Since opening a single clinic on the Upper East Side in 2010, urgent-care chain CityMD has grown to 68 locations in three states. Its New York storefronts, which provide convenient walk-in health care to residents, have become as ubiquitous throughout the city as bank branches and Duane Reades.
Now the company is being rewarded for its rapid growth. Private-equity firm Warburg Pincus last week bought a majority stake in CityMD for an undisclosed price. Reuters said the deal valued the chain at about $600 million. It's unclear how big of a payday that represents for CEO Dr. Richard Park and his co-founders.
What is clear is that the purchase signals interest in the urgent-care sector from deep-pocketed investors who want access to New York's lucrative health care market but are barred by state law from investing in hospitals.
"A rising tide lifts all boats, with the investment signaling interest in the industry," said Sarah Arora, New York market president of GoHealth Urgent Care, CityMD's primary local competitor. "As the space gets more attention, it will raise the bar for the industry, which is good for the patient."
GoHealth operates 35 clinics in New York through a joint venture with Northwell Health.
A statement from CityMD said the company will use the capital to accelerate its expansion "through new site openings and strategic acquisitions and partnerships." Warburg Pincus is betting on the chain because CityMD is "creating an exceptional patient experience and providing high-quality treatment at significantly lower costs than traditional visits to the emergency room," In Seon Hwang, the firm's managing director, said in a statement.
Both CityMD and GoHealth emphasize customer service—a rarity in health care—for patients seeking treatment for minor illnesses and injuries, said Greg Burke, a researcher for the United Hospital Fund, who co-authored a study on the growth of urgent care in the area.
"You don't say, 'I'm going to urgent care,'?" Burke said. "You say, 'I'm going to GoHealth or CityMD.'?"
There are about 500 urgent-care centers in the state, including about 190 in New York City, according to data from the Urgent Care Association of America, based in Naperville, Ill. The number has nearly doubled since 2015, when the United Hospital Fund said there were 103 in the city. In Manhattan, 19 CityMDs dot the map. Brooklyn has nine locations.
Ryan Condren, managing director of the Brooklyn retail-leasing team at real estate firm CPEX, said CityMD typically targets corner locations close to transportation.
"Post-recession, urgent cares replaced the banks as tenants," he said. "It was a nice substitute."
But is the proliferation of walk-in clinics also good for New Yorkers?
To improve public health, doctors must manage their patients' chronic diseases, such as diabetes, and that's not urgent care's strength, Burke said. For patients who must spend a lot out-of-pocket before their insurance picks up the tab, however, a $150 urgent-care bill is preferable to a $400 emergency room charge, he said.
Privately held CityMD doesn't disclose revenue, but the sector's growth shows no signs of slowing down.
"I'm still shocked by how much business there is," said Suzanne Brundage, a co-author of the United Hospital Fund study. "I don't think we've even seen the saturation point here in New York."
"Purchase of CityMD signals strong investor interest in urgent care" originally appeared in Crain's New York Business.