to be anyone’s medical home, so physicians know their patients will come back to them,” Dahl says.

In markets such as Houston, Tulsa, Okla., and Richmond, Va., RediClinic convenient-care facilities operate inside Wal-Mart stores and H-E-B grocery stores. But, in Sioux Falls, S.D., the ReadyCare clinic located inside the Lewis Drug store is operated by Sanford Health. It gets only about four patients a day, but Sanford Clinic President Dan Blue is looking at the usually empty facility as half-full because he thinks the single-digit count may mean that the newly extended hours in primary-care offices and urgent-care centers are meeting patients’ needs.

“We also recognize there’s a small segment of the community that we’re not reaching as we should, so we recognized we need to be in this sector,” Blue says. “Instead of just going with an entrepreneur who was just pushing this as a business model, we wanted to design our own. … We decided we could do a better job than what these (for-profit) organizations offered.”

Blue added that Sanford physicians were “pretty negative about the concept” at first, until it was established that there would be a connection between the clinic and a primary-care medical home.

The same attitude is taken at AtlantiCare, which has added two retail clinics to its list of 50-plus locations. That number includes two hospitals, along with facilities for urgent care, surgeries and behavioral health. Five more clinics are “in production,” says Don Parker, president and chief executive officer of AtlantiCare Health Services. “We don’t accept anybody using us as a medical home,” Parker says. “Everybody seeing us gets a referral to a primary-care physician.” If patients already have a primary-care doctor, Parker says, that physician gets a summary from AtlantiCare’s EHR within 24 hours. If the doctor doesn’t have an EHR, they get a faxed copy.

The clinics are located in ShopRight supermarkets and are seeing between six to eight patients a day. “We’re slightly below where we expected to be,” Parker says. “Getting people to consume healthcare in a grocery store is a real change in behavior and it’s not something they’re accustomed to.”

Parker says the food-store setting provides unique partnership opportunities such as labeling which foods are good for particular diets and for reaching younger healthcare consumers—some of whom diagnose themselves with information from the Internet and then come to the clinic to “validate their opinion.”

Visits are facilitated by pagers patients are given when they check in. Instead of sitting in a waiting room reading magazines, patients can do their shopping while waiting to see the nurse practitioner.

Parker says it took a fair amount of staff education to convince AtlantiCare doctors that the clinics were a positive development. Two points, however, stood out in the HealthRite argument: There is already a primary-care shortage in New Jersey, so the clinics were supplementing, not supplanting, their practices, and “it’s much better for us to be involved than a for-profit group,” Parker says.

Some organizations are finding it easier to form partnerships or less formal “strategic alliances,” and it’s a model that privately held, for-profit Houston-based RediClinic has followed with the Bailey Medical Center in Owasso, Okla.; Bon Secours Richmond (Va.) Health System; Hillcrest Medical Center, Tulsa; Methodist Healthcare System in San Antonio; St. David’s HealthCare in Austin, Texas; and—most prominently—with Houston’s Memorial Hermann Healthcare System.

RediClinic President and CEO Web Golinkin says that in Houston the clinics are branded “RediClinic in association with Memorial Hermann,” and he described the relationship as a “50-50 joint venture.” There are 11 RediClinics operating inside H-E-B food stores in the Houston area with three more set to open soon.

“To really test the viability of the concept, you need sufficient penetration in the market,” says Golinkin, who last month was elected president of the Convenient Care Association. “We don’t see ourselves as a stand-alone option.”

He added that RediClinic has been in contact with 55 different health systems and engaged in talks about setting up similar arrangements.

In Richmond, all the RediClinic medical directors work for Bon Secours, says William Webb, administrator for Prime Care Family Practice, which is located next to a Wal-Mart with a RediClinic inside. Webb says he is working on a deal where his physicians would review the clinic’s charts. “We’re not going to make any money off of it, but it keeps us in the loop and it makes sure they’re doing it right,” Webb says. “I was looking at starting my own (clinic), but decided against it. … Retail clinics were going to come in no matter what happened, so you might as well make sure you’re part of it.”

At Conshohocken, Pa.-based Take Care Health Systems, now a wholly owned subsidiary of Walgreen Co. and the operator of the Take Care Health Center clinics, spokeswoman Lauren Tierney says they collaborate with local physicians, but they do not do so exclusively with one system. “We haven’t gone as far as RediClinic with co-branding and co-marketing,” she says, adding that Take Care has “physician alliance teams” that meet with local chapters of the American Academy of Family Physicians as well as state and local medical societies to recruit collaborating physicians.

Another model identified by Hansen-Turton is the convenient-care clinic with on-site physicians. She says at least three organizations use this model: Burlingame, Calif.-based QuickHealth; Jacksonville, Fla.-based Solantic Walk-In Urgent Care; and New York City’s DR Walk-In Medical Care clinics. The DR Walk-In clinics are located in Duane Reade drugstores and are operated by Washington-based Consumer Health Services in affiliation with Continuum Health Partners’ 692-bed St. Luke’s-Roosevelt Hospital Center, New York.

According to Jerry Ray, Duane Reade’s senior vice president for pharmacy operations, having an

on-site physician allows for a broader scope of services and maybe a higher comfort level for patients.

“Any person looking to go to a walk-in clinic would feel more at ease with a physician,” he says. “We think it offers us a distinct leg up and an advantage over the typical nurse-practitioner model.”

The clinics are operating at four Manhattan Duane Reade stores, with two more opening in Brooklyn within the next 30 days, Ray says, adding that “I think they’re looking to get maybe 12 to 18 more open next year.” Expansion plans call for affiliations with Continuum’s 794-bed Beth Israel Medical Center and 374-bed Long Island College Hospital.

The American Academy of Family Physicians board Chairman Rick Kellerman says it will be three to five years before it’s determined if retail clinics help access and lower costs or increase costs by causing more fragmentation of healthcare. One thing for sure, however, is that he doesn’t believe it’s the cure for the system’s problems.

“It’s a symptom—not a solution—of a system that is not working well for patients or physicians,” says Kellerman, a Wichita, Kan., family physician, and he listed several reasons why hospitals want to get involved in retail clinics.

“They want to head off the national groups in their communities and want to control the local market,” he says. “They also see it as a way of funneling patients into their system. And it’s new and they don’t want to be the last one on their block to get a new toy.”

Before heading down the retail clinic path, Kellerman suggests hospitals and health systems engage physicians, and address their concerns about unfair competitive practices that could lead to a loss of patients, income and control.

“It would be a good business practice to make sure a hospital is not putting itself in competition with its own referral base,” he says.

One market calling out for such diplomacy is Kansas City, Mo., where Metropolitan Medical Center of Greater Kansas City Executive Director Jill Watson says opposition to retail clinics was so fierce an emergency medicine practice discontinued its agreement to supervise a retail clinic.

“I can’t imagine who else would be willing to do it now,” she says. “The docs were not excited about these clinics coming to town.”

Doctors have responded to the retail clinics by keeping longer office hours, Watson says, but she acknowledges that local demand for convenient-care services continues to grow.

Hansen-Turton agrees, saying that growth depends on working with local doctors. “We can only exist long-term if there’s a partnership with the local healthcare community,” she says.

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