A few months ago, I found myself commenting on another website focused on healthcare-related news about the future growth potential for retail clinics versus urgent care centers. Actually, I was on the verge of a full-on debate with some other user, saved only by the grace of a site error. It is an ironic example of how technology can make humans more efficient — even if by mistake.
So in a way, I was kind of happy when I saw the report Marketdata Enterprises released in late September, “The market for retail health clinics and urgent care centers." It gave me a legitimate, work-related reason to revisit this issue.
First, it’s important to note that this isn’t really so much a debate — it’s not necessarily a matter of either retail clinics or urgent care centers. There are more than enough patients to go around — and, I’m not even just talking about the 32 million patients who currently don’t have insurance.
According to the Department of Health and Human Services, nearly 67 million people in the United States live in a primacy care shortage area. “And for Americans who do have a regular physician, only 57% report having access to same or next-day appointments and 63% [have] difficulty getting access to care on nights, weekends or holidays without going to the emergency room. … 20% of adults waited six days or more to see a doctor when they were sick in 2010,” Marketdata noted.
Certainly both models are capable of expanding access and improving cost, and in a relatively small percentage of instances, urgent care centers are the most appropriate site of care. But if the question is “which model has the greatest potential to significantly improve cost and access to care?” — it’s kind of a no-brainer.
While urgent care centers significantly outpace retail clinics today in both locations and annual revenues, you’d be fooling yourself to think that couldn’t and won’t change dramatically in the coming years. When CVS, Walgreens, Kroger, Target, Walmart and others decide to flip the switch and go full-bore on clinic expansion, these companies will be able to roll out new clinics at a much faster clip than urgent care operators. It will even force many urgent care centers to close.
Why? It’s a simple numbers game.
First, these retailers are already sitting on some of the best real estate in America — tens of thousands of stores, to which they can just add a clinic tomorrow. Even now, with retail clinics still in the very early stages, this advantage plays out pretty clearly in the current figures. The top three clinic operators — CVS/MinuteClinic (569), Walgreens/Take Care (360) and Walmart (150) — outnumber almost 2-to-1 the three leading urgent care chains Concentra (310), U.S. HealthWorks (135) and MedExpress (77).
Right now, according to the Marketdata study, the average cost to open a retail clinic is about $20,000 to $100,000 for the host retailer to make the existing space ready, and about $25,000 to $145,000 for the clinic operator to construct the actual clinic, depending on the number of exam rooms. By contrast, it costs anywhere from $750,000 to $1 million to open an urgent care center.
Then factor in the additional labor costs. Retail clinics require physician oversight, but that doesn’t mean you need to have a doctor on-site. In two-thirds of all urgent care centers there is at least one physician on-site at all times. According to the American Academy of Urgent Care Medicine, in 2006 the average urgent care physician made anywhere from $155,000 to $208,000 a year. The average nurse practitioner working in a retail clinic makes about $90,000 a year.
It’s a numbers game. In the end, it’s going to be a lot more cost- effective for retail clinics to provide all this extra care America is going to need to make healthcare reform work — regardless of what shape it takes or what you call it.
Rob Eder is the editor in chief of The Drug Store News Group, publishers of Drug Store News, DSN Collaborative Care, and Specialty Pharmacy magazines. You can contact him at firstname.lastname@example.org.