Hospitals and health systems partnering with retail clinics, such as CVS' MinuteClinic and Walgreens' Take Care Clinic, is a growing trend. Recently, New Orleans-based Louisiana State University Health Sciences Center and the LSU Healthcare Network partnered with area Take Care Clinics and Detroit-based Henry Ford Health System partnered with MinuteClinics. Although the partnerships with health systems are relatively new, retail clinics have been growing increasingly common for years. As of July 1, 2011 there were 1,251 retail clinics in the United States, an increase of 74 from the previous year, according to a July 2011 Merchant Medicine report.
There are a variety of potential benefits motivating partnerships between health systems and retail clinics, including greater access to care and lower costs. However, hospitals and health systems still face challenges, such as relying on a retail-based entity to deliver healthcare services. Experts discuss these pros and cons of hospital-retail clinic relationships and what factors healthcare leaders should consider when thinking about forming such a relationship.
Access
One of the biggest motivating factors for hospitals and health systems to partner with retail clinics is to increase patients' access to care. "Thirty-two million more Americans will be looking for healthcare under healthcare reform," says Fred Campobasso, managing director of consulting firm Navigant.
This influx of new patients will compound an already overburdened system. Some experts point to a shortage of physicians, while others say the true culprit is administrative demands on physicians' time. "Our belief is that we don't have as critical a shortage of primary care as many people seem to believe. The real problem is that we've got primary care doctors in their offices tied up doing things they don't need to do," says Howard J. Peterson, managing partner of the management consulting firm TRG Healthcare. Retail clinics could thus provide an additional resource for patients with only minor health issues, freeing up primary care providers' time for sicker patients.
Coordinated care
Retail clinics' partnerships with hospitals and health systems allows for greater coordinated care. "[This trend] is in large measure about defragmenting healthcare. Depending on the nature of the relationship, the partners can link medical records, use common clinical-quality protocols and coordinate plans for follow-up care, all of which are intended to produce better outcomes," says Marc Malloy, CEO of the Renaissance Medical Management Company. More coordinated care can improve the quality of care by providing services to patients in the right place at the right time. "In a more coordinated world, we're going to have an evolution of services and patient experience in terms of who [patients] are interacting with for the care they need," says Gabe Weissman, external communications manager for Take Care Health Systems.
Electronic medical records form the basis of how retail clinics and providers can exchange information to avoid duplication of services and to better care for patients. "Technology has become the enabler to be able to move healthcare outside of the medical setting," says Virginia Cardin, DrPH, senior healthcare consultant with Frost & Sullivan. One of the challenges of coordinating care is aligning different electronic systems for sharing data. "It is very important for the industry to figure out standardized ways of communicating between disparate providers and sharing information in real time," says Ron Weinert, Walgreens' vice president of health systems services. He says Walgreens is working to standardize its own processes to share results from Take Care Clinics and receive data from providers.
Hospitals and health systems also benefit from greater coordinated care with retail clinics in patient referrals. "Having a relationship with a clinic means that if there is a medical need that cannot be treated at the retail clinic, there is an established relationship and referral pattern, which benefits the hospital, the clinic and the patient," Mr. Malloy says.
Medication compliance
As part of this enhanced coordination of care, retail clinics can increase patients' medication compliance. "One of the challenges hospitals have is effectively transitioning the patient back to the community," Mr. Weinert says. He says Walgreens is helping improve patients' compliance by establishing pharmacies in hospitals' lobbies, allowing easy access for patients. In addition, a recent agreement between Chicago-based Northwestern Memorial Physicians Group and Walgreens includes a program to educate patients about their disease and medication and to share patients' medication information between primary care providers and pharmacists. Improved medication compliance is beneficial not only for individual patients' health, but also for the healthcare system because it can reduce readmissions due to noncompliance.
Marketing
Hospitals and health systems may also partner with retail clinics to increase brand recognition. Being associated with well-known names like CVS and Walgreens and the retail clinic model can help hospitals "gain a reputation for treating the well, and not just the sick," Mr. Campobasso says. As part of a hospital's outreach to the community, retail clinics can thus help achieve one of healthcare reform's goals of improving the health of a population, according to Mr. Campobasso.
