Although we’ve seen a significant slowing of retail clinic growth over the past five months, that doesn’t mean growth has stopped.  We will continue to see net growth in the number of clinics across the country and that growth will come from two primary sources:  the major operators, especially TakeCare, MinuteClinic, RediClinic and The Little Clinic; as well as from hospital systems who are entering the retail clinic business.

And when you look at new entrants into the retail clinic business by ownership type, i.e. retailers, private investors and hospital systems, it is the hospital systems that represent the greatest source of new entrants.
Hospital systems getting into this business is not a new phenomenon.  Aurora in Milwaukee was the first hospital system to get into the business back in late 2004 and early 2005.  Others soon followed, including Geisinger (central PA); Mercy (DesMoines); Alegent (Omaha) and Sutter (Sacramento).  There are now 103 retail clinics operated by hospital systems.  This does not include hospital systems that are working with major operators to provide collaborative physicians and/or referral arrangements.

The majority of hospital-based operators are just that: operators.  Usually in partnership with their physician group(s), they sign a lease agreement with a local retailer and open a clinic under the hospital system name.  But we are seeing the development of a new model that could be the beginning of local hospital systems becoming national players.

Bellin Health System, based in Green Bay, WI, is the best example we’ve seen of this new model.  And Bellin is moving quickly to establish itself as the market leader.  The model involves two pieces:  operating clinics directly and helping other hospital systems through a licensing/consulting arrangement.

A little over two years ago, Bellin, like many health systems, had many important initiatives on its plate.  Retail clinics was one of them.  But when Wal-Mart started talking about opening clinics in the Green Bay market, things moved into high gear.

“We didn’t want to see the disruption or disintegration of our primary care system,” says Ken Berndt, Director of Business Development at Bellin.  “We also didn’t like the idea of not knowing what was happening to our patients if they went to one of these clinics.  So we moved ahead and opened two clinics right away under the Bellin FastCare brand.”

Today Bellin directly operates five FastCare clinics in Eastern Wisconsin.  But unlike other hospital-based operators, Bellin didn’t stop there.

“Since we’re hospital system based, we wanted to help out other hospital systems,” says Berndt.  “We see ourselves helping to neutralize the threat from non-hospital systems opening retail clinics.  We also look for hospital systems who agree that the retail clinic should be integrated into their system of primary care medicine.”

In addition to the clinics Bellin operates directly, the system has now helped eleven other hospital systems get started.  The chart on page one shows where Bellin operates its own clinics and where it is helping other health systems.

Bellin provides three major elements to other health systems: a brand (FastCare); a retail platform (Shopko); and a business model template.

The Brand
It may not sound like much, but finding a suitable brand for retail clinics is nearly impossible.  Just about every conceivable retail clinic brand concoction has been legally acquired over the past five years of the retail clinic rush.  So for an organization to come to provide a brand that needs no legal research, that’s a major headache removed.

The Retail Platform
Bellin has an exclusive arrangement with Shopko, a mass merchant that operates 133 stores in 13 states, predominantly in the Midwest and Northwest regions of the country.  Shopko is headquartered in Green Bay, WI; same city as Bellin’s headquarters.  And it is privately held by Sun Capital Partners.  The company operates its stores in predominantly middle-market cities like Aberdeen-SD, Austin-MN, Ogden-UT, or Billings-MT.  Pharmacy and healthcare is one of the company’s fastest growing segments.
“Shopko has a company personality much like our own,” says Berndt.  “We both want the same things for our customers and patients.”

One symbol of the cooperation is signage.  Very few retail clinic operators are able to get exterior signage for their clinics.  But Shopko makes every effort to make sure passersby know there is a retail clinic inside.
“We’ve seen a lot of retailers take a passive role in their retail clinic programs,” says Mike Bettiga, Shopko executive vice president of health services. “I think many of the operators that went out of business can attribute some of the failure to their retail partners.  We know we have a stake in this, so we’re doing everything we can to help FastCare operators succeed.”

