Health systems revamp their approach to retail clinics

Kaiser Permanente aims to double its retail clinic network over a four-year span, increasing its footprint from 17 in 2018 to 35 in 2022. The integrated health system plans to add about four clinics in Southern California Target stores over the next year.

While 2020 was likely an outlier given the periodic shutdown of non-essential services following the ebb and flow of COVID-19, foot traffic across Kaiser’s retail clinics was up about 50% from 2018 to 2019. Patients who used the clinics to fill prescriptions, schedule an appointment and access other services were increasingly happy with their experience, said Bill Caswell, chief operating officer for Kaiser Permanente Southern California.

“We look at these retail clinics as an extension of our integrated model,” he said, adding that treatment pathways are connected by the electronic health record and patients are steps away from a pharmacy. “When we look at patient outcomes, follow-up visits and customer and patient satisfaction, we are delivering on our promise of quality care.”

And though Kaiser’s experience provides a promising example, many other health system experiments with retail clinics have fallen short of expectations as providers adjust staffing, service offerings and IT infrastructure.

Providers hope that a second iteration of retail clinics will better connect care.

“Part of this version 2.0 is maximizing our ability to bring in specialists via telehealth,” Caswell said. “We’ve learned a lot, especially over the past year, in how telehealth can hit the sweet spot in meeting customers’ needs.”

Meeting consumers where they are could head off more complex care. But if data isn’t shared properly or if the staffing mix is off, retail clinics can lead to excessive, duplicative treatment.

Providers are also wrestling with the COVID-19 pandemic, which may have permanently shifted how patients access care as telehealth and scope of practice regulations adjust.

“If you’re losing an entire generation of family practitioners and internists that are not being replaced, having retail clinic access points are important. But there are significant volume and service-mix hurdles,” said Jeff Goldsmith, founder and president of consultancy Health Futures. “If these retail clinics are loss-leaders, then you have to wonder about the investment logic.”

The number of retail clinics is poised to grow as health systems eye lower cost and more convenient settings.

Care provided at retail clinics costs around 30% and 80% less than similar treatment at physician offices and emergency departments, respectively, according to a 2009 analysis of 2,100 private claims for low-acute care. Retail clinics could be an adequate substitute for around 14% of unnecessary ED visits, research shows.

That helped fuel the growth in the sector, increasing from 351 facilities in 2006 to an estimated 3,000 in 2020, according to Accenture. Wait times are minimal and hours are flexible, which are ideal for working parents who need a quick consultation regarding their kid’s rash or other minor condition after they finished shopping.

“Our (health system) clients want to have outlets that are convenient to their patients. But there has been some adjusting over time as they gain experience, dial it in and right-size,” said Jay Johnson, national director of healthcare markets for commercial real estate management company JLL. “Some of the locations that don’t succeed are where there is not a strong affiliation with a care provider or insurer.”

Novant Health is banking on a strong connection between their primary-care offices and retail clinics. Novant, which recently opened three retail clinics in Walgreens stores across North Carolina after selling nine of its retail pharmacies to the pharmacy chain in 2019, aims to run the clinics as if they were an extension of their primary-care practice.

The clinics are staffed by physician assistants and nurse practitioners who treat everything from relatively common illnesses like colds and urinary tract infections to chronic conditions. Patients could get the same level of chronic disease management and relatively complex care with the right EHR pathways, referral patterns, wraparound treatment plans and staffing synergies, said Dr. Pam Oliver, president of Novant Health Physician Network. “That buy-in from physicians and the attachment to the primary-care medical group may be a game changer,” she said. “There are risks, but they have to be ones that we are willing to take because if you don’t think outside the box, you are way behind.”

Some of the financial risks would be offset by population health gains like reducing unnecessary ED visits or lowering A1c levels, Oliver said.  “Part of this is the move to value-based care—what specific niche needs are there in the community outside of what we traditionally offer?

We hope this is a scalable solution that adds access points in a way that brick-and-mortar offices may not,” she said, noting that retail clinics could bridge care gaps for those who aren’t ready to embrace primary care. “Preventive services would be huge to try to prevent those avoidable ED visits or admissions.”

