Retail Clinics Raise Medical Spending: So What?

flying cadeuciiNew research published in Health Affairs finds that retail clinics don’t save money. Many health policy analysts had hoped that retail clinics would reduce medical spending by replacing more costly physician office visits. The article did confirm that retail clinics are less expensive than traditional physician visits for the same service. Yet retail clinic use was associated with an increase in medical spending of $14 per year by those who used them. The $14 per person-year increase was not a complete picture, however, because the study did not compare inpatient spending or prescription drug use.

The researchers looked at Aetna insurance claims for 11 low-acuity conditions to see if people were substituting cheaper retail clinic visits for more costly doctor visits. What they found was that patients tend to visit a retail clinic when they might otherwise forgo care. In other words, patients were adding visits for conditions that would have cleared up on their own rather than necessarily substituting cheaper visits for higher cost visits. Traffic at retail clinics tends to peak during off hours (evening and weekends) when physician offices are closed.

The research was reported by Kaiser Health News and also ran in MedCity News, where I found some of the comments especially interesting. One commenter asked if changing the term “utilization” to “engagement” might make a difference, as in:“clinics increase health ‘engagement’ to the tune of about $14/person.” Increasing patient engagement sounds like a positive benefit rather than the negative connotation of utilization.

As an economist, my knee jerk reaction is patients may want to visit a retail clinic when their traditional source of care is not available. They may be willing to spend a little extra in cost-sharing to take care of a medical need rather than suffer through it.

A commenter made the argument that further analysis may reveal retail clinics reduce emergency room use when comparing less trivial conditions. It wouldn’t take very many sick kids whose parents took them to a CVS Minute Clinic instead of the hospital ER to save an extra $14 per person spent on the trivial conditions studied.

Something that boosts convenience at a slight cost is considered bad in health care whereas it would be considered great in every other sector of the economy. Has anyone ever accused Apple of increasing the cost of personal communication? It may have, but just think back to the good ole days when people had to use payphones when out, left messages on answering machines to communicate with loved ones who weren’t home or mailed letters to communicate with those far away.

Despite the cost, I willingly spent more than $1,000 to procure my iPhone 6 and my iPad Mini. Besides a phone plan,I also pay another $30 per month for streaming media services that I can watch on my phone, iPad or my home television. Compared to the rabbit ears our sole television had growing up (we only received one channel reliably), Apple has also increased my cost for television entertainment. For that matter, I pay an additional $100 per year for a Garmin Pilot app so I can use both my iPhone and iPad for GPS aircraft navigation when piloting an airplane.

My Apple devices are good examples of why consumers need to take back control over more of their health care dollars. My iPhone can tell me where my aircraft is in relation to airports across the country, pull up winds aloft and severe weather forecasts. I can watch television on it, research a report and communicate with colleagues. One thing my iPhone is not much good for is communicating with my doctor. The reason: 90% of doctor bills are paid for by third party payers. Those payers have been slow to reimburse for phone consultations because they wanted to make sure it doesn’t raise their costs unnecessarily.

Devon M. Herrick, PhD is a health economist and senior fellow at the National Center for Policy Analysis. He has written on ways consumers can lower their drug spending for more than a decade.

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  1. Leave it to Devon Herrick to be right about the silliness of media’s principal reaction to the latest research on clinics’ impact for all the wrong reasons.

    The popular media reaction – “oh no, clinics actually INCREASE spending on health treatment, they’re a failure!!!1!” – is …. foolish, for several reasons. Two of the real reasons are the limitations of the study – team Mehrotra didn’t look at the totality of clinics’ economic impact, leaving out time savings for patients and productivity savings for employers altogether. They also did not attempt to weigh clinics’ impact on the ‘rescue care’ spending of clinic visitors – that is, what impact if any that clinic visits might have on diminishing patients’ subsequent need for much more costly care for otherwise undetected/untreated but manageable health conditions. Like needed ramps on an interstated, clinics increase access and may ultimately smooth traffic congestion, resulting in fewer catastrophic wrecks. They obviously won’t eliminate them, but they may make it easier – more efficient, less burdensome – for the right clinicians to treat the right patients with the right level of resources devoted to care.

    Herrick’s shrugging “the market is wonderful, lookit my neato iPhone atter all” dismissal of concern about how increased access has measurably but inconsequentially increased total health spending is predictably rigidly ideological, and simultaneously information – and explanation – free.