Qualify for a free subscription to HealthLeaders magazine.
As retail clinic growth slows, hospitals are seeking new ways to better compete.
Even as hospitals and physician practices grapple with fierce competition from retail convenient care clinics in drugstores and other retail locations, there are signs the trend is losing steam. Staffed by nurse practitioners and other "physician extenders," such clinics usually are open a much greater range of hours than physician offices, and they're cheaper. But in recent months, as competition for the workers to staff them has grown heated, salaries have risen commensurately, and more than 70 such clinics have shut down because they just can't make the volumes they need to become profitable.
But don't be fooled. The business model that spawned these clinics is sound, and they are here to stay. "In some cases what you're seeing in deceleration of growth in openings is a factor of focusing on profitability," says Greg Park, a managing director at CIT Healthcare, a healthcare financing company. "In their initial step into the market, a key component was all about market presence and getting geographic coverage—and therefore, ultimately, having enough coverage and market share to negotiate with payers to include them in their network coverage." Retrenchment is a natural evolution, Park says, because "now they're focused on profitability."
What Park and others are saying is that we're now only in the beginning of a transformation in primary care, and as the initial market share grab claims some victims, now might be the time to determine how these clinics are affecting your business picture—and how you can compete.
Some big retailers are trying to give these clinics panache by partnering with local hospitals, which presumably have the brand cachet and local loyalty that the clinics, owned mostly by megacorporations, do not have.
To be sure, hospitals have worked at developing their own such clinics outside the sphere of corporate partners (see HealthLeaders, July 2008), but often such initiatives require big shots of investment capital, which, thanks to a variety of factors that start and stop with the credit crisis, many hospitals can't afford. That's where healthcare real estate partners—not retailers—can come in.
The idea of co-developing a medical building with others' capital in return for long-term guaranteed leases is not new to many hospitals, but the idea of convenient medical malls and the cross-referrals they can generate is an arena in which hospitals have a competitive advantage over retail-based convenient care clinics. The healthcare village, which might contain an anchor wellness center, hospital-employed physician offices, imaging and surgery centers and, yes, convenient care clinics, is being adopted by some of the most well-capitalized systems on their own.
Still, less well-off hospitals may also be able to make such a venture work by partnering with real estate companies that foot the bills for construction and maintenance in return for long-term leases.
"They want to preserve their capital for things directly tied to the hospital, like electronic medical records, for example, but they still want to enter new markets," says Donna F. Jarmusz, senior vice president with Alter+Care in Skokie, IL, which develops such centers with hospital partners. "Hospitals are slowly realizing they don't need to own the building to have a major presence."
- Governors Push to Expand Role of PAs, Telemedicine
- 3 More Pioneer ACOs Say They Will Quit
- Why Open Payments Irks Physicians
- Telemetry Overuse Cost Health System $4.8 Million in One Year
- Ebola in the U.S.: Reason to Fear, to Hope, to Prepare
- Overcoming a Payer Mix 'Nightmare'
- Top Provider Billing Mistakes Are Changing
- Difficult Patients: It's Not Them, It's You, Doctor
- IV Fluids Shortage Continues
- Employee Engagement: Make It Meaningful