Retail clinics that aren’t integrated into a health system’s EHR and care pathways run the risk of driving up healthcare spending through redundant or excessive care, said Ryan Schmid, founder and CEO of Vera Whole Health.

“Creating access is wonderful—there is no question that it is critical to have access points,” he said. “But there is also a risk of creating a lot of unnecessary care. You have to align financial incentives from those access points to the rest of the system, otherwise the patient gets sucked up into specialty care when 80% of it can be done through family medicine.”

Retail clinics have had an inflationary impact on healthcare spending, a 2016 RAND Corp. study published in Health Affairs found. Nearly 60% of the retail clinic visits among the commercially insured represented new use of medical services rather than a replacement of traditional office visits. That increase in spending—which translated to $14 in new net costs per person per year—trumped the savings associated with replacing physician and ED visits, the authors said.

Physicians have historically been reluctant to embrace retail settings for chronic care management. Health systems believe that sentiment is changing as the clinics evolve.

“These clinics have a limited ability to reduce cost and improve quality because they are treating minor conditions, not making a dent in the rising cost of healthcare, which is driven by chronically ill patients and specialty pharmaceutical spending,” Lawton Burns, professor of healthcare management at the Wharton School at University of Pennsylvania, said at a 2018 California Department of Insurance hearing on the now-completed CVS-Aetna merger.

CVS’ 1,100-plus MinuteClinics, which are affiliated with more than 90 major health systems, continue to build out their primary-care platform, the company said in earnings reports. While CVS tracks earnings across its retail sector, financial data that narrows in on retail clinics at CVS and other healthcare companies is limited.

In New York State, only about a third of its retail clinics were located in medically underserved areas, a 2015 analysis by the United Hospital Fund found. That mirrors national trends, which can mute the impact on access and mitigating physician shortages, researchers said.

Advocate Medical Group announced last year that it was closing care clinics at seven Walgreens stores where “overlap in services resulted in unsustainable volumes.”

An Advocate Aurora Health spokesperson said the company, which operates in Illinois and Wisconsin, will continue to operate its remaining 48 retail clinics after the seven clinics close. The median household income across the communities where clinics closed exceeded the national average, according to Modern Healthcare’s analysis of Census data. “These communities’ healthcare needs are well served by other providers. ” Advocate Aurora said in a statement.

Meanwhile, Walgreens announced plans last July to invest $1 billion in VillageMD over the next five years to expand its primary-care clinic footprints across its U.S. stores. It will initially add 700 VillageMD primary-care clinics and “hundreds more” after that, staffed by full-service physicians rather than a nurse practitioner or physician assistant. “There are growth opportunities around new markets or service lines, as well as portfolio optimization opportunities,” Johnson said, noting that “right-sizing” clinics or offices is often overlooked in mergers and acquisitions.

Nearly a quarter of 100 healthcare chief financial officers surveyed last fall said they plan to divest their retail properties, a BDO poll found.

In its market research and due diligence, Novant found mixed success when it comes to systems operating retail clinics, Oliver said. “It is very much a mixed bag; there wasn’t resounding evidence that this is definitely going to work,” she said.

Early evidence indicates that retail clinics aren’t associated with a reduction in emergency department utilization. EDs in close proximity to retail clinics didn’t experience a reduction of visits from patients with low-acuity illnesses like influenza, UTIs and ear aches, a 2016 study published in the Annals of Emergency Medicine found. About 13.7% of all ED visits are for low-acuity conditions, the authors note.

Retail clinics can’t be viewed as a stand-alone strategy, Kaiser’s Caswell said. EHR interconnectivity avoids redundancy and miscommunication. Kaiser keeps tabs on pharmacy fill rates and related follow-up care. Broadening clinicians’ scope of service and facilitating video consultations with Kaiser specialists have helped, Caswell said.

Retail clinics are uniquely positioned to capture in-person care post-pandemic, said Lyndean Brick, CEO of healthcare consultancy Advis.

“While it still has to be tweaked, in-person retail and concierge healthcare delivery models are where the future is,” she said.