May 14, 2006
Attention Shoppers: Low Prices on Shots in the Clinic Off Aisle 7
By MILT FREUDENHEIM
Everyday low prices on strep-throat exams.
That is the basic idea behind a retail approach to routine medical care now catching on among consumers and entrepreneurs. At Wal-Mart, CVS and other chain stores, walk-in health clinics are springing up as an antidote to the expense and inconvenience of full-service doctors' offices or the high-cost and impersonal last resort of emergency rooms.
For a $30 flu shot, a $45 treatment for an ear infection or other routine services from a posted price list, patients can visit nurse practitioners in independently operated clinics set up within the stores — whose own pharmacies can fill prescriptions.
"It was a lot easier to know you can just drive up the block to a clinic, rather than spend time in the pediatrician's waiting room," said Liz Lyons, who recently took her 9-year-old son to have a sore throat swabbed in a clinic at a CVS drugstore in Bethesda, Md.
She made a $10 co-payment, with her husband's insurance picking up the rest of the $59 tab.
About 100 of these clinics, which typically lease space from the host stores, are now operating around the nation. Hundreds more are in the works, bankrolled by a range of competing entrepreneurs who include Stephen M. Case, the former AOL chairman; Richard L. Scott, who once ran the nation's largest hospital chain; and Michael Howe, a former chief executive of the Arby's restaurants group.
Despite their diverse backgrounds, those executives and others share a concept of "consumer-directed health care" — a marketing and political term that usually means higher out-of-pocket medical costs — as a mass-market opportunity. Even some family physicians say the clinics may have their place in the array of American medical offerings.
And most insurers so far are welcoming retail clinics as a way to save money. The uninsured, meanwhile, typically find the clinics more affordable than most alternatives — including the for-profit storefront clinics that have long offered a full range of physician-provided medical services to a walk-in clientele.
Uwe E. Reinhardt, a professor of economics and public affairs at Princeton University, said that the store chains, with their reputations on the line, would insist that the clinics maintain high standards and low error rates. "Primary care is a neglected field in the United States, lagging other economically advanced countries," he said. "The clinics can teach the rest of our health system how primary care could be done and brought to the public. That is very important." Whether a fad or the beginning of a fundamental shift, the retail clinic trend comes in response to an erosion in employer-sponsored insurance benefits that is forcing people to pay more or all of their own health costs. It is also a reaction to the growing perception that conventional medical service for routine and preventive care has become too costly and inefficient.
" Starbucks has 10,000 locations; health care is certainly more important," said Mr. Case, who made his name and fortune on the Internet but is now betting that his chain of RediClinics at Wal-Mart, Walgreens and other retailers can be the next big thing.
Mr. Case says his epiphany came a few years ago when he took his young daughter to an emergency room on a Sunday for an ear infection. "We waited four hours and they just weren't able to see us," he recalled. "This is crazy: a society in which everything is convenient other than what people care most about, which is taking care of their health."
Mr. Case's company, Revolution Health Group, has 11 RediClinics now running, including one at a Duane Reade pharmacy on West 50th Street in Manhattan. He plans to open 90 others in various retail chains by the end of this year, and 500 within three years.
Other executives bringing their names and money to the field include Hal Rosenbluth, who sold a highly automated travel business to American Express and is now behind a clinic chain called Take Care Health Systems. It has clinics in 16 stores, and Mr. Rosenbluth has raised $77 million with an eye toward expanding to 1,400 in the next few years.
Another in the game is Dr. Glen D. Nelson, a Minneapolis surgeon and investor whose health care résumé includes 11 years as president of the Park Nicollet Medical Center in Minneapolis, head of a managed health care company and later vice chairman of the medical device maker Medtronic.
"The clinic concept is a microcosm of what you could do to the whole system to improve it and make it more consumer friendly and economical," said Dr. Nelson, the chairman of MinuteClinic, which has branches in 73 stores.
The licensed nurse practitioners who run most of the clinics typically have advanced training and referral arrangements with local doctors for cases beyond the clinics' scope. Patients with major illnesses or in need of emergency care or follow-up for a chronic condition are typically referred to doctors, hospitals and urgent care centers. Infants and toddlers will usually be sent to pediatricians or family physicians.
When Ms. Lyons recently brought her son, Daniel, to the MinuteClinic at the CVS in Bethesda, the nurse practitioner on duty was Trish Hughes, who performed a quick swab test to check for a streptococcal bacterial infection. In less than three minutes, that preliminary test came up negative; the swab was retained for further testing.
