Walk-In Medical Clinics Changing Focus to Survive
Three years ago, National Medical Enterprises had hopes that its 18 emergency medical clinics would produce profits as quickly as they provided treatment for walk-in patients suffering from ailments such as sprains, cuts and the flu.
But in 1985, Los Angeles-based NME found itself bailing out of the business as the clinics proved to be both a marketing and a financial flop. By the end of that year, NME had sold all but five of its original 18 facilities. It now owns just two clinics, both in Modesto, Calif.
“The business was not profitable for us, nor did it seem to benefit our hospitals by any material amount,” said Paul J. Russell, the firm’s vice president for corporate communications. “What we found is that primary care is best left to doctors. Our strength is in hospitals.”
Free-standing emergency health-care clinics, which have been dubbed “docs in a box” by critics who view the centers as the medical equivalent of fast food, may themselves need some urgent care these days.
Clinics advertising extended hours and specializing in urgent care first began sprouting up in shopping centers, along suburban thoroughfares and in other heavily traveled areas about a decade ago.
But now they face cutthroat competition and are being besieged by reform-minded health activists and state lawmakers who believe that some clinics are ill-equipped to deal with true medical emergencies. As a result, the facilities are having to change their focus to survive.
“There’s a shakeout that’s been going on in the industry,” said Larry Frisk, vice president for corporate development of MedStop, a Dallas-based franchiser of ambulatory care clinics. “The industry will be very different in the future, . . . less dependent on walk-in patients and more focused on managed care.”
Adds Kenneth S. Abramowitz, a health-care analyst at Sanford C. Bernstein & Co.: “You are seeing a leveling off of growth and consolidation in the industry. Some are doing well in some places . . . but most of the big companies are cutting back.”
The largest operator of clinics, Humana Inc., lost more than $40 million operating its 175 clinics in the fiscal year that ended Aug. 31. In an effort to cut its losses, the company has sold 46 clinics and hopes to sell 70 more before the end of the year, said Gary Meller, Humana’s chief operating officer of health services.
Pearle Health Service Inc., the Dallas-based operator of Pearle Vision Center, also has its Primacare emergency centers on the block, according to James Beymon, the company’s treasurer. Beymon says that the 13 centers are profitable but that the company wants to get out of the business “to concentrate on the optical market.”
American Medical International, in Beverly Hills, dissolved its ambulatory services division in 1985. Company officials declined to comment, but AMI’s annual report indicated that the action was part of efforts to eliminate unprofitable units.
Even though millions of Americans used one of the nation’s 2,700 urgent care clinics last year, such facilities are being forced by competition and government regulation to change their focus from treating mostly walk-in cases.
Clinics are affiliating with health maintenance organizations and signing contracts with employers to provide physical checkups and other routine care as well as to treat workers injured on the job. Meanwhile, big chain operators, such as NME, have turned over some of their clinics to the physicians who worked there.
Today, many walk-in clinics have become almost indistinguishable from ordinary physician group practices--a development that has prompted some experts to wonder why clinic operators could not foresee that there wasn’t much room for them in the health care market.
“The whole urgent-care movement doesn’t make a lot of sense when you look at it closely,” said Henry Lubow, chief executive officer of Ambulatory Medical Management, a Los Angeles chain that specializes in treating workers.
“In most areas of the country you already have a significant oversupply of physicians and medical services,” Lubow noted. “If you then create urgent-care facilities, . . . you can’t possibly make any money.”
It was hoped that the clinics would fill a niche by being patterned after fast-food restaurants. Clinics often used names that emphasized quick or emergency care, such as Doctors Urgent Care in Charleston, W.Va.; Emergency Medicine Associates in Olney, Md., and NME’s former Instant Care Medical Center on Del Amo Boulevard in Compton.
But while the clinics boasted of being fast, economical and convenient, some critics argued that people with life-threatening emergencies might be misled by clinics’ labeling themselves “emergency” facilities.
Semantic Safeguards
Several states, including California, passed laws barring clinics from advertising or using the word “emergency” unless the facility meets strict standards. The intent of such legislation is to decrease the chance that someone with a life-threatening emergency will seek treatment at a facility incapable of helping them.
“People who were injured or needed true emergency care may think they can get it from one of these clinics, and that might not be the case,” said Sen. Henry J. Mello (D-Monterey), author of the California measure.
The law, which became effective January 1, bans use of the word “emergency” in a clinic’s name or advertising unless the facility meets such guidelines as being open 24 hours a day and maintains true emergency equipment and backup services. Clinics are being given a one-year grace period to comply with the law’s provisions.
Despite the name changes, some emergency cases still show up at clinics, acknowledged John A. Rupke, president of the National Assn. for Ambulatory Care and owner of six Grand Rapids, Mich., clinics called the Butