On this edition of Just Checking In, industry expert Alan Ayers discusses retail clinics effect on urgent care centers.
Good afternoon this is Alan Ayers, just checking in from the Las Vegas strip, standing in front of Caesar’s Palace, which is currently hosting the 2016 Emergency Medicine Practice Management Convention. The topic I am going to be talking to you about today is the retail healthcare clinics, specifically those located in CVS and Walgreens stores.
CVS has about 1,000 locations. CVS was early to the game. CVS really kind of chose a hospital affiliation model early on. Around the country 28 hospital systems have partnered with CVS, including some platinum names like The Cleveland Clinic and Ohio Health, and primarily to provide supervision for nurse practitioners working in the CVS stores. But from the hospitals perspective it also increases the hospital’s brand attachment; provides point of access in the community; and from CVS perspective is provides co-branding, which lends the hospital’s brand halo to the clinical operation there in the drug store.
Walgreens has been a little less aggressive, was a little later to the game, has about 400 clinic locations primarily going on their own—until recently it was announced that Walgreens was selling it’s 56 retail locations in the Chicago area to Advocate which is a Catholic health system, as well as selling about 25 locations in Seattle to Providence, which is another Catholic health system. Recent news reports regarding the Walgreens and Advocate deal really indicated that this is really a land grab by a hospital system in a highly competitive market. In other words, a way for Advocate to expand their footprint in the community (is) by partnering with a recognized name like Walgreens that has fairly high foot traffic through their stores.
The genesis by these retail health clinics many believe was to push retail drugs. The idea was that patients would come to the center; see the nurse practitioner who would write a script and then the drug store would make money from selling the script. In actuality the business case really has little to do with the pharmacy. It actually is driven by over the counter. So if you think about it, the patient comes in; has sinusitis; they may need an antibiotic however they are going to pay for that antibiotic with their insurance which is going to be minimal co-pay and odds are the antibiotic is going to be a generic. Some major retail chains give away generics for free. Some have 30 day supplies for $10, others have generics for $4. So the generic prescription drug isn’t how the drug store makes money. Really the drug store makes its money by over the counter. So comparing the generic, which may be a $10 co-pay on a prescription plan to say a $20 bottle of Robatussin. The drug store is making far more margin on over the counter. So if you look at who has sponsored the convenient care industry and who has really been a major proponent of these clinics, it has been the over the counter industry. Companies like Tylenol, Robotussin, promoting their products to nurse practitioners. So in addition to writing a script the nurse practitioner will recommend certain OTC products that are in the drug store. More importantly if you look at these drug stores in the United States, drug stores are essentially convenience stores. So a bigger business case for retail clinics is that they drive foot traffic into the store. So a patient comes in with their sinusitis, while they are waiting they buy panty hose, they buy candy, they buy beer, they buy cigarettes, they buy a newspaper that’s really how the drug store makes money and much of the business case is just driving traffic through the store. The more people you get in a Walgreens or CVS store on a day to day basis, and the longer those customers stay in the store the more “front of house” type items that they are likely to purchase. Consumer behavior using these clinics, adoption has been relatively slow. Although CVS now claims that their clinics are treating 18-20 million patients a year in its 1,000 retail clinics. So we are seeing an uptick in consumer adoption. I know that there was concern when these clinics launched that they would be competitive to urgent care. To the extent that they treat a lot of the low acuity upper repertory infections, Otitis Media, Allergic Rhinitis low touch conditions that are commonly seen in urgent care they can certainly be a competitive threat. And if you look at it from a consumer perspective, let’s say you have an upper respiratory infection, or sinusitis, having the option of paying $150 if you are on a high deductible plan to go to urgent care to see a PA or to pay $75 to see a nurse practitioner in Walgreens, there seems to be a stronger business case in some instances to actually use the NP or PA in the retail clinic. However we have not really seen that retail clinics have made a significant dent in the urgent care business. And if anything rather than viewing retail clinics as competitors I would really view them as a source of referrals.
So if you think about a retail clinic, they are very limited in what they can do. First off, they are limited by the nurse practitioner or physician assistant’s scope of practice. Second, they are very protocol-driven so only minor conditions, things that they list on a menu board are things that they can treat and it’s highly process-driven how the nurses go about diagnosing and treating those conditions and then they are also limited by space and equipment. Minute clinics in CVS are typically a 10x10 room, they don’t have an exam table, it is just a chair. They do have a refrigerator for minor vaccinations, they don’t have a restroom for any kind of drug testing, and they don’t have a lab. Walgreens clinics are a little bit larger but still very limited in the scope. Not only the scope of the nurse practitioner but the constraints of the physical facility and the supplies that they have on board. So that means every day there are hundreds of patients that are showing up a retail clinics who cannot be treated who must be referred elsewhere. The American Academy of Family Practice requires that retail clinics have a referral source that they have relationships to refer patients to healthcare resources in the community. At CVS they would say that’s the role of their 28 hospital partners.
I do know urgent care centers who say they get 8-10 retail clinic referrals a week. But how they do it is this: It actually goes to creating a relationship with the nurse practitioner working in the retail clinic. So if you were to call CVS corporate and say I have an urgent care center down the street from your Minute Clinic and I would like to take referrals, patients that need a procedure, patients that maybe need lab work, patients that need an x-ray, things that clearly cannot be treated in the retail environment. The response you would get from the CVS bureaucracy would be “That’s the role of our 28 hospital partners we have that taken care of through the hospital partnerships that we form.” But my experience is that the nurse practitioners who work in these retail clinics take a lot of personal pride in the service and care that they offer their patients and they want to do the best thing for those patients. So where I have seen referral relations be successfully created is where the urgent care practitioner actually goes to the clinic meets the nurse practitioner, personally introduces the services of the clinic and so when a patient comes in to Walgreens or CVS that can’t be treated that nurse practitioner on his or her own will say, “Well, we really can’t treat you for that here but there’s an urgent care center around the corner, there’s an urgent care center at such and such intersection who can care for your needs.” Key is developing that 1-on-1 relationship and maintaining it over time. So like any relationship it must be cultivated in order to grow and to prosper and so I have seen instances where an urgent care will reach out to a retail clinic, turn the spigot on the nurse practitioner is sending 8-10 referrals a week. Well over time that volume kind of falls off because the urgent care center did nothing to cultivate the relationship. If you can develop a relationship with an NP or PA working in a retail clinic that’s something that over time you want to follow up you want to maintain so that the NP or PA has assurance that the patients that they are referring to your urgent care center are having a good experience.
So that’s it for today. Again, this is Alan Ayers I am just checking in here at the Las Vegas strip talking about retail clinics. In these episodes we would like to discuss whatever is important to you if you have questions or comments please contact us here at Practice Velocity at the address that you see on your screen. Thanks again and looking forward to Checking In again on the next episode.