Some hospitals and most physician offices are worried about the proliferation of in-store clinics, and have been for some time now. But despite the fact that they don't make money for many of the grocery and drug stores that offer them, they're not going away.
On the contrary, they're growing by leaps and bounds, and Tuesday's story about plans by CVS Caremark Corp. to double the number of in-store medical clinics it operates within the next five years only reinforces that view.
As a group, hospital leaders aren't worried they will lose a lot of business to such clinics—they offer vastly different services, after all—but they know the clinics have the potential to hurt their branding strategy, especially health systems that have a variety of outpatient offerings.
For example, these MinuteClinics are proliferating at CVS stores, with CVS's brand name getting the exposure. To that end, many hospitals have tried to lock up their service areas through deals with retailers to provide clinicians and supervise these clinics in return for carrying the hospital's brand name. That's smart.
Physician practices, especially family medicine and other primary care areas, are worried too, but not for the same reasons. The threat to them is a lot bigger.
Nationally, their associations call for regulations to be imposed on the clinics, from requiring them to have direct physician supervision to more draconian regulations—all the way to outlawing them entirely. Their stated fear is that such clinics could lead to a reduction in patient care standards, and that so-called physician extenders aren't qualified to make recommendations for patients who mostly visit the clinics outside normal business hours for minor ailments like a child's ear infection or the common cold.
They also seem to have a visceral objection to potential conflicts of interest between the caregivers and the store that supports them—in other words, they fear that such clinicians will push patients to purchase expensive drugs and other treatments from the stores that house them. I think that pressure is more subtle, patient purchasing decisions will likely have a lot more to do with convenience than any push from caregivers.
I have no problem with noting the conflict, but where were these physician groups as hundreds of their members, physicians all, began offering much more expensive office-based ancillary services, such as imaging, in which they have a financial interest? In any case, that argument seems like a dead end, because it's not the true reason independent physician practices feel threatened.
Really, the argument is about market share. After all, CVS admits the clinics can't stand on their own financially. They're a loss leader for getting more traffic into the drugstores. But clearly, they do drive traffic, and sales, in the store.
With about 500 clinics in 25 states, CVS alone has already made a huge dent in the market, and as more people gain insurance under the healthcare reform law and as the population ages, they will continue to proliferate. Why is that a bad thing? We clearly don't have the number of primary care physicians to treat these patients when they gain insurance.
The real question is whether physician offices, many still mired in paper processes and banker's hours, will adapt. It doesn't make sense to directly compete, because of the loss leader problem principally, but also because a small physician office can't begin to directly compete with a behemoth like CVS.