Considering that they're the smallest players in the healthcare arena, retail clinics get a lot of attention. In an industry that has seen dozens of hotly contested (and failed) approaches over the years to achieving "right care, right provider, right time, right cost," retail clinics are a rare thing: a model that truly delivers these goals and resonates with consumers. Retail clinics have increased price transparency, quality and convenience, and everyone--including the media, regulators, the medical establishment, investors and major hospitals--is taking notice.
In the past year, the number of retail clinics grew from roughly 150 to 700 clinics, managed by more than 40 operators. To date, 15 percent of these clinics are owned and run by hospitals, and more than a third of the clinic operator companies are part of hospital systems. This, in and of itself, is surprising. Retail clinics typically generate a modest $1 million in revenues per location, compared with hundreds of millions (or billions) in revenues generated from a hospital.
So why are multi-billion dollar hospital systems interested in these relatively small-time operations? In short, it's because there are strategic, operational, and learning opportunities for hospitals in the retail clinic space. Forward-thinking hospital managers are looking for ways to capture the upside of retail clinics and mitigate the potential future loss of patients and earnings they represent.
The retail clinic model is straightforward: The clinics offer a limited menu of medical services on a walk-in basis, are staffed with nurse practitioners who are lower cost than physicians, and are located in small, relatively inexpensive retail spaces. Consumers have responded very favorably to this approach to care, with 1.35 million clinic visits to date and 90 plus-percent reported satisfaction rates on quality of care, convenience and cost. While initially clinics appealed to the two ends of the economic spectrum (affluent consumers who didn't care about out-of-pocket cost because they wanted convenience and people who didn't have insurance and were looking for lower out-of-pocket costs), consumers from all socioeconomic groups are now using these clinics, reporting high levels of satisfaction and intent to return.
So what does this mean for hospitals? Consider the following value points of retail clinics:
1. Increase capacity and reduce costs in the ED by redirecting patients. Hospitals that have overcrowded emergency departments are diverting non-urgent patients (e.g., a child with a mild middle ear infection who comes in on a Friday night) to their own branded clinics within their facilities or in nearby retail stores.
For example, Aurora Health Care System in Wisconsin, serves its non-urgent patients far more quickly and economically (for both patients and insurance carriers) in a clinic than would not have been possible in a busy emergency room. If the patient is insured, clinics reduce the consumer co-payment costs; if the patient is not insured, he or she will pay a much lower out of pocket cost in a retail clinic than an ER. For uncompensated care, the hospital saves by caring for the patient in the most cost effective manner.
Hospitals are implementing this strategy by either owning and operating clinics in retail stores (such as Aurora in drug stores); other hospitals are evaluating the use of a modular retail clinic facility situated next door to their ED--patients can self-select or are provided with the clinic option when they check in with a nurse.
2. Keep patients in network--a defensive move. Establishing retail clinics as part of a hospital chain "saturates" the market, dissuading the competition from establishing a foothold in that marketplace. AtlantiCare in New Jersey is an example of this strategy.
"We were the first to open a retail clinic in New Jersey. Our intention was to get started and to create some barriers to entry. If we had retail clinic stores then we hoped that Minute Clinic wouldn't come into our market," says AtlantiCare Health Services President Don Parker. To date, this has worked--the AtlantiCare retail clinics are the only clinics in this market.
In a similar vein, Sutter Health wanted to keep patients in its network in the competitive California market. Sutter named its clinics Sutter Express, leveraging a strong brand name, differentiating itself from other clinics, emphasizing the clinics' hospital roots, and highlighting the advantage of a common EMR.
3. Attract new patients into the network. Retail clinics are an inexpensive way to bring your services and brand to new patient populations. This can be a way to pave the entry for a new or larger hospital facility, or a way to draw new populations to your existing facilities.
For example, Geisinger established its retail clinics 10-plus miles from its hospital locations in an explicit effort to bring new patients from a broader area into its network. Alegent Quick Care (part of Alegent Health of Omaha) opened a new clinic in Plattsmouth, 20 miles south of its hospital base, because it couldn't yet justify a full service hospital in this small (but growing) bedroom community, but wanted to establish a foothold for its brand in a promising market.
