Retail clinics at tipping point

Before the H1N1 pandemic of 2009, almost no pharmacists administered flu vaccines. But last year, pharmacists working for Deerfield, Ill.-based Walgreen Co. administered 5.5 million flu shots among the 9 million vaccines they delivered.

Dr. Jeffrey Kang, Walgreen's senior vice president of health and wellness services and chief architect of the firm's retail expansion, said chain stores are ideally situated for providing primary-care services such as flu shots. “If you had a blank sheet and your goal is to get everyone immunized, what kind of system would you design? One that is easy to get to, open 365 days a year with locations on almost every corner in the country,” said the former chief medical officer at the CMS' predecessor agency. “That's essentially what retail pharmacies are. When corporations see an opportunity and an unmet consumer need, we can move fast.”

They clearly are moving fast and they are not alone. The industry's Convenient Care Association estimates nationwide there are now more than 1,400 health clinics inside retail chain stores, double the number from six years ago. Industry leader CVS Caremark Corp. now operates 650 MinuteClinics in 25 states and Washington, D.C., and plans to open 150 new clinics in the coming year on its way to having 1,500 in 35 states by 2017. Walgreen, the second-largest player, is planning double-digit growth in 2013 as it expands its Take Care clinic roster of 372 stores.

Major retailers such as Target also are expanding their efforts, some by forging alliances with local health systems. And even some providers are getting in the game by opening mall-based retail outlets to capture the burgeoning demand for instant healthcare.

A number of factors are driving the explosion in convenient care, which appears to be reaching a tipping point in its drive to play a major role in the delivery of primary care. Insurers, which were skeptical when the first in-store clinics opened more than a decade ago, are now willing payers for the low-cost alternative for routine healthcare events such as vaccines and family physicals.

More consumers are also looking for cheap alternatives as they are forced by employers into high-deductible plans, which make them responsible for first-dollar coverage. The move makes them much more cost-conscious when it comes to buying healthcare services.

The Patient Protection and Affordable Care Act is also driving the expansion plans by major retailers. Most of the people who will be obtaining insurance coverage for the first time next year will come from low- and moderate-income families. Never having had a primary-care physician, many may prefer the convenience of getting routine medical care from professionals at local pharmacies and shopping malls.

When you add payment reform and physician shortages to the mix, an environment is being created where retail chains can swiftly step in to offer an alternative to slow-moving healthcare systems. The retail chains offer a low-cost alternative to traditional office-based medicine because many of the services are being delivered by licensed pharmacists or nurse practitioners.

“It's a ball the medical profession dropped, and I don't think they'll get their ball back,” said Uwe Reinhardt, a Princeton University economist. “Regular physicians were not responsive enough.”

While it is still a small factor in the overall delivery of primary care, physician groups in the relatively low-paying field are reacting as if it were a major threat, especially now that some retail clinic operators are moving into providing disease-management services for patients with diabetes and hypertension. Since 2006, the American Academy of Family Physicians has included in its “desired attributes” for retail clinics limits on the scope of services they can offer and a requirement that the clinics use electronic health records to communicate with patients' primary-care physicians.

Dr. Sam Unterricht, president of the Medical Society of the State of New York, acknowledged that there are financial considerations driving his group's concerns, but that's not its major motivation. Retail clinics will create a two-tiered healthcare system where some patients are seen by physicians and some by nurse practitioners, he said. There also is an inherent conflict of interest because nurse practitioners will feel pressure to write prescriptions that will be filled in-house or to recommend over-the-counter remedies sold in the store, he said. “The society, and physicians in general, think the retail clinics are a threat to the quality of care and a threat to physicians financially.”

The convenience of one-stop shopping for the typical non-emergency healthcare encounter, which usually involves first a visit to the doctor and then a visit to the drugstore, is clearly one of the major appeals of retail clinics. Moreover, patients already have trouble finding primary-care physicians, a situation that will get only worse as the Patient Protection and Affordable Care Act expands coverage for about 30 million people during the next decade.

Massachusetts is the model for what can happen when the levels of uninsured drop to below 5%. Woonsocket, R.I-based CVS has opened 37 additional MinuteClinics there in the past two years. In stating its case for the expansion, it cites a Massachusetts Medical Society study showing that the typical wait to see a family physician had grown from 29 days in 2010 to 45 days in 2012 as the success of its reform law expanded coverage.

Insurers, once reluctant, are now embracing the convenient-care strategy. During a May 1 first-quarter earnings call, Larry Merlo, CVS Caremark's CEO, noted how “in the early days,” only about 20% of MinuteClinic visits were covered by insurance. That number is now approaching 90%. The embrace comes in part because the drug chain has forged partnerships with 26 local health systems. Revenue for the first quarter was 50% greater than the first quarter of 2012, “bolstered by the very strong flu season,” he told analysts.

Walgreen is aggressively moving to offer more services in its Take Care clinics. It recently began offering assessment, treatment and management of asthma, diabetes, hypertension and other chronic conditions. While Take Care is still involved with only six health systems, it has also joined three accountable care organizations, what many see as the healthcare delivery system of the future. “I think the big shift that I see in the landscape is from one that has historically been a pay-for-use model to one that is really starting to center around outcomes in healthcare,” Wade Miquelon, Walgreen's chief financial officer, said last week during an investor conference in New York.

With ACOs and payment for outcomes, Walgreen will benefit from gain sharing when it helps keep people healthy and lowers healthcare costs. “That's a huge shift, and what (paying health systems for outcomes) gives rise to is for players like Walgreens to participate with them, help them bend the cost curve so they can make more money and we can play more broadly,” Miquelon said. “These things are very disruptive because we can provide, in many areas, the same or better care more conveniently and cheaper than the current alternative. And, what's really changing is that—in the past—nobody cared about that as much because everyone was being paid per use.”

