Retail ready: Is value enough to keep convenient retail clinics on a roll?

It would seem that any healthcare entity able to introduce lower costs and greater convenience would be welcomed with open arms, if not a genuine ticker-tape parade. Yet, walk-in retail clinics, new players built on low cost and convenience, are struggling to gain a national foothold, and experts aren't sure the new guy will even make it in the end.

Many retail clinic chains have already gone under, including Health Stop, a venture-capitalized chain of walk-in clinics launched throughout the East and Midwest in the mid-1980s. Considered the originator of the current movement-which is now led by chains such as MinuteClinic, RediClinic and Take Care Health Systems-the Health Stop facilities were designed to care for patients with minor ailments who had no primary care physician or who needed night or weekend appointments. At its peak, the chain had more than 100 clinics and $50 million in annual revenue but dissolved after 10 years.

Even the newest of these chains often find the going tough: Wellness Express, a San Ramon, Calif.-based company that opened its first clinic in April 2005, closed its four locations in November 2006.

According to the University Of Michigan's Consumer Satisfaction Index, consumers are less satisfied with the provision of healthcare than they are with the U.S. Postal Service. One of the few things even lower on that list is consumer satisfaction with their health insurance.

Consumer choice (in the form of health savings accounts and other CDHC options) and political pressure (in the form of employers and organizations such as the Leapfrog Group) are changing the rules.

Although prices get most of the attention, some experts say that money isn't the primary driver of retail clinics' emergence. "When it comes to common, self-limited complaints such as earaches, sore throats, minor coughs, sprains and strains, both the insured and uninsured prefer the option of prompt walk-in visits rather than scheduled appointments that are delayed from the onset of symptoms," says Steven Goldberg, MD, corporate medical director, clinical policy for Louisville, Ky.-based Humana Inc. "Retail clinics often more clearly detail the complete cost of services and are located at sites that are more convenient to families."

CONTENTIOUS AT FIRST

Several physician organizations, including the American Academy of Pediatrics, have opposed-or at least expressed concerns about-the growing number of retail clinics. Among their concerns are increased fragmentation of care, a lower quality of care, higher risk of contagion and the possibility that indications of more serious health issues will go unnoticed by nurse practitioners (NPs), who have replaced physicians as caregivers in many of the clinic chains.

But others appear resigned to the fact that the clinics are here to stay. The American Academy of Family Physicians has encouraged its 94,000 members to adapt by expanding their office hours and accepting same-day appointments.

Emotions are running high, but there is not much available as far as hard data and analysis of clinics' operations, says Margaret Laws, director of public financing and policy for the California Healthcare Foundation, which commissioned perhaps the most in-depth report available to date: "Health Care in the Express Lane: The Emergence of Retail Clinics," released in July 2006.

"Part of the reason that there is so little empirical and analytical information on clinics is because they are still a work in progress," says Laws, who co-wrote the report. "Some employ physicians, others use NPs, and their list of services and prices sometimes vary as well. It's an emerging industry, so even the clinics themselves haven't all figured out what they want to be when they grow up."

Wellness Express, when it closed its doors three months ago, needed between $5 million and $15 million to sustain its operations until it reached profitability, but wasn't able to raise the capital from equity or venture capital firms. And by some standards, that chain was doing well: of the 10,000 patients Wellness Express served, repeat customers accounted for approximately 44% of that total.