Retail clinics—the skinny for entrepreneurs

A recent article in the New England Journal of Medicine (NEJM) set out to define the evolving role of retail clinics in the U.S. healthcare ecosystem. The authors provided a brief history and overview, reviewed the data analyzing these clinics, and pointed to key policy considerations for the future. The defining characteristics of retail clinics include:

1. Offer medical care for specific illnesses
2. Easily accessible locations and transparent pricing
3. Often staffed by advanced practice registered nurses (APRNs) and physician assistants (PAs)
4. Largely owned by large retailers

Nearly one in every three health care dollars is spent on ambulatory care. Currently, ambulatory care is delivered in settings like  doctors’ offices and urgent care clinics. This may be changing. Retail clinics promise convenient care and are capable of taking a chunk of the ambulatory health care dollars.

The top three companies (CVS, Walgreens, and Kroger) control over 85% of the retail clinic market. These industry giants have brand recognition and infrastructure—they can simply incorporate a retail clinic into an existing store. Moreover, the prospect of growth is robust, as these four corporations have implemented clinics in only 8% of their stores.

Despite the strengths of this model, retail clinics have a limited scope of practice. The non-physician staff of these clinics conduct algorithmic diagnosis (a step-by-step process with strict guidelines for diagnosis) and thus can only identify and treat specific conditions. With to bring Watson and predictive analytics into clinics, scope of practice could potentially expand. If retail clinics are able to scale, they offer digital health entrepreneurs a massive distribution channel to consumers.   

• Treating well-defined, specific conditions, lower fixed costs, and a less expensive staffing model yields cost savings on a per episode basis.
• Total cost of care (not just per episode) is >reduced.

• Retail clinics deliver care (for minor, acute conditions) that is equivalent, if not superior to the quality of other ambulatory care sites.
• 90% of retail-clinic users report satisfaction with retail clinic care.
• Careful evaluation will be necessary if retailers expand scope to complex indications and patients

Access

• Majority of retail clinic visits occur after hours—when a normal doctor’s office would not be open and higher intensity care (e.g. emergency department) would likely incur greater cost.

• 61% of retail clinic visits involve patients without a primary care provider – 3x the national rate. Retail clinics offer an alternative source of care and a pathway to higher levels of care to patients who prefer to avoid a primary care provider.

• Largely located in relatively affluent areas and cater to patients with private insurance.

The medical establishment has not taken kindly to the advent of retail clinics, particularly towards clinics which forego physician supervision, citing uncertainty about quality of patient care and disruption of the doctor-patient relationship. Their concerns should be carefully weighed. The evidence supporting retail clinics is still growing and patient-protection mechanisms continue to coalesce (only 3 states have adopted legislation specific to retail clinics).

As a physician-in-training, I understand why my future profession feels threatened by the new kid on the healthcare block. However, organized medicine’s intransigence is ill-conceived. These bodies should step out from behind the shield of the doctor-patient relationship and find evidence to thoroughly evaluate retail clinics. Instead of barring new modes of care delivery, organized medicine should lead the design of systems in which the unique strengths of retail clinics, doctor’s offices, and hospitals are complementary.

I strongly suspect that the momentum towards retail clinics will continue, given their ability to address two of healthcare’s biggest challenges: cost and access. Today, retail clinics cannot match traditional care settings with regard to the depth and breadth of medical care offered. It is this reality that presents a significant opportunity for digital health entrepreneurs—identifying spaces in which these clinics fall short and developing solutions that expand retail clinic capabilities.