4. Create new, lower-cost methods of customer acquisition and brand exposure. Clearly, consumers visit their supermarket, drugstore and mass merchandiser more often than they visit hospitals. The average shopper goes to the grocery store 2.2 times per week, and may only visit a hospital once a year (if that). When hospitals compare the traditional cost of acquiring a new hospital customer with the cost of operating retail clinics, they find that clinics are relatively inexpensive for large systems to operate (even if at a small loss, or small profit). Clinics can simply be a lower-cost way to market expensive hospital services and build brand exposure. Strong brands are built through customer experience, rather than only through marketing communications, and a retail clinic can offer a positive, personal consumer experience.
5. Drive changes in public health (integrated payer/provider systems). Wellness is a major priority for the payer-provider system, and food is an essential part of health and wellness. Organizations like AtlantiCare believe that by putting clinics into grocery stores, often along with nutrition programs, they can drive better public health while also bringing down total patient costs.
Hospitals recognize that there are "ancillary" benefits to their retail clinic operations. While these benefits alone don't justify establishing clinics, they illuminate smart ways to leverage a retail clinic operation.
6. Create a channel for new business lines. Durable Medical Equipment Distribution: AtlantiCare uses clinics to let people try DME items they sell (scooter, canes), while Aurora drives its overall pharmacy business by placing clinics inside retail pharmacies that it owns.
7. Pilot new technologies "skunkworks" with people who embrace change. Hospital staff who choose to work in new retail operations are often agents for change, and relish the opportunity to create new approaches to patient care or system processes. Alegent in Omaha is using their clinics as the pilot for EMRs.
"People who work in our retail clinics enjoy change, and the opportunity to create new ways to serve our patients. they are well suited to trying out new technologies," says Rocky Fredrickson, CEO of Alegent Health Clinic.
8. Understand the new Generation X patient. Seventy percent of all clinic visits are by Gen-X (age 28-42) moms and their kids, compared with about 22 percent of all PCP visits. This generation has a different view of a medical home and medical relationships, and this is the age where medical relationships and habits are formed. Hospitals that are struggling to understand and address the changing needs of younger patients see retail clinics as a straightforward way to serve, learn about and develop relationships with this community.
Next week Part II: Tools for Hospitals to assess the potential impact on their patient and physician populations, economics, and brand--a pragmatic guide for hospitals to assess the retail clinic opportunity and create a strategy for improved patient care, patient and provider satisfaction and maximum impact.
Mary Kate Scott, Principal of Scott & Company, is a nationally recognized authority on retail clinics. Her firm helps hospital systems evaluate the retail clinic opportunity, calculate the economic and brand impact, and predict local consumer and physician response to different clinic operations. She is the author of The California HealthCare Foundation reports: Health Care in the Express Lane: The Emergence of Retail Clinics, and Health Care in the Express Lane: The Retail Clinics Go Mainstream. She offers speeches, workshops and media commentary on the intersection of consumers, healthcare and technology. Scott can be reached at mks@marykatescott.com or 310/822-6130.
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January is a big month for human resources. New positions have been approved, reviews are done, and raises finalized. At many companies, the start of the year is associated with mass resignations--often equated to employee resolutions to pursue that dream job, build homes in Africa, or return to school.
Excuses start flowing when a good employee leaves: He wanted more money, his colleague got promoted and he didn't, she didn't like the commute. Truth of the matter, experts say, is that good employees rarely leave because of pay or title--even if that's what they end up complaining about in their exit interviews. Good workers often leave because of bad managers; it doesn't matter what an employee thinks about a company as a whole if his individual boss stinks.
Given the influence managers have on employee satisfaction and turnover rates, it's surprising how few companies utilize upward reviews. And if a company does assess a manager's leadership skills, they usually only do it within the manager's immediate department--even though her relationships with outside departments (like the lab or radiology) may define her work. The 360 review process, where feedback comes from colleagues, other managers, and, usually, direct reports, can help organizations ferret out bad leaders, uncover inefficiencies, and provide leadership development.