Clearly that's worked in vaccinations, once a mainstay business of primary-care physicians. Walgreen now has 26,000 pharmacists credentialed to administer shots. “It doesn't mean we're going to be doing brain surgery—we're not, but there's lot of things in primary care and preventive medicine that we, I think, have the right to win,” Miquelon said.

He predicted pharmacists would begin writing prescriptions for certain categories of drugs. “I like to say what we're trying to do is transform the role of the community pharmacies, not necessarily just the role of the pharmacists.”

Its most significant move yet is its pioneering efforts in moving retail clinics into the ACO space. Walgreen has partnered with Largo, Fla.-based Diagnostic Clinic; Marlton, N.J.-based Advocare; and Temple, Texas-based Scott & White Healthcare to form ACOs.

Scott & White's Dr. W. Roy Smythe, who is their medical innovation director, said forming an ACO was Kang's idea. “I knew what they were doing, but I had no idea that their plan was so audacious,” the thoracic surgeon said. The Scott & White Healthcare Walgreens Well Network was one of 106 ACOs chosen to participate in the Medicare ACO shared-savings program this past January.

Health systems that are forging partnerships with retail chains such as Walgreen and CVS Caremark see another advantage in the linkups: access to capital. “All these changes we're talking about, none of them are free,” Smythe said. “They have the resources to make investments in technology and systems that are hard for health systems to make. They bring resources to the table that, frankly, we need.” Walgreen's 8,100 stores racked up sales of $18.7 billion in the second quarter.

Physician critics of storefront medicine worry that it's really financial pressure, not a desire to deliver better care, that is driving retailers' push into their field. Dr. Jaan Sidorov, a primary-care physician and independent healthcare consultant, wrote a post in the “Disease Management Care Blog” that said the publicly traded companies are looking to aid their bottom lines by having salaried nurse practitioners pushing more prescriptions to offset its narrowing margins as more drugs go generic. “Ultimately, I think Walgreens is all about selling drugs,” Sidorov said in an interview with Modern Healthcare. “Walgreens, CVS and the other retail drugstores are perilously close to the bad karma that big pharma has.”

Walgreen is actively moving to dispel those suspicions. In addition to developing ACOs, the firm has developed “centers of excellence” that have improved patient compliance with medication regimens. That should improve patient outcomes, reduce hospital admissions, readmissions and emergency department visits, and—yes—sell more prescriptions in the process. “It's a win-win-win scenario,” Kang said. “Patient outcomes are better, we're getting more prescriptions and, from a payer perspective, their total cost of care is lower.”

The potential of retail clinics to play a central role in coordinated care has led some healthcare analysts to predict retailers will play a much bigger role in primary care.

“They perceived a market need that the regular healthcare system has, for decades, refused to fill,” said Princeton's Reinhardt, who serves on the boards of several healthcare-related companies. “It was a niche that needed to be filled, and they filled it.”

But retailers have to be careful as they move deeper into primary care. “Part of the danger they have is, if they get sued, they have deep pockets,” Reinhardt said. Quality control will be a must. A drugstore chain that has a single store bungle its delivery system role could see the same ripple effect as a restaurant chain where bad meat in one state affects sales all over the country.

On the consumer side, changes in the insurance market are a major reason people are looking for care at in-store clinics. Dr. Kevin Ronneberg, associate medical director of Minneapolis-based Target Corp., said the growth of high-deductible plans, which makes people responsible for the “first dollar” of their own care, is directing more consumers to its retail clinics. The company, better known for its low-cost but fashionable clothing lines, plans to open 15 clinics this year to bring its total to 69.

The company's clinic growth is “methodical,” Ronneberg said, because it takes time to learn lessons from each new installation. For example, new stores now have optometry, pharmacy and clinics adjacent to each other and across the aisle from store shelves holding over-the-counter remedies. One thing that has separated Target from the pack is not selling cigarettes under the same roof that healthcare services are provided. It discontinued selling tobacco in 1996.

While Target has been slowly growing, clinics inside Wal-Marts have been closing. It now leases space to 125 clinics associated with area health systems, which operate retail clinics inside its stores. A spokeswoman said Wal-Mart is “committed to providing all of our customers with quality and affordable healthcare solutions—everything from clinics to $4 prescriptions.”

David Taylor, vice president of regional services for Springfield, Mo.-based Cox Health, said it runs five facilities inside area Wal-Mart stores, which are known as “The Clinic at Walmart operated by CoxHealth.” It would like to open more, he said, but Wal-Mart hasn't been responsive to the idea. CoxHealth could pursue other retail chains or open some retail clinics on its own because its deal with Wal-Mart doesn't call for an exclusive relationship, Taylor said.

A growing number of health systems see expanding their strip mall and retail-chain presence as part of their overall healthcare delivery model. Columbia, Md.-based MedStar Health recently opened an urgent-care center in a strip mall in Wheaton, Md., under its “PromptCare” banner. Another will open soon in Gaithersburg, Md., in a renovated restaurant building.

“This is really a retail arm of healthcare,” said Bob Gilbert, MedStar's president of ambulatory services. “Where do you put retail healthcare? Where retail is.”

TAKEAWAY: Patients are looking for convenience and retail pharmacies are providing it—while helping systems improve outcomes.

Follow Andis Robeznieks on Twitter: @MHARobeznieks