8 Ways to Compete Successfully With Retail Clinics

Leigh Page

Disclosures

February 19, 2019

In This Article

The Phenomenon Is Cooling Off Somewhat

Retail clinics show no signs of going away, but their growth is subsiding.

They took off about a decade ago, experiencing a ninefold growth in numbers from 2006 to 2014, according to a report for the Robert Wood Johnson Foundation.[9]

This rising phenomenon—along with other trends, such as the rise of high deductibles—seems to have actually cut patient volume for PCPs. From 2012 to 2015, the prime years of retail clinics' growth, primary care visits fell by 4.7% a year, according to a 2016 report by the Health Care Cost Institute. Specialists, who are much less impacted by retail clinics, actually showed an increase in visits in those years, the report showed.[10]

However, this decline in visits does not seem to have harmed most primary care practices, owing to the growing shortage of PCPs. It's getting harder for patients to find PCPs, so they keep very busy, LeRoy says.

Still, physician groups have been very alarmed by the boom in retail clinics. They were particularly alarmed by moves several years ago by both Walgreens and CVS to serve chronically ill patients. However, these campaigns have been largely a failure, according to Merchant Medicine's Charland. Not many patients go to retail clinics for such services as A1c tests, he says.

We're just not seeing the kind of openings from major [retail clinic] players that we saw in 2012 to 2014.

Since 2015, Charland says, the growth of retail clinics has slowed considerably. "We're just not seeing the kind of openings from major players that we saw in 2012 to 2014," he says.

Why? "It's difficult to make money on this model," Charland says. "You can use it to lure people into the store to buy prescriptions, but it's hard to make money on the retail clinic itself."

With many pharmacies and grocery chains cooling on retail clinics, hospital systems have rushed in to fill the gap, Charland says. In the Chicago area, for example, Advocate Health now runs the clinics in many Walgreens stores. And in the Dayton, Ohio, area, where LeRoy practices, the Kettering Health Network recently took over operations of 10 retail clinics in Kroger grocery stores.[11]

Hospital systems also are hard-pressed to make money on retail clinics. A 2013 study, looking at 19 systems that ran retail clinics, found that only four of them were breaking even on these operations.[12] But while hospitals struggle to break even on the retail clinics themselves, "they hope to make money on the downstream cases for specialists and subspecialists," Charland says.

Preserving the Patient Relationship

LeRoy, for his part, does not seem overly concerned about the threat of retail clinics.

"Patients want two things most of all: to get in and get out quickly, and to have a closer relationship with their physicians," he says. "Retail clinics offer the first part, but not the second."

The lesson is that in areas where retail clinics flourish, primary care physicians need to make sure that patients stay loyal to the doctors' office. This can be done by offering the conveniences of retail clinics, particularly easier appointments, but also by emphasizing services that retail clinics can't offer.

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