Of course, an upward or 360 review process doesn't always guarantee realistic insight into management ability. Some companies allow managers to hand-pick who completes their reviews, meaning direct reports only have the opportunity to weigh in if their managers request it. Other companies make review completion optional, so their direct reports aren't required to actually submit their feedback, making the review seem less important than the traditional top-down review.
Sometimes it's the review form itself that's faulty. I'm happy to say my company uses the 360 process, but the online review tool is unwieldy: 25 or so questions, each with multiple parts, rating employees on a scale of 1 to 5. If you answer a question at either end of the extreme--(1) my manager is terrible or (5) he's off the charts good--you get five follow-up questions digging into your first answer. Impatient reviewers figure out early that if they want to finish the review this decade, they better give indifferent scores (i.e., threes) for each question.
Management literature is filled with fodder about what makes a good leader, but how do you test that your managers actually have those traits? It's surprising how many senior leaders don't know their organization is filled with terrible managers. You may think your CFO is great--she meets all her goals, delivers on your every whim--but how is she at managing people? Are the 15 people in her department on the brink of resignation?
I've written a lot about the importance of weeding out underperformers. If it's true that managers really do make or break employee happiness (I believe they do) then weeding out weak managers is just as important. Upward reviews and 360 feedback, although imperfect, are a good start in identifying the weak (and the exceptional). If you already utilize some type of bottom-up review process, great, but be sure it's effective, useful, and used.
Molly Rowe is leadership editor with HealthLeaders magazine. She can be reached at mrowe@healthleadersmedia.com.
Urinary catheter infections account for 40 percent of all hospital infections, but U.S. hospitals do not have strategies in place to minimize them, according to a new study from researchers at the University of Michigan. Catheters are used on one in four patients, often after surgery, but as many as one third of the days in which patients have the devices are medically unnecessary, the study said. Infections from the devices are the most common type of infections acquired in hospitals. In July Medicare stopped paying for care of urinary tract infections acquired while hospitalized. The study provides the first national examination of hospital prevention strategies at 119 Veterans Affairs and 600 nonfederal hospitals, conducted in 2005.
Jenn Giroux, a hospital nurse, saw a need for a method to quickly and thoroughly protect patients from the germs that collect on healthcare workers' stethoscopes, which often go unsterilized between patient exams. After experimenting with some baby products she had around the house, she came up with what could soon be standard medical equipment, StethoClean--a protective plastic sleeve that covers the diaphragm and the neck of a stethoscope so that it does not directly contact a patient. Giroux introduced her new product this fall at a meeting of the Association of Professionals in Infection Control and Epidemiology in Atlanta.
"It's hard to imagine how unsystematic and data-free most healthcare is today and how hard the existing culture of care resists the intrusion of process-based data."George Halvorson, Chairman and CEO of Kaiser Foundation Health Plan and Hospitals, Health Reform Now! John Wiley & Sons, Inc, 2007
The physician culture resists challenges to its beliefs. But the challenges continue.
The beliefs include:
Medicine is a profession centered on the patient.
Money shouldn't be central in deciding what's best for the patient.
Data alone is insufficient to judge physician performance.
Physicians are a brotherhood and a sisterhood.
Medical practice is not "just another business."
Beliefs under stress These beliefs have been under stress as Medicare and health plans have emerged as physician paymasters, as the for-profit "medical industrial complex" has grown explosively, and as claims-based data has been used to rank physician performance. These developments have transformed medicine along corporate lines. In business, the piper usually calls the tune. The physician culture resists this notion. Consequently, constant rearguard battles erupt to maintain the professional status quo.
I believe in capitalism, for-profit businesses' obligations to stockholders, "not-for-profit" health organizations' need to generate profits, the necessity to manage healthcare organizations, and the maxim "no margin, no opportunity."
This piece, then, isn't a screed against capitalism, greed, or profits. Instead it rests on the belief that many current healthcare efforts toward "responsibility" and "accountability" have gone astray because the health system's movers and shakers fail to take into account the physician culture.
I'm not saying doctors always react admirably to trends threatening their culture. I'm saying they act predictably.
Recent Developments Today's recent efforts to change healthcare and the physician culture include:
Pay-for-performance (If only we can get doctors to do the right things with measurably better results, we could induce them to change by rewarding them with more pay.)