Ms. Lyons said she was pleased with the clinic experience. "I will be back," she said.
For Beth Brauning, 54, a self-employed house cleaner who is uninsured, the prices at a clinic in a CVS near Columbus, Ohio, were a big attraction. The nurse practitioner took her blood pressure and wrote two allergy prescriptions she needed.
The bill was $49 — "probably half what my doctor would have charged me," Ms. Brauning said. "It was such a good experience for me. You go to an emergency room, it's $300 to walk in the door."
Having someone in the store writing prescriptions could be a boon for pharmacy chains. "Pharmacy is 70 percent of our business," said Jim Maritan, a CVS vice president for strategy and business development. "It is a great experience having a nurse practitioner clinic on site."
But some doctors say the clinic-pharmacy relationship could create conflicts of interest. "We want to make sure that the patient is protected," said Dr. Joseph P. Annis, an anesthesiologist in Austin, Tex., who is the chairman of an American Medical Association council that studied the clinics for an A.M.A. report due out later this month.
Dr. Anne B. Francis, a pediatrician in Rochester added that it was important for children to have a physician who gets to know the family and keeps a complete health record that can help point to underlying causes of some ailments. "All ear aches are not ear infections," she said.
Although some physicians are fearful of losing business to the clinics, others say that the clinics may fill a need. Larry S. Fields, a family doctor in Ashland, Ky., who is president of the American Academy of Family Physicians, said that if the clinics "stick to this limited scope, they may have a small role in providing acute health care to people who are mildly ill, when their only other alternative at the time might be an emergency room."
The academy has issued a list of "desired attributes of retail health clinics," which the big clinic operators say they have embraced, including provision of a well-defined and limited scope of services; a formal connection with local physicians to provide "continuity of care" and supervise the nurse practitioners; and electronic health records that can be transmitted to a doctor's office.
With no need for expensive medical equipment or office space, the clinics tend to be cheap to operate — particularly since the nurse practitioners are paid $30 to $45 an hour, compared with the $65 or much more an hour that a primary care doctor can command. A store clinic can be profitable with 25 patients over a 12-hour day, clinic executives said.
Employers and insurers also see opportunities for savings. The power-tool maker Black & Decker, a self-insured employer, has subtracted $10 from its usual $25 co-payments when employees patronize MinuteClinics around Baltimore, rather than visit a doctor.
"We have had an overwhelmingly positive response from our employees," said Raymond Brusca, the vice president of benefits at Black & Decker, adding, "my medical plan comes way out ahead financially."
A clinic company with somewhat grander ambitions is Solantic. Its clinics are staffed by doctors and provide a wider range of services that include X-rays at $90 apiece (or two for $150).
For routine services, Solantic's prices may be slightly higher than at other clinics — $55 or more for a Solantic doctor visit compared with $45 to be seen by a nurse practitioner at a rival's clinic. But having doctors on staff "dramatically increases the number of services we can provide to a patient," said Richard L. Scott, the chairman of Solantic, which is based in Jacksonville, Fla.
Mr. Scott built Columbia- HCA Healthcare into the nation's largest hospital chain before being forced out in a 1997 boardroom coup fueled by government allegations of Medicare fraud. Three top officers of the company were indicted, although Mr. Scott was not cited in the case. In a separate tax dispute over deductions for executive pay, the company agreed to pay a $71 million settlement to the Internal Revenue Service."I always wanted to create a clinic business when I was in the hospital business," Mr. Scott said.
Glenn Habern, Wal-Mart's senior vice president for business development, said that Solantic and three of its rivals — RediClinics, MedPoint Express and Quick Quality Care — would be among the clinic companies leasing space in about 60 of Wal-Mart's 1,300 "superstores" by the end of this year.
"It's still a test for us," Mr. Habern said. "If customers like it we may open more. So far, we've not seen any reason not to do so." But a big Wal-Mart competitor, Target, has evidently seen drawbacks.
At the end of this month Target plans to close the 11 MinuteClinics in stores in Maryland and Minnesota; the company would not explain why. "Target will begin remodeling to open new health clinics in these stores in fall 2006," the company said in an e-mail message, without specifying who would manage the new clinics.
Dr. Nelson, at MinuteClinic, said in an interview before the breakup with Target was disclosed that "the pharmacy business is a small percentage of the Target footprint."
"Target also is very disciplined," he added. "They like to have things totally designed and controlled to their own specifications. They struggled with whether they want somebody else talking to their clients."