Despite the slow economy, the number of healthcare retail clinics has increased about 15% during the past two years, according to a new report released by the Deloitte Center for Health Solutions. And more of these clinics are beginning to ally themselves with established healthcare organizations.
The current growth rate pales in comparison to when the retail clinical market rocketed to a 350% increase in 2007. The economic downturn in December 2007 changed this course dramatically. Retail clinic market growth will likely slow from 10% to 15% from 2010 through 2012, but accelerate above 30% from 2013 2014 as the economy improves, according to the report, "Retail Clinics: Update and Implications."
As of July 2009, 1,107 retail clinics were in operation nationwide, according to the report. Most retail clinics operated in retail pharmacy settings (82%) or as departments or wholly owned subsidiaries of host organizations, such as grocery stores (12%) or big box discount stores (6%).
"Retail clinics represent a new channel that can deliver primary care services more conveniently and at lower cost to consumers," said Paul Keckley, PhD, executive director of the Deloitte Center for Health Solutions.
The growth rate hides the fact, though, that some clinical retail chains saw reductions in the number of their sites. Nearly 150 clinics closed in 2008, with 55% of those closings linked to smaller retail operators and start ups that eventually left the market. RediClinic reduced from a high of 50-plus clinics in 2007 to 35 in mid 2008 to only 20 clinics by mid 2009.
MinuteClinic—the largest retail clinic chain which is now owned by CVS Pharmacy—shed 27 clinics and closed 104 of its clinics during the summer months. It has 451 clinics in operation.
Also, 2009 saw increased activity by large acute care organizations entering into retail medicine via contractual arrangements with drug store and grocery chains. One example was an agreement announced late last month between MinuteClinic and Allina Hospitals and Clinics of Minnesota. MinuteClinic has 24 locations in the Twin Cities area.
Approximately 20% to 25% of the retail clinics now are already owned by healthcare providers, says Mary Kay Scott, a California healthcare consultant, who has studied and written about the retail clinic trend. Many of the clinics, such as MinuteClinic, have begun to "more formally align" themselves with larger healthcare providers.
"All retail clinics, no matter who they are owned by, make sure they can refer you to a primary care physician and make sure that they can get you treatment somewhere if it's not appropriate in the clinic," she says.
Some of the more recognizable health systems now in the "retail clinic mix" are Intermountain Healthcare with access to five clinics within grocery stores in Utah; Mayo Clinic with two clinics in Minnesota; and the Cleveland Clinic with a primary referral channel for nine MinuteClinics operating in the Cleveland area.
The key to the successful operation of the retail clinic is back up and ancillary support from a local provider organization that is "responsive to its need for a medical director to review charts, manage referrals, oversee quality controls, and write orders for drugs, tests, and follow up care," the report said.
Increasingly, retail clinics' patient data will be warehoused in the electronic health records held by providers. Therefore, retail clinics will require ongoing collaboration with a local provider organization while resisting pressure to modify their operating model to accommodate "traditional" approaches to care.
At current demand levels, the retail clinic industry is "marginally profitable." Clinics in appropriately targeted locations and settings typically break even in 12 to 18 months, the report noted.