Cost
The rising cost of healthcare is another motivating factor for hospitals and health systems to partner with retail clinics. One way retail clinics save costs is by providing an alternative to an emergency room. "Enormous cost savings can be driven by diverting inappropriate ER utilization into the retail clinic environment," says Mr. Weissman. Reducing inappropriate emergency department use lowers the cost to patients because those with non-emergent cases can access the less expensive retail clinic. Dr. Cardin, who has researched these partnerships, says the average cost per visit is $50-$65. Lowering unnecessary ED use also reduces the cost to the system because it can reserve resources for patients who truly need them. Although in general an increase in patients drives revenue, an overtaxed emergency room may force hospitals to use costly resources, including staff time, on patients who are actually non-emergent but do not have access to another healthcare facility. Filtering non-emergent patients to retail clinics can thus also improve quality by allowing the hospital to more quickly serve patients who need emergency care.
Despite the potential for cost savings, in certain relationships hospitals and health systems must share the risk with retail clinics that patient volume will not make the venture profitable. Retail clinics require a low cost of capital per clinic to start up but have high fixed costs, according to Stephan Peron, a principal at VMG Health. Clinics need a certain level of patient volume — Mr. Peron estimates 15-20 patients per day — to break even and offset the fixed costs. Without this minimum volume, the partnered hospital or health system would need to provide ongoing financial support to the retail clinic to maintain its operation. Once retail clinics get patients in the door, however, the patients are likely to return. "Once the patients have been there once and they like the service and the cost is effective, it is highly likely that they will come back," says Mr. Peron. "The hard part is to get the volume up. Once it's up, it's very sustainable."
Retail-healthcare relationships
Although there is the potential for significant benefits from partnerships between retail clinics and healthcare organizations, many challenges remain, including the nature of the relationship between the two entities. "[Participating] health systems will have to enter into a new service model they haven't been in before and rely on the partner to ramp it up and run it," Mr. Peron says. "It's different than a health system partnering with, for example, a surgery center, because the hospital understands how surgeries are conducted and how to operate and work with physician networks to pull in volume. They typically do not have experience in the retail model that is driven directly by the patient versus the referring physician. They will have to rely on their partner, almost fully, to start it, run it and make it financially successful."
However, hospitals' potential lack of control of retail clinic operations is risky. If the retail clinic does not deliver on its promise of maintaining quality, improving patient access and providing cost savings to the patients, it could tarnish the longstanding reputation of the hospital, according to Mr. Peron.
Mr. Peterson says there may be a "melding of views" when retail clinics partner with hospitals. "The retail people are going to bring a retail mindset to the discussion, and the hospital people are going to bring a traditional healthcare provider viewpoint to the discussion. They're going to have to figure out how those two things go together."
Henry Ford Health Partners With CVS' MinuteClinic
Walgreens, Florida's Memorial Health Form Collaboration
There are a variety of potential benefits motivating partnerships between health systems and retail clinics, including greater access to care and lower costs. However, hospitals and health systems still face challenges, such as relying on a retail-based entity to deliver healthcare services. Experts discuss these pros and cons of hospital-retail clinic relationships and what factors healthcare leaders should consider when thinking about forming such a relationship.
Access
One of the biggest motivating factors for hospitals and health systems to partner with retail clinics is to increase patients' access to care. "Thirty-two million more Americans will be looking for healthcare under healthcare reform," says Fred Campobasso, managing director of consulting firm Navigant.
This influx of new patients will compound an already overburdened system. Some experts point to a shortage of physicians, while others say the true culprit is administrative demands on physicians' time. "Our belief is that we don't have as critical a shortage of primary care as many people seem to believe. The real problem is that we've got primary care doctors in their offices tied up doing things they don't need to do," says Howard J. Peterson, managing partner of the management consulting firm TRG Healthcare. Retail clinics could thus provide an additional resource for patients with only minor health issues, freeing up primary care providers' time for sicker patients.
Coordinated care
Retail clinics' partnerships with hospitals and health systems allows for greater coordinated care. "[This trend] is in large measure about defragmenting healthcare. Depending on the nature of the relationship, the partners can link medical records, use common clinical-quality protocols and coordinate plans for follow-up care, all of which are intended to produce better outcomes," says Marc Malloy, CEO of the Renaissance Medical Management Company. More coordinated care can improve the quality of care by providing services to patients in the right place at the right time. "In a more coordinated world, we're going to have an evolution of services and patient experience in terms of who [patients] are interacting with for the care they need," says Gabe Weissman, external communications manager for Take Care Health Systems.
