Can You Really Compete With Retail Clinics -- and Succeed?

Leigh Page

Disclosures

March 18, 2015

In This Article

Can You Compete on Price?

Even though practices can improve access for patients, it's extremely difficult—maybe impossible—to match retail clinics' low prices. NPs in the clinics cost far less than doctors, and such operators as CVS and Walgreens further reduce costs by not having to pay for store space. A 2009 study[3] led by Dr Mehrotra found that the overall cost to the patient to get care at a retail clinic was 30%-40% lower than at physician offices and urgent care centers.

Salud Pediatrics in Algonquin, Illinois, is open weekday evenings and Saturday morning, but it hasn't lowered prices, said Brandon Betancourt, the practice's administrator. Even though he passes a few retail clinics on his way to work, "going head-to-head with retail clinics [on price] is not the way to go," he said. "Retail clinics can afford to let their healthcare operation be a loss leader. The clinics get people into the store to fill their prescriptions and buy things."

Instead of low prices, Salud emphasizes quality. "Medicine is not just about speed and convenience," Betancourt said. "If the patient wants that sort of medicine, you should be very clear about that and tell them, 'This is not the place for you.'"

When billing a visit for a covered patient, physicians charge what the insurer will pay on the basis of the Current Procedural Terminology (CPT) code. Robert Wergin, MD, a family physician in Milford, Nebraska, and president of the AAFP, said when he makes quick visits with patients who have similar complaints as retail clinic patients, he often uses CPT code 99212, which pays about $60; that is similar to the clinics' rate.

Retail clinics' low prices, however, seem to be getting more attractive to patients. Traditionally, the clinics tended to attract people who are more interested in convenience than price. But as high deductibles become the norm and people have to pay for more of their care out of their own pockets, price seems to matter more.

It used to be that practices could compete with retail clinics on price. As recently as 6 years ago, most adults visiting retail clinics were not covered by their health insurance.[4] Thus, when these patients went to a doctor, it was actually a better deal than a retail clinic. At the doctor's office, patients would only have to cover the copay, provided that they had met their deductible. But at the clinic, they'd have to pay the full charge. That has changed, however, as retail clinics successfully negotiated coverage with insurers. CVS recently reported[5] that more than 80% of people who visit its clinics are now covered by insurance.

The doctors' cost advantage not only has slipped away, but also has turned into a disadvantage, owing to changes in copay policies. Some payers have reduced or completely waived the copay for retail clinics, but not for doctors. In 2008, Blue Cross and Blue Shield of Minnesota waived the copay[6] just for retail clinics, and CVS has reduced or eliminated the copay in many of its own contracts with payers. CVS calculated[7] that for people with reduced copays, utilization of its clinics rose by 247%.

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