Re­tail clin­ics at tip­ping point

Pharmacies, chains an­swer­ing de­mand for ac­cess and af­ford­abil­ity

Modern Healthcare - - COVER STORY - Andis Robeznieks

Be­fore the H1N1 pan­demic of 2009, al­most no phar­ma­cists ad­min­is­tered flu vac­cines. But last year, phar­ma­cists work­ing for Deer­field, Ill.-based Wal­green Co. ad­min­is­tered 5.5 mil­lion flu shots among the 9 mil­lion vac­cines they de­liv­ered.

Dr. Jef­frey Kang, Wal­green’s se­nior vice pres­i­dent of health and well­ness ser­vices and chief ar­chi­tect of the firm’s re­tail ex­pan­sion, said chain stores are ide­ally sit­u­ated for pro­vid­ing pri­mary-care ser­vices such as flu shots. “If you had a blank sheet and your goal is to get ev­ery­one im­mu­nized, what kind of sys­tem would you de­sign? One that is easy to get to, open 365 days a year with lo­ca­tions on al­most ev­ery cor­ner in the coun­try,” said the for­mer chief med­i­cal of­fi­cer at the CMS’ pre­de­ces­sor agency. “That’s es­sen­tially what re­tail pharmacies are. When cor­po­ra­tions see an op­por­tu­nity and an un­met con­sumer need, we can move fast.”

They clearly are mov­ing fast and they are not alone. The in­dus­try’s Con­ve­nient Care As­so­ci­a­tion es­ti­mates na­tion­wide there are now more than 1,400 health clin­ics in­side re­tail chain stores, dou­ble the num­ber from six years ago. In­dus­try leader CVS Care­mark Corp. now op­er­ates 650 Min­uteClin­ics in 25 states and Wash­ing­ton, D.C., and plans to open 150 new clin­ics in the com­ing year on its way to hav­ing 1,500 in 35 states by 2017. Wal­green, the sec­ond-largest player, is plan­ning dou­ble-digit growth in 2013 as it ex­pands its Take Care clinic ros­ter of 372 stores.

Ma­jor retailers such as Tar­get also are ex­pand­ing their ef­forts, some by forg­ing al­liances with lo­cal health sys­tems. And even some providers are get­ting in the game by open­ing mall-based re­tail out­lets to cap­ture the bur­geon­ing de­mand for in­stant health­care.

A num­ber of fac­tors are driv­ing the ex­plo­sion in con­ve­nient care, which ap­pears to be reach­ing a tip­ping point in its drive to play a ma­jor role in the de­liv­ery of pri­mary care. In­sur­ers, which were skep­ti­cal when the first in-store clin­ics opened more than a decade ago, are now will­ing pay­ers for the low-cost al­ter­na­tive for rou­tine health­care events such as vac­cines and fam­ily phys­i­cals.

More con­sumers are also look­ing for cheap al­ter­na­tives as they are forced by em­ploy­ers into high-de­ductible plans, which make them re­spon­si­ble for first-dol­lar cov­er­age. The move makes them much more cost-con­scious when it comes to buy­ing health­care ser­vices.

The Pa­tient Pro­tec­tion and Af­ford­able Care Act is also driv­ing the ex­pan­sion plans by ma­jor retailers. Most of the peo­ple who will be ob­tain­ing in­sur­ance cov­er­age for the first time next year will come from low- and mod­er­atein­come fam­i­lies. Never hav­ing had a pri­ma­rycare physi­cian, many may pre­fer the con­ve­nience of get­ting rou­tine med­i­cal care from pro­fes­sion­als at lo­cal pharmacies and shop­ping malls.

When you add pay­ment re­form and physi­cian short­ages to the mix, an en­vi­ron­ment is be­ing cre­ated where re­tail chains can swiftly step in to of­fer an al­ter­na­tive to slow-mov­ing health­care sys­tems. The re­tail chains of­fer a low-cost al­ter­na­tive to tra­di­tional of­fice-based medicine be­cause many of the ser­vices are be­ing de­liv­ered by li­censed phar­ma­cists or nurse prac­ti­tion­ers.

“It’s a ball the med­i­cal pro­fes­sion dropped, and I don’t think they’ll get their ball back,” said Uwe Rein­hardt, a Prince­ton Univer­sity econ­o­mist. “Reg­u­lar physi­cians were not re­spon­sive enough.”