Physician rankings (If we could use data to cull bad doctors from the herd, we'll have a higher performing system.)
EMR implementation (If we would make medical record systems mandatory, we could avoid duplication, coordinate care, save money, and raise quality.)
Hospital/physician-integration (If only hospitals and physicians would integrate, join together in joint ventures, stop duplicative competition, get their computer systems to talk to one another, and otherwise coordinate care, patients and the system would benefit.)
Health 2.0 (If we could aggregate enough data, integrate EMR, PHR, and claims-based data, deposit the data in central data banks, bring data to bear at the point of care, predict and use data to indicate what works, and intervene with the latest, hottest, and best information, the system would take a quantum jump forward in reducing cost and lifting quality.)
Consumer-directed care (If we could raise deductibles high enough to sensitize "consumers" to cost and give them enough information, patients would become price and value savvy, and patients would become "health consumers" capable of negotiating with physicians on a more even playing field and of choosing higher value care.)
Why Recent Developments May Misfire These are logical concepts to minimize costs, and to manage and rationalize care, but movers and shakers who put them into play may underestimate cultural barriers.
Here are a few examples of why these concepts may misfire.
Pay-for-performance: Most doctors think they're "performing" very well. They've done their time in pre-medical education, medical school, residency, and fellowship training--usually 12 to 16 years in all--and deem themselves autonomous professionals. They resist hectoring, lecturing, criticism, and data judging their performance. It's not that they perform equally well. It's just that each thinks their performance rests on their individual circumstances. Besides, these questions always arise, Based on whose performance? And on what basis? Standards set by health plans or Medicare? Or standards set by physician organizations? Also business-minded physicians know tracking their own performance in outpatient settings entails expense--buying and installing record systems, maintaining those systems, undergoing a period of reduced productivity, training staff, spending time and money generally not compensated for by the small bonuses that health plans provide. Some skeptical physicians are asking: Why should I be paid for what I'm supposed to be doing already? And why am I not privy to the criteria used to judge me, placing me in a "lower tier," even excluding me from networks?
Physician ranking: A national movement is afoot among health plans to rank physicians. Health plans are using retrospective claims data to rank doctors in terms of cost and "quality." Physicians believe rankings rest mostly on cost. They're incensed when the ranking criteria for exclusion are unknown. Physicians have rebelled in Washington, New York, Connecticut, Minnesota, and Massachusetts among other states. In Massachusetts, the dispute focuses on "tiered networks" covering state employees and a state commissioner's request for claims data from health plans. Under the commissioner's plan, patients pay more to see a lower tier doctor than a higher tier doctor. For doctors, the problems are two-fold: 1) doctors don't know how and why they are being ranked, and 2) patients may assume a low ranking means the doctor is incompetent, or even a quack. To show how fiercely physicians resist ranking and how complicated ranking can be, the Massachusetts Medical Society is saying tiered ranking should 1) strengthen patient relationships, 2) involve physicians in designing and implementing programs, 3) use clinically important and sound performance measures, 4) ensure adequate sample size, 5) rely on sound data analysis techniques, 6) share and review data with physicians, 7) guarantee transparent quality and cost data, 8) identify practice characteristics requiring special attention, 9) use uniform reporting formats, 10) minimize unintended harmful consequences of reporting to the public, and 11) be pre-tested before implementing. In other words, fight intrusion into the physician culture with counter-measures to make it a fair game.
Mandatory EMR Implementation: This has the earmarks of cultural dogfight. In this Internet era, IT enthusiasts and data aggregators are saying: Surely the time has come for a national computer system linking patients, doctors, hospitals, government, and health plans using data to cut costs, improve quality, coordinate care, and avoid duplication. For at least five years, IT engineers, managers, and thought leaders have been hard at work at all levels of the health system to make a unitary computerized national system a reality. HHS secretary Michael Leavitt has gone so far as to say Medicare payment cuts should go into effect immediately. If doctors and hospitals don't toe the line and install EMRs, then reduce their revenue streams. The trouble is that only 5 percent of hospitals and 15-30 percent of doctors have done so, and foot-dragging has been fierce in solo and small practices without the resources to make EMRs happen. Doctors say EMR implementation costs too much, disrupts practices, lowers productivity, interferes with patient interaction during the clinical exam, has no tangible return on investment, and shows no evidence of cutting costs or raising quality. Maybe sufficient government and health plan pressure will turn the situation around, or perhaps a federal program like Hill-Burton will turn the trick, but so far it's a bureaucratic, technocratic and physician cultural standoff.
