I recently met Michael Howe who is CEO of MinuteClinic, and he had the good graces to call me back and talk on the day that they sold out to CVS. Very classy as it would have been easy to blow me off.

So the rumor quoted here is that CVS paid $170m for the company—certainly an endorsement that they at least think that retail NP clinics are real. But if you want to really know more, look at this new report on retail clinics from the California Health Care Foundation written by Mary Kaye Scott. Very nice summary indeed.

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  1. The retail/in-store clinic movement is more than a highly beneficial strain of “disruption” to the primary healthcare delivery system. Looking forward, it should also be a significant catalyst and test-bed to improve community health status.
    This strategy entails e-collaboration with a robust referral care network harmonizing enabling tools related to consumer-directed wellness, early disease detection and disease management services. Add a hefty dash of one-on-one customer rewarding based on health risk appraisal completion. Follow up with sequential adherence-based economic incentives fulfilled through behavioral target marketing with customized couponing triggered by the HRA findings, seasonal drivers, and respondent demographics. Similar reward triggering could be based on benchmark attainment within disease management protocols.
    Win-wins arise building loyal families in touch with new teams of wellness providers. It’s opt-in and HIPAA immune, and is freed from the babble generated by a zillion committees, taskforces, and “working” groups intent on cyber transacting everything. To the extent progressive local and regional health systems are included, the smoother the political sailing. For example, a Blue Cross plan could co-venture production of selected services. Local VNA and health departments would continue to make excellent staffing partners for short-lived campaigns such as back-to-school vaccinations. With insurance coverage arising and rising, the customer is the beneficiary regardless of the chosen production function.
    Service demand can be continuously driven by demographic (gender and age) thresholds per U.S Public Health Service guidelines. Such info is captured within the HRA completion process to trigger sentinel announcements (for example, 50th birthday) and invites along with customized coupons to promote visiting the clinic and the store. Intervention opportunities also arise seasonally. Examples include the promotion of back-to-school and vacation-prompting vaccinations, flu season shots with pneumonia piggy-backed on, spring and fall seasonal allergies, and national body part (i.e., Breast Cancer) of the month campaigns.
    Why Retail Clinics as the Locus for Change?
    Incumbents in the retail clinic space grow because their business case is compelling, enterprises are sufficiently capitalized and customer experiences are highly scored by all relevant satisfaction metrics. These operations are still in early growth facing normal start-up woes:
    Uncertain ROIs and break-even points, staffing, information capture and work-flow patterns
    “Without the doc” risk-averse service menus, voluntary script dispensing/selling firewalls, constrained spatial layouts and low-ball pricing.
    Thus, there is plenty of wiggle room to now plan additional functionality as the kinks get worked out and consumer acceptance grows. As competition increases, investment drivers include the need for continuous product improvement and differentiation as well as for satisfying large customer cohorts shifting from latent to expressed demand for diagnostic, immunization and screening services. In-store worker-focused risk assessments add icing to the convenience cake, especially by filling in off-peak appointment slots, smoothing work flow and reducing queues and wait times. (Workers’ rewards must be nondiscriminatory per U.S. Department of Labor regs compared with customers’ rewards.)
    Like Lipitor, the “daughter products” released after its ingestion are more beneficial than the original dose. Sensible protocol-based and decision-supported adult primary care is the core retail clinic output platform now in place. Providing appropriate consumer-assisting programs with health systems co-venturers builds upon sunk investments at low marginal cost.
    In many urban and rural communities, the default locus for free “medical advice” has traditionally been the neighborhood pharmacist. The retail clinic can expand this tradition with one-on-one assistive and practical care in terms of fuller primary prevention services that are disease- or body-part specific.
    Many screening and testing services have been battle-tested in drug stores, at health fairs and convention lobbies and within assorted clinics of all stripes. More recently, based on strong empirical evidence from workplace wellness settings, providing customized incentives and rewards is essential to “get people to the last mile” to initiate behavioral change. This might become an especially compelling strategy with the deployment of emerging home-based disease management products incorporating remote monitoring. Incentives could take many forms from reward programs to price discounts on in-store goods and services.
    Convenient Primary Prevention Would Gain Equal Footing with Convenient Care
    Given pervasive techno-chaos within the overall healthcare industry, it takes business discipline and standardization to harmonize appropriate processes and technology. Just consider the hundreds of options flowing from web-based and traditional programming in risk assessment and personal auditing and tracking programming including health risk appraisals, HSAs and derivative financial products, mini personal health records, electronic medical records, chronic disease management with remote monitoring, behavioral targeting and one-on-one relationship marketing and loyalty card systems.
    Each of these now operate under different parentage – from health departments, governments, self-insured large employers, progressive unions, managed care organizations, classic insurers, marketing services firms and, increasingly, by customers themselves. Many have or will become zero-priced commodities. The good news is that all are adjunctive to enhancing the retail clinics’ care and caring missions.
    The retail clinic could assume employers’ traditional role in health risk appraisal to get incentive packages, monitoring and benchmarking locked and loaded. Then, many follow-through tests and procedures are done in store with out-referral when appropriate. Record keeping would be online and really simple. It’s like installing training wheels for the emerging PHR and EMR systems. These convergent systems are typified by early developer groups such as WebMD while Google is constructing a PHR system.
    Caring Processes are Inseparable from Care Processes
    Retail Clinic 2.0 positioning is not glitzy PR to deflect the opening blows by organized physician groups that wrongly perceive negative competition from nurse practitioners and others. The reality is all PCPs (and, more importantly, their patients) will be universally better off if they begin to mimic some of the critical convenience, staffing, IT and pricing success factors put in place by the retailers.
    The docs are far from being disintermediated; they can be emancipated from the routine sniffles and scratches while remaining wired in, utilizing their time and skills more appropriately and productively. Ditto for our under-funded public health clinics that will face huge work flow and staffing problems as prevention and wellness eventually obtain public and private core financing. Latent demand for the 55-year-olds and kids is likely to explode if Medicare expands down and SCHIP widens.
    Recent AMA opening moves challenging the emerging retail clinic industry’s usurpation of physician roles and functions were inevitable. It’s fuming again but will lose the battle because:
    Their economic self-interest becomes more visible than their patients’,
    The inherent cost-effectiveness of the current approaches is readily apparent to customers (especially where services are insured), and
    Business groups, governments, employers, public health associations and insurers all welcome price and quality competition wherever and whenever they find it.