While it is still a small fac­tor in the over­all de­liv­ery of pri­mary care, physi­cian groups in the rel­a­tively low-pay­ing field are re­act­ing as if it were a ma­jor threat, es­pe­cially now that some re­tail clinic op­er­a­tors are mov­ing into pro­vid­ing dis­ease-man­age­ment ser­vices for pa­tients with di­a­betes and hy­per­ten­sion. Since 2006, the Amer­i­can Acad­emy of Fam­ily Physi­cians has in­cluded in its “de­sired at­tributes” for re­tail clin­ics lim­its on the scope of ser­vices they can of­fer and a re­quire­ment that the clin­ics use elec­tronic health records to com­mu­ni­cate with pa­tients’ pri­mary-care physi­cians.

Dr. Sam Un­ter­richt, pres­i­dent of the Med­i­cal So­ci­ety of the State of New York, ac­knowl­edged that there are fi­nan­cial con­sid­er­a­tions driv­ing his group’s con­cerns, but that’s not its ma­jor mo­ti­va­tion. Re­tail clin­ics will cre­ate a two-tiered health­care sys­tem where some pa­tients are seen by physi­cians and some by nurse prac­ti­tion­ers, he said.

There also is an in­her­ent con­flict of in­ter­est be­cause nurse prac­ti­tion­ers will feel pres­sure to write pre­scrip­tions that will be filled in­house or to rec­om­mend over-the-counter reme­dies sold in the store, he said. “The so­ci­ety, and physi­cians in gen­eral, think the re­tail clin­ics are a threat to the qual­ity of care and a threat to physi­cians fi­nan­cially.”

The con­ve­nience of one-stop shop­ping for the typ­i­cal non-emer­gency health­care en­counter, which usu­ally in­volves first a visit to the doc­tor and then a visit to the drug­store, is clearly one of the ma­jor ap­peals of re­tail clin­ics. More­over, pa­tients al­ready have trou­ble find­ing pri­mary-care physi­cians, a sit­u­a­tion that will get only worse as the Pa­tient Pro­tec­tion and Af­ford­able Care Act ex­pands cov­er­age for about 30 mil­lion peo­ple dur­ing the next decade.

Mas­sachusetts is the model for what can hap­pen when the lev­els of unin­sured drop to be­low 5%. Woonsocket, R.I-based CVS has opened 37 ad­di­tional Min­uteClin­ics there in the past two years. In stat­ing its case for the ex­pan­sion, it cites a Mas­sachusetts Med­i­cal So­ci­ety study show­ing that the typ­i­cal wait to see a fam­ily physi­cian had grown from 29 days in 2010 to 45 days in 2012 as the suc­cess of its re­form law ex­panded cov­er­age.

In­sur­ers, once re­luc­tant, are now em­brac­ing the con­ve­nient-care strat­egy. Dur­ing a May 1 first-quar­ter earn­ings call, Larry Merlo, CVS Care­mark’s CEO, noted how “in the early days,” only about 20% of Min­uteClinic vis­its were cov­ered by in­sur­ance. That num­ber is now ap­proach­ing 90%. The em­brace comes in part be­cause the drug chain has forged part­ner­ships with 26 lo­cal health sys­tems. Rev­enue for the first quar­ter was 50% greater than the first quar­ter of 2012, “bol­stered by the very strong flu sea­son,” he told an­a­lysts.

Wal­green is ag­gres­sively mov­ing to of­fer more ser­vices in its Take Care clin­ics. It re­cently be­gan of­fer­ing as­sess­ment, treat­ment and man­age­ment of asthma, di­a­betes, hy­per­ten­sion and other chronic con­di­tions. While Take Care is still in­volved with only six health sys­tems, it has also joined three ac­count­able care or­ga­ni­za­tions, what many see as the health­care de­liv­ery sys­tem of the fu­ture. “I think the big shift that I see in the land­scape is from one that has his­tor­i­cally been a pay-foruse model to one that is re­ally start­ing to cen­ter around out­comes in health­care,” Wade Miquelon, Wal­green’s chief fi­nan­cial of­fi­cer, said last week dur­ing an in­vestor con­fer­ence in New York.

