Partner With Retail Clinics to Boost Brand, Downstream Revenue

When retail health clinics first came on the scene several years ago, many healthcare leaders didn't quite know what to make of them. On the one hand, they could help hospitals by keeping non-emergency cases out of overcrowded EDs, but there was also a risk that the clinics could take away some downstream revenue from hospitals.

It's now clear that both views are true: in addition to taking a load off EDs, retail clinics are also poised to take on the roles of primary care provider and disease management. Hospital leaders have the choice of either trying to beat retail clinics—a difficult proposition—or joining them. Ignoring clinics will not be an option.

NPR recently reported on a leaked confidential document from Walmart that revealed the conglomerate has set its sights on becoming the nation's largest provider of primary healthcare services. The document indicated Walmart's interest in monitoring patients with asthma, high blood pressure, diabetes, heart disease, obesity, and other chronic conditions.

While Walmart has since said that it does not plan to build a "nationally integrated, low cost primary care platform," clearly it and other operators of retail clinics are looking to expand their services. In fact, Walmart and CVS Caremark—the largest operator of in-store clinics, with nearly 550 in the U.S.—have already started programs to help diabetics monitor and control their condition.

This ambition is significant to strategically minded healthcare marketers. Hospitals can ill afford to lose primary care and chronic disease patients, but they are also hard-pressed to compete with the convenience and pre-set low prices the clinics offer.

But there's a way out of this predicament—partnering with a retail clinic.

Two healthcare organizations that partnered with retail health clinics have already begun reaping the benefits. Wuesthoff Health System in Rockledge, FL, opened two health clinics in local Walmarts in 2009 and 2010, co-branding the centers as "The Clinic at Walmart Operated by Wuesthoff Health System." Walmart gave the health system complete control over the clinic, so long as prices were transparent.

Wuesthoff found that the clinics do indeed keep non-emergency patients out of the ED—in a survey, 15% of its Walmart patients said if the clinic had not been available, they would have gone to the emergency room. At the same time, affiliated primary care physicians have also seen an increase in patients, resulting in a jump in downstream revenue in Wuesthoff hospitals.

Similarly, Lehigh Valley Health Network in Allentown, PA, partnered with Geisinger Health System's Careworks Convenient Healthcare in 2008 after it opened two clinics within supermarkets in the health system's market. While LVHN entered the clinic business reluctantly, because of concerns about physician competition and different standards of care, executives are pleased with the results, having seen an increase in specialist referrals that they can trace back to the clinics. The partnership is co-branded as "Careworks together with Lehigh Valley Health Network."

By partnering with retail clinics, hospitals are able to take better control of their futures. Operating retail health clinics is good for a hospital's brand because it lets potential patients know the organization is innovative, convenient, and price-conscious.

These points are especially important moving forward, as The California Healthcare Foundation recently found the number-one thing consumers like about in-store clinics was cost predictability. Additionally, the American Journal of Managed Care found that use of retail clinics among patients with insurance increased tenfold from 2007 to 2009.

"If these trends continue, health plans will see a dramatic increase in retail clinic utilization … particularly among, young, healthy, and higher income patients living close to retail clinics," the study concludes.

This statement should make healthcare leaders realize that to get ahead of the in-store clinic wave, it may be time to paddle out and partner with a retailer. Not only does it make good business sense, but clinics can be beneficial to a  hospital's brand and future success in its market.