  2. Walgreens tells me that their clinics will average approximately 300 square feet and require 20 patients per day to breakeven. The company also, of course, hopes that the patient will fill any scrip at its pharmacy and, perhaps, buy some front end (non-scrip) merchandise before leaving.
    Hopefully, the concept will prove profitable and spread quickly. It has the potential to reduce ER visits, maybe make it easier to get a timely appointment with a PCP for more serious ailments and make a net positive contribution to pricing transparency.
    It would also be helpful, I believe, if insurers would revise their contract terms so that doctors can offer a discounted price (to reflect lower costs related to not having to bill the patient or deal with the insurer as well as not having to wait for payment) for those willing to pay cash at the time of service.

  3. As a new high deductible health insurance user, I can see real advantages to retail clinics. In my demographic, I think they will compete very well – but, is the HDHI market big enough to make a reasonable profit?
    Ultimate success will also depend on how each retail clinic business manages other health care stakeholders. Private practice physicians wield a lot of power, and if they become detractors that’s likely the kiss of death.

  4. You’re right Tom, insurance provides a money pool and data collection system which does add a lot, I just don’t think the present for profit insurers, adding double digit compounded rate increases each year, are giving us the most efficient and fairest system. You’d think they would be the ones controlling costs, yet they are really just controlling their “shed the losers” costs. But the same things they bring to the system could be achieved by a single pay gov. system with the efficiencies and fairness that go with that. This doc is certainly not practicing in the ghetto, but many of his patients are not rich either. He does not charge a yearly access fee and sees many, “can’t afford insurance” patients who must balance between paying for the visit and paying for the tests. But without him they would have NO options. He also manages cronic disease such as diabetes. But I think that this will not work for many specialists as you point out because of the extremely high charge rates they get. He does get calls all the time from other physicians who would like to model their practices after his, but because insurance companies contract that a doc who leaves them cannot see any of those patients, they then would have to start all over again building a practice. And yes docs in Canada would like to wean themselves from the government system. According to him he is doing as well, money wise, as any doc with the same size practice.
    “In practice, there are access problems to overcome for the less well-off.”
    Absolutely, that is why I don’t think this is a solution, but when I hear all those that say let the consumer drive the system, and then I see very few family practice docs taking this independent route, I wonder how the consumer is going to drive anything which would bring us a better system.

  5. > So how much are insurers adding
    > to the cost of healthcare?
    Depends on whom you ask. The range commonly quoted is 12 — 25%.
    But this doesn’t tell us much because it leaves out what insurers bring to healthcare. Without insurers, we would not have the medical technology we have because there would’ve been no market for it; we would have absolutely no data on outcomes, practice variation, and so-forth.
    > how come most docs (free marketeers) aren’t
    > going this route??
    Because it works OK for family practice docs in affluent locales who don’t want to see anyone over 65 years old. It will not work for almost any other doc because the $45 (or $95) office visit is the very least of their patients’ problems.
    Simple office visits (for lack of a better term) are not, properly speaking, insurable events. This is why there is so much transactional friction (i.e. hassle and extra expense) for everyone when it comes to using the insurance mechanism to pay for small, ordinary expenses. In theory I do not want “office visits” to be insured at all, for anyone. In practice, there are access problems to overcome for the less well-off.
    This guy in North Carolina is probably giving up income, but he doesn’t have to work as hard at the business side of his business because it is organizationally simpler. Evidently he likes it this way. And more power to him, I say.

  6. I don’t know why there should be a turf war, although I’m not surprised. Here in NC there is a doc that managed to pry himself from the expensive and time comsuming addiction to insurers. His office staff is I think three instead of 6-7 that would be needed if he dealt with insurance. He also has more time for patients. See his site: http://acchealth.com/
    $45 office visits, big reductions in lab tests and other services. So how much are insurers adding to the cost of healthcare? Middle men will kill you. Maybe if we had one government insurer it would cut the inefficient system we have now? He was interviewed on local NPR station WUNC July 5th on the Connection. His income is very good and many insured go to him as the service is great. So, here is the free market that many people say could work, so how come most docs (free marketeers) aren’t going this route?? Apparently insurers are also glad to get claims from his office because they are substanially less than insurance docs. But we all know that that transfers the insurance hassels to patients.