With ACOs and pay­ment for out­comes, Wal­green will ben­e­fit from gain shar­ing when it helps keep peo­ple healthy and low­ers health­care costs. “That’s a huge shift, and what (pay­ing health sys­tems for out­comes) gives rise to is for play­ers like Wal­greens to par­tic­i­pate with them, help them bend the cost curve so they can make more money and we can play more broadly,” Miquelon said. “Th­ese things are very dis­rup­tive be­cause we can pro­vide, in many ar­eas, the same or bet­ter care more con­ve­niently and cheaper than the cur­rent al­ter­na­tive. And, what’s re­ally chang­ing is that—in the past— no­body cared about that as much be­cause ev­ery­one was be­ing paid per use.”

Clearly that’s worked in vac­ci­na­tions, once a main­stay busi­ness of pri­mary-care physi-

cians. Wal­green now has 26,000 phar­ma­cists cre­den­tialed to ad­min­is­ter shots. “It doesn’t mean we’re go­ing to be do­ing brain surgery— we’re not, but there’s lot of things in pri­mary care and preven­tive medicine that we, I think, have the right to win,” Miquelon said.

He pre­dicted phar­ma­cists would be­gin writ­ing pre­scrip­tions for cer­tain cat­e­gories of drugs. “I like to say what we’re try­ing to do is trans­form the role of the com­mu­nity pharmacies, not nec­es­sar­ily just the role of the phar­ma­cists.”

Its most sig­nif­i­cant move yet is its pi­o­neer­ing ef­forts in mov­ing re­tail clin­ics into the ACO space. Wal­green has part­nered with Largo, Fla.-based Di­ag­nos­tic Clinic; Marl­ton, N.J.based Ad­vocare; and Tem­ple, Texas-based Scott & White Health­care to form ACOs.

Scott & White’s Dr. W. Roy Smythe, who is their med­i­cal in­no­va­tion di­rec­tor, said form­ing an ACO was Kang’s idea. “I knew what they were do­ing, but I had no idea that their plan was so au­da­cious,” the tho­racic sur­geon said. The Scott & White Health­care Wal­greens Well Net­work was one of 106 ACOs cho­sen to par­tic­i­pate in the Medi­care ACO shared-sav­ings pro­gram this past Jan­uary.

Health sys­tems that are forg­ing part­ner­ships with re­tail chains such as Wal­green and CVS Care­mark see an­other ad­van­tage in the linkups: ac­cess to cap­i­tal. “All th­ese changes we’re talk­ing about, none of them are free,” Smythe said. “They have the re­sources to make in­vest­ments in tech­nol­ogy and sys­tems that are hard for health sys­tems to make. They bring re­sources to the ta­ble that, frankly, we need.” Wal­green’s 8,100 stores racked up sales of $18.7 bil­lion in the sec­ond quar­ter.

Physi­cian crit­ics of store­front medicine worry that it’s re­ally fi­nan­cial pres­sure, not a de­sire to de­liver bet­ter care, that is driv­ing retailers’ push into their field. Dr. Jaan Si­dorov, a pri­mary-care physi­cian and in­de­pen­dent health­care con­sul­tant, wrote a post in the “Dis­ease Man­age­ment Care Blog” that said the pub­licly traded com­pa­nies are look­ing to aid their bot­tom lines by hav­ing salaried nurse prac­ti­tion­ers push­ing more pre­scrip­tions to off­set its nar­row­ing mar­gins as more drugs go generic. “Ul­ti­mately, I think Wal­greens is all about sell­ing drugs,” Si­dorov said in an in­ter­view with Mod­ern Health­care. “Wal­greens, CVS and the other re­tail drug­stores are per­ilously close to the bad karma that big pharma has.”

Wal­green is ac­tively mov­ing to dis­pel those sus­pi­cions. In ad­di­tion to de­vel­op­ing ACOs, the firm has de­vel­oped “cen­ters of ex­cel­lence” that have im­proved pa­tient com­pli­ance with med­i­ca­tion reg­i­mens. That should im­prove pa­tient out­comes, re­duce hos­pi­tal ad­mis­sions, read­mis­sions and emer­gency depart­ment vis­its, and—yes—sell more pre­scrip­tions in the process. “It’s a win-win-win sce­nario,” Kang said. “Pa­tient out­comes are bet­ter, we’re get­ting more pre­scrip­tions and, from a payer per­spec­tive, their to­tal cost of care is lower.”