Electronic medical records form the basis of how retail clinics and providers can exchange information to avoid duplication of services and to better care for patients. "Technology has become the enabler to be able to move healthcare outside of the medical setting," says Virginia Cardin, DrPH, senior healthcare consultant with Frost & Sullivan. One of the challenges of coordinating care is aligning different electronic systems for sharing data. "It is very important for the industry to figure out standardized ways of communicating between disparate providers and sharing information in real time," says Ron Weinert, Walgreens' vice president of health systems services. He says Walgreens is working to standardize its own processes to share results from Take Care Clinics and receive data from providers.
Hospitals and health systems also benefit from greater coordinated care with retail clinics in patient referrals. "Having a relationship with a clinic means that if there is a medical need that cannot be treated at the retail clinic, there is an established relationship and referral pattern, which benefits the hospital, the clinic and the patient," Mr. Malloy says.
Medication compliance
As part of this enhanced coordination of care, retail clinics can increase patients' medication compliance. "One of the challenges hospitals have is effectively transitioning the patient back to the community," Mr. Weinert says. He says Walgreens is helping improve patients' compliance by establishing pharmacies in hospitals' lobbies, allowing easy access for patients. In addition, a recent agreement between Chicago-based Northwestern Memorial Physicians Group and Walgreens includes a program to educate patients about their disease and medication and to share patients' medication information between primary care providers and pharmacists. Improved medication compliance is beneficial not only for individual patients' health, but also for the healthcare system because it can reduce readmissions due to noncompliance.
Marketing
Hospitals and health systems may also partner with retail clinics to increase brand recognition. Being associated with well-known names like CVS and Walgreens and the retail clinic model can help hospitals "gain a reputation for treating the well, and not just the sick," Mr. Campobasso says. As part of a hospital's outreach to the community, retail clinics can thus help achieve one of healthcare reform's goals of improving the health of a population, according to Mr. Campobasso.
Cost
The rising cost of healthcare is another motivating factor for hospitals and health systems to partner with retail clinics. One way retail clinics save costs is by providing an alternative to an emergency room. "Enormous cost savings can be driven by diverting inappropriate ER utilization into the retail clinic environment," says Mr. Weissman. Reducing inappropriate emergency department use lowers the cost to patients because those with non-emergent cases can access the less expensive retail clinic. Dr. Cardin, who has researched these partnerships, says the average cost per visit is $50-$65. Lowering unnecessary ED use also reduces the cost to the system because it can reserve resources for patients who truly need them. Although in general an increase in patients drives revenue, an overtaxed emergency room may force hospitals to use costly resources, including staff time, on patients who are actually non-emergent but do not have access to another healthcare facility. Filtering non-emergent patients to retail clinics can thus also improve quality by allowing the hospital to more quickly serve patients who need emergency care.
Despite the potential for cost savings, in certain relationships hospitals and health systems must share the risk with retail clinics that patient volume will not make the venture profitable. Retail clinics require a low cost of capital per clinic to start up but have high fixed costs, according to Stephan Peron, a principal at VMG Health. Clinics need a certain level of patient volume — Mr. Peron estimates 15-20 patients per day — to break even and offset the fixed costs. Without this minimum volume, the partnered hospital or health system would need to provide ongoing financial support to the retail clinic to maintain its operation. Once retail clinics get patients in the door, however, the patients are likely to return. "Once the patients have been there once and they like the service and the cost is effective, it is highly likely that they will come back," says Mr. Peron. "The hard part is to get the volume up. Once it's up, it's very sustainable."
Retail-healthcare relationships
Although there is the potential for significant benefits from partnerships between retail clinics and healthcare organizations, many challenges remain, including the nature of the relationship between the two entities. "[Participating] health systems will have to enter into a new service model they haven't been in before and rely on the partner to ramp it up and run it," Mr. Peron says. "It's different than a health system partnering with, for example, a surgery center, because the hospital understands how surgeries are conducted and how to operate and work with physician networks to pull in volume. They typically do not have experience in the retail model that is driven directly by the patient versus the referring physician. They will have to rely on their partner, almost fully, to start it, run it and make it financially successful."
However, hospitals' potential lack of control of retail clinic operations is risky. If the retail clinic does not deliver on its promise of maintaining quality, improving patient access and providing cost savings to the patients, it could tarnish the longstanding reputation of the hospital, according to Mr. Peron.
Mr. Peterson says there may be a "melding of views" when retail clinics partner with hospitals. "The retail people are going to bring a retail mindset to the discussion, and the hospital people are going to bring a traditional healthcare provider viewpoint to the discussion. They're going to have to figure out how those two things go together."
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