Retail medicine outlets are exploding across the United States. And retail giants, such as Wal-Mart, are growing their capabilities in this area exponentially. While Wal-Mart had 80 outlets at the end of 2007, it is projected they will have over 2000 by the end of 2013.
This growth is being fueled by a number of factors. A primary issue is the need for low-cost healthcare. This is particularly true for the uninsured, but is also important to people with high deductible health plans. Retail clinics tend to offer lower prices, and also offer price transparency. This predictability issue is of value to many consumers, as well.
Another factor fueling growth is access. Retail centers provide an unparalleled ease of access, easier than most physicians offices and, certainly, emergency departments, and are comparable to most urgent care centers. Consumers with busy schedules find this feature very attractive.
The degree to which this developing trend threatens individual hospitals and their owned physician practices varies by market. In some markets, the supply of primary care physicians is so limited that retail clinics are a welcomed addition to the market. However, in other markets, the experience is totally different.
If the supply of primary care physicians is adequate, retail clinics are an unwelcome competitor. Retail clinics generally attract the patients with less intense illnesses, removing the bread–andÃ¢Â””butter cases from the physician’s office. For many practices, these are also the most profitable cases. Thus, retail clinics can do significant damage to the primary care physicians.
Another threat is that these retail clinics will expand their scope. While many focus on taking care of basic medical conditions, they could just as easily expand into issues such as imaging or physical therapy. Organizations like Wal-Mart are notorious for expanding their offerings and getting into seemingly separate businesses. Therefore, it is reasonable to expect that they will do so in healthcare as well.
Despite this reality, there appears to be little that hospitals and their associated physicians can do to resist these trends. In our opinion, a better strategy is to embrace this trend and try to provide leadership in the arena by either providing the services themselves or developing joint ventures with retailers.
Oddly, insurance companies might become an ally in this fight. Initially, their reaction was to include retail medicine providers in their network. That decision was basically driven by positive subscriber reaction to the retail medicine. A second positive was the hope that members might substitute retail medicine for more expensive emergency room care.
The experience of one Midwestern insurance company indicates that improved utilization might be highly questionable. A study of their database shows that 24% of the individuals who visited retail medicine outlets followed up with their primary care physician in the next 30 days about the same condition. Their database also indicates that the prescribing behavior of the providers in the retail medicine setting might not be as advertised; they’ve seen a significant number of prescriptions with a 21-day or greater supply of medication, and have observed that 8% of the prescriptions were for chronic conditions. The retail medicine outlets, having advertised as dealing with episodic care, are, in some cases, providing ongoing care.
Hospitals and their associated physician groups have three alternative strategies: 1) compete with retail medicine outlets, 2) ignore them, or 3) resist them. Given marketplace realities and the fact that the uninsured and underinsured are not attractive patient groups for the physician offices, resisting might not be that fruitful. Ignoring retail medicine might also be risky in a market where the primary care physician supply is adequate. In such markets, active involvement in retail medicine might help retain the revenue “”in the family”” and discourage competition, and could be the most logical approach.