The po­ten­tial of re­tail clin­ics to play a cen­tral role in co­or­di­nated care has led some health­care an­a­lysts to pre­dict retailers will play a much big­ger role in pri­mary care.

“They per­ceived a mar­ket need that the reg­u­lar health­care sys­tem has, for decades, re­fused to fill,” said Prince­ton’s Rein­hardt, who serves on the boards of sev­eral health­care-re­lated com­pa­nies. “It was a niche that needed to be filled, and they filled it.”

But retailers have to be care­ful as they move deeper into pri­mary care. “Part of the dan­ger they have is, if they get sued, they have deep pock­ets,” Rein­hardt said. Qual­ity con­trol will be a must. A drug­store chain that has a sin­gle store bun­gle its de­liv­ery sys­tem role could see the same rip­ple ef­fect as a restau­rant chain where bad meat in one state af­fects sales all over the coun­try.

On the con­sumer side, changes in the in­sur­ance mar­ket are a ma­jor rea­son peo­ple are look­ing for care at in-store clin­ics. Dr. Kevin Ron­neberg, as­so­ciate med­i­cal di­rec­tor of Min­neapo­lis-based Tar­get Corp., said the growth of high-de­ductible plans, which makes peo­ple re­spon­si­ble for the “first dol­lar” of their own care, is di­rect­ing more con­sumers to its re­tail clin­ics. The com­pany, bet­ter known for its low-cost but fash­ion­able cloth­ing lines, plans to open 15 clin­ics this year to bring its to­tal to 69.

The com­pany’s clinic growth is “me­thod­i­cal,” Ron­neberg said, be­cause it takes time to learn lessons from each new in­stal­la­tion. For ex­am­ple, new stores now have op­tom­e­try, phar­macy and clin­ics ad­ja­cent to each other and across the aisle from store shelves hold­ing over-the-counter reme­dies. One thing that has sep­a­rated Tar­get from the pack is not sell­ing cig­a­rettes un­der the same roof that health­care ser­vices are pro­vided. It dis­con­tin­ued sell­ing to­bacco in 1996.

While Tar­get has been slowly grow­ing, clin­ics in­side Wal-Marts have been clos­ing. It now leases space to 125 clin­ics as­so­ci­ated with area health sys­tems, which op­er­ate re­tail clin­ics in­side its stores. A spokes­woman said Wal­Mart is “com­mit­ted to pro­vid­ing all of our cus­tomers with qual­ity and af­ford­able health­care so­lu­tions—ev­ery­thing from clin­ics to $4 pre­scrip­tions.”

David Tay­lor, vice pres­i­dent of re­gional ser­vices for Spring­field, Mo.-based Cox Health, said it runs five fa­cil­i­ties in­side area Wal­Mart stores, which are known as “The Clinic at Wal­mart op­er­ated by CoxHealth.” It would like to open more, he said, but Wal-Mart hasn’t been re­spon­sive to the idea. CoxHealth could pur­sue other re­tail chains or open some re­tail clin­ics on its own be­cause its deal with Wal­Mart doesn’t call for an ex­clu­sive re­la­tion­ship, Tay­lor said.

A grow­ing num­ber of health sys­tems see ex­pand­ing their strip mall and re­tail-chain pres­ence as part of their over­all health­care de­liv­ery model. Columbia, Md.-based Med­Star Health re­cently opened an ur­gent-care cen­ter in a strip mall in Wheaton, Md., un­der its “Promp­tCare” ban­ner. An­other will open soon in Gaithersburg, Md., in a ren­o­vated restau­rant build­ing.

“This is re­ally a re­tail arm of health­care,” said Bob Gil­bert, Med­Star’s pres­i­dent of am­bu­la­tory ser­vices. “Where do you put re­tail health­care? Where re­tail is.”

TAKE­AWAY: Pa­tients are look­ing for con­ve­nience and re­tail pharmacies are pro­vid­ing it—while help­ing sys­tems im­prove out­comes.

Wal­green has more than 26,000 phar­ma­cists who ad­min­is­tered 7 mil­lion flu vac­cines since Septem­ber—up from 5.5 mil­lion the year be­fore.

CoxHealth op­er­ates five in-store clin­ics such as this one in Spring­field, Mo., in space it rents from Wal-Mart.

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