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Nervous About Retail Clinics? It Just Got Worse

Philip Betbeze, for HealthLeaders Media, August 4, 2008

News out of the Gopher State this week means primary physician practices already struggling with weak reimbursement now have something else to worry about: competition from retail clinics. Yeah, I know that's old news. But did you hear about Blue Cross Blue Shield of Minnesota's plan to immediately offer its beneficiaries the added benefit of having to pay nothing out of pocket to see clinicians at retail convenience clinics?

Goodbye margins for primary care physicians—at least in Minnesota. Even without this brazen new incentive, members of the Minnesota Blues plan already favored the clinics. They made 40,000 visits to retail clinics in 2007, a nearly 100% increase over the previous year. Those are visits that would have gone to traditional clinics in the past. Look for this latest option to increase those numbers even further.

This means hundreds of thousands of visits, most likely, will shift from primary care physician offices to retail clinics. The move is intended to move minor health problems like sore throats, ear infections, and seasonal allergies to a cheaper venue.

Blue Cross estimates that the average cost of a visit to a retail clinic is about half the cost of a similar visit to a traditional clinic—some $47 vs. $97. Let's assume the average copay is $20. On a switch from one to the other care venue, Blue Cross still saves $30 per visit. Those are big numbers, folks. Heck, the health plan breaks even if copays are as high as $50. The fact that Blue Cross can in effect eat the copay and still save a lot of money portends trouble for traditional clinics, which are already struggling. Things like this that suggest the independent primary care physician will continue along the path of the dodo. I don't know whether that's a good thing or a bad thing—only that it's true. Economics is a powerful motivator—especially in the declining economy we're facing now (see this week's Finance Forum).

This is only the beginning. Unless those of you who depend on traditional medical care can continue to wring costs out through efficiencies similar to the ones that retail clinics employ, other sectors of the healthcare industry are in for similar disruptive change. If you can get ahead of that curve by anticipating the disruptions, you'll be OK. Otherwise, you'll wither.

No copay? That sounds pretty good. Sign me up.


Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at pbetbeze@healthleadersmedia.com.


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