Currently Viewing:

Retail Clinics Are Still Here. Now What?

Medica Research Institute is a non-profit, research organization determined to improve health outcomes for all, especially the most vulnerable through advancing knowledge that informs value-based healthcare and accountable communities for health. We are committed to contributing to evidence through independent, data-driven health services research that is placed in the public domain.
Based on sheer numbers and volume of patient visits, retail clinics could not be called “disruptive innovations” yet.18 However, they are changing their business models and provoking responses on the part of other healthcare organizations in ways that suggest a larger influence than these measures might suggest. The ownership structure of retail clinics may be one explanation. Retail clinics have provided an avenue for the largest retail product and service providers in America to enter healthcare delivery. These companies, with large existing customer bases, a focus on consumer service, and convenient locations pose potentially formidable competition for physician groups and hospitals.
Retail Clinics Change, Traditional Providers Respond
The initial business model for retail clinics was relatively straightforward. They offered a limited set of services, payment was in cash, and convenience—measured in terms of location and hours of operation—was their calling card.19,20 They tended to be located in areas with relatively high income and education levels21 and generated modest, if any, profits for their investors. The owners of retail clinics have made two noteworthy changes in an attempt to increase profits. First, they have moved away from “cash payment,”22 with their owners now negotiating contracts with insurers. Visit copays and deductibles are sometimes waived to attract business. As a result, out-of-pocket costs for consumers can be substantially less than was the case under the cash payment model. This change increases the potential for retail clinics to draw patients away from traditional primary care providers.
The second major change involves service expansion.15,23 As a first move in this regard, retail clinics began to provide basic preventive care, such as flu shots and travel-related immunizations.24 This meant increased patient volume and revenue for the stores in which they were located. In a second more recent change, retail clinics began providing basic care for people with chronic conditions.10,16 This threatens the bread-and-butter revenues of primary care physicians. When retail clinics are located in stores with pharmacies, providing chronic illness care can improve overall store profitability, as prescriptions often accompany chronic illness visits.
Traditional providers have responded to these changes, although the extent of their responses is difficult to document. Some primary care offices have introduced same-day scheduling and extended office hours, for instance,25 chipping away at the retail clinic convenience advantage. The recent growth in the number of urgent care centers, which feature physicians and imaging equipment on site and a wider array of services than retail clinics, could be interpreted as another competitive response. (However, this growth has been driven by factors more compelling than retail clinic expansion, such as competition among integrated delivery systems for patients and the need for systems to reduce emergency department use under new financial incentives.)
Some organized physician groups and integrated delivery systems have pursued a product differentiation strategy, trying to shift the competitive dynamic to quality over convenience. Retail clinics have pushed back, noting research findings that retail clinic quality is just as high as that in primary care physician offices for the services that retail clinics provide,9,16,26,27,28 and that clinicians in retail clinics are equally or more likely to adhere to treatment guidelines.9,27,28
Other traditional providers have stressed more collaborative approaches, such as record sharing or supervision of retail clinic clinicians.29 More impressive is the growing number of high profile physician groups and delivery systems that own and/or operate retail clinics.9,30 This is an arrangement that may facilitate cost-management under new risk contracts. Retail clinics can be positioned as a less-expensive gateway into the system-managed care continuum,31 when compared to primary care physician offices, and they can function as “safety valves” when primary care practices are full.

Copyright AJMC 2006-2019 Clinical Care Targeted Communications Group, LLC. All Rights Reserved.
Welcome the the new and improved, the premier managed market network. Tell us about yourself so that we can serve you better.
Sign Up