Bellin essentially has done the negotiations for space and rent, something many retail clinic operators complain takes more time than it should.   “It’s been an excellent fit,” says Berndt.  “We expect that by early November we’ll have 22 Fast Care locations, located in four states.  We are also negotiating clinics in Idaho, Ohio, Iowa, and Nebraska so we could have 30 clinics by Christmas.”

There may be another benefit to the partnership: the big operators of retail clinics until now have bypassed the middle- and small-market cities where Shopko has its stores.  Of the 828 clinics run by the four largest companies (MinuteClinic, TakeCare, The Little Clinic and RediClinic), only 39 are located in markets outside of the top 50 metropolitan statistical areas.  More specifically, of the 117 Shopko markets, there are only five clinics run by any of the top four operators.

All five are TakeCare clinics inside Walgreens stores in Madison, Appleton, and Green Bay, WI.  Bellin and its hospital system partners are essentially neutralizing their territory before the competition shows up.  Sometimes that means the competition won’t show up.

Basics of the Model
The clinic build out is consistent across all stores.  From the day discussions begin until the day the clinic opens, Bellin handles everything: architecture, rough-in, millwork, furniture, supplies, and marketing.  All clinics have the same look and feel, including a dedicated bathroom and a waiting room.  Although stores are not exactly the same, most clinics are in the front of the store to gain maximum visibility, usually next to the pharmacy.

Included with the service is a complete marketing handbook so operators can hit the ground running.  The marketing handbook even contains a TV commercial that can be easily adapted with the health system logo and locations.  In just over two years Bellin’s own primary care patient panel is up 4.5% a year.  One thing they didn’t anticipate is how many people don’t have a medical home.

“It’s 30 percent of our visits,” says Berndt.  “So we make sure people understand that they can’t keep living that way.  Without a medical home, there is no early intervention, therefore the chance of the severity increases.  So we’re fixing the medical home problem and increasing our patient visits at the same time.”

The second thing they didn’t anticipate is that about 20 percent of their visits are from competitive hospital systems or medical groups.

“These are patients who’ve decided not to tolerate long waits and poor customer service,” says Berndt.  “So we’re ending up with new patient relationships.”

One of the major concerns about many hospital systems exploring retail clinics is their own ability to quickly implement a retail model. 

“Something we recognized early on was that, as hospital systems, we have limits,” says Berndt.   “We move slowly.  When we go to build something new, even if it’s supposed to be small, it ends up being very hospital like.  Building a 500 square foot clinic is very hard for hospital systems to conceive.  So, having gone through this ourselves, we knew we could bring some knowledge and speed to the table.”

The telemedicine industry is 20 years old.  So why are we hearing so much about telemedicine today if the industry has been around for so long?

Delight, enchantment, service excellence. That’s what companies like American Express, Target and Apple call it. The big question is whether any of that customer service sophistication is showing up in the walk-in medicine industry.

There is new-found energy in the worksite clinic business. Everyone wants in, from the largest health systems to the smallest insurance broker.

As we look ahead to 2013, all indications are that the urgent care market will continue to gain steam, while retail clinics will see only modest growth.

If you have been in the camp that thinks retail clinics won’t last, it’s time to take another look at the landscape. We believe the retail clinic concept is about to enter a period of strong growth, driven by the model’s underlying efficiency at a time when services will seek the most logical care venue based on acuity. In this feature article, we discuss our “Top Five” reasons for optimism in the retail clinic channel.

It seems like a natural fit to have a hospital system operating a network of urgent care centers, especially at a time when population management and accountable care organizations seem to be ruling strategic plans going forward.  Yet with all of this momentum around population management, integration with primary care and efforts to reduce emergency room visits, the number of hospitals operating urgent care centers is surprisingly low.  In this article we look at some hospital systems have have had great success with their urgent care initiatives.