Hospital-Physician Integration: This has long been a dream among hardheaded managers and healthcare leaders. For good reason. Hospitals and doctors share a common goal--getting patients well. But cultural disputes keep getting in the way. Hospitals believe they're the center of the healthcare universe. They're open 24 hours a day, legally obligated to take all comers, and offer comprehensive services with on-the-spot intervention in case of emergencies. But doctors may disagree as to who should be King of the Mountain, who should control clinical care, and who should reap rewards. Doctors know without physician services, hospitals would simply be empty buildings with mediocre food. Money factors are there too. Hospitals consume about 50 percent of all care monies while physicians take 25 percent. Previously I belonged to the integration crowd. Fifteen years ago, I co-founded the National Association of Physician Hospital Organizations, later renamed the National Association of Integrated Health Organizations. Both are history. Ten years ago it became apparent hospitals, given their administrative structures and controlling mentalities, were running most Physician Hospital Organizations (PHOs). The standing joke among doctors was that PHOs were really HPOs, meaning hospitals controlled them. In any event, neither hospitals nor physician organizations felt committed to financially supporting PHOs, which died from financial starvation. But before their premature death, at a hospital at which I was a PHO chairman, the hospital and its medical staff developed a hundred or so bundled bills, common hospital procedures, incorporating all hospital and physicians services and making them known in advance. This sort of price transparency will become common in consumer-directed care. What went around will come back around.
Health 2.0: Among IT visionaries, the belief persists that with dropping computer costs, widespread Internet use, ubiquitous Googling, ingenious algorithms, and aggregation of EMR, PHR, and claims data, a rational cost-efficient reform will rapidly come together. Comprehensive, at-your-finger tips, computer-based information will replace paper records. Some policy wonks and all-knowing pundits even believe computer-guided artificial intelligence can closely mimic clinical care, interpret nuances of patient-doctor interaction, select the best tests and proper procedures to perform, predict their relative effectiveness, and substitute or augment clinical judgment. That these functions can save money remains untested. In Minnesota, a state dedicated to creating a statewide record system by 2015, health costs are out of control-1.1 million Minnesotans expect to pay 10 percent of their pre-tax income for health benefits next year, and for a quarter of residents, the cost will be 25 percent of pretax income ("Healthcare Takes a Hefty Bite out of Minnesotan's Income," Star Tribune, December 20, 2007)
Consumer-Driven Care: The November 24/31 issue of American Medical News carries an article "Consumer-Directed Care--Culture Shock." It says both doctors and patients resist patients being defined as "consumers." This may be why consumer-directed care, defined as high-deductible plans paired with high-deductible or flexible savings accounts-are slow out of the gate. Of 150 million Americans with health benefits, only 2.7 million have enrolled. This may be a classic example of culture resistance. The American Medical News reporter explains it this way:
"The limited growth of consumer-directed health plan enrollment is in part due to the exam room taboo. A typical patient, sitting in an open-backed gown on top of an examination table doesn't much want to talk about money. And doctors don't want to be the ones to bring it up."
This open-ended image doesn't lend itself to price haggling. Neither does the gap between patient or doctor knowledge, nor the fact that vulnerable patients want to look good and not run the risk of looking impertient in the doctor's eyes.
Then there's the problem of data-gathering during the patient exam. The March 2006 issue of Family Practice Management gives these tips:
Listen to the patient before opening the computer screen and reviewing patient status
Let the patient see the screen as you explain what you're doing
Talk to the patient as you search for information
Point to the screen to explain what you're looking at
Learn to type, look, and listen to patients at the same time
Talking about price continues to be awkward, partly because many patients lack the knowledge to know what the physician is talking about. But it may be that economic factors-patients spending their own money or looking for a bargain combined with continuing unaffordable and escalating healthcare costs-will drive cultural change.
Summing up Because of cultural factors--patients taking the doctor's word for granted, first-dollar coverage without discussion of money, freedom of doctors to order what they please based on clinical judgment, patient dependency and trust in physicians' superior knowledge, the physician's penchant for autonomy, clinical and monetary differences between hospital and physician cultures--transitioning to a more managed, monitored, and data-based system is fraught with obstacles. These barriers will not be easily surmounted.
Physicians have limited but real options: becoming employees, creating new practice models, pursuing non-clinical careers, retiring, not accepting new Medicare patients, owning facilities, undertaking entrepreneurial activities, ending health plan contracts, joint venturing with hospitals, joining large groups, entering academia, morphing their practices into collective organizations with more clout in the marketplace, or joining together to voice their vision of a better system.
Most physicians will simply go with the flow, resisting, adjusting, but bowing to the inevitable, even if the current runs against their culture. In the end, it's better to be mainstream than extreme. After all, we're all in this together.
Richard L. Reece, MD, is a pathologist, writer, editor, speaker blogger and consultant in Old Saybrook, CT. His latest book, Innovation-Driven Care: 34 Key Concepts for Transformation, was published in March. His blog may be accessed at www.medinnovationblog.blogspot.com. He may be reached at rreece1500@aol.com.
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I wrote a column late last year that I called "Looking Upstream," in which I shared some predictions about the healthcare industry. Now that 2007 is behind us, I thought it proper to look back at some of the issues PhysicianLeaders has covered.
We re-launched this e-newsletter June 7 of last year to make it more content rich and visually pleasing. Since then, we've had 27 weekly issues. The best part of this beat is interacting with readers and industry insiders. It has been an enriching and enlightening journey, and I look forward to continuing my coverage of physician-related topics in 2008.
One of the benefits of being an online reporter is the immediate feedback I get from readers. No doubt the story of 2007 that garnered the greatest response was a recent article I called My Generation. It was a pithy list of complaints I've heard about Gen-X physicians. Reader feedback was split as to whether these opinions are accurate. An online poll on HealthLeadersMedia.com found that 45 percent of users say Gen X and Y physicians are inferior to previous generations, 29 percent say they are comparable, and 25 percent say they are superior.
Another aspect of online reporting is that analytic software lets me determine which stories were the most widely read. Below is a list of the most popular PhysicianLeaders stories of 2007--I think you can tell by some of these headlines that I've had a lot of fun crafting this e-newsletter.
I'm Going To Sue You--Just think how much less stressful life would be if you could discern your patients' true intentions. After all, if you knew a patient was prone to sue, you could take early action to protect your interests. Healthcare attorney James W. Saxton points out how to spot the patients that might put you at risk.
Hair Today, Gone Tomorrow--One benefit to my hairstyle--or lack thereof--is that despite life's frustrations, I cannot pull my hair out. This inspired me to ask some of my physician friends about the top issues that make physician leaders want to pull out their hair. I'm sure the five items mentioned are not exhaustive, so feel free to let me know what you'd add to the list.
Doctor Paycheck--Consider all the ways hospitals nowadays are attempting to fortify physician relations. With a looming shortage of primary care providers, hospital executives have to come up with strategies to maintain referrals and ensure care in their communities. Executives frequently tell me about their plans to increase the number of employed physicians.
The Beautiful People --The estimated 5,000 medical group professionals who attended the MGMA's annual conference last October sure improved the aesthetics of the City of Brotherly Love. In this column I provide a rundown of HealthLeaders Media's online coverage of the conference.
Looking Upstream--Toward the end of last year I was on the road quite a bit, interacting in person with healthcare administration and physician leaders. In my conversations with these industry experts, I've asked them to forecast changes that will have the most impact on physicians. In this column, I present five predictions for the near-future.
I hope over the past six months you've found something of interest in these and other columns, as well as reader-contributed pieces, podcasts, and online articles from HealthLeaders magazine. As I told a colleague of mine recently, writing for HealthLeaders Media is a pleasure--and that, I believe, is a testament to the good will and engagement of the professionals in this continually shifting industry.
As always, let me know if you have comments, questions, or suggestions. I like to think of this e-newsletter as a joint venture I have with my readers. My articles can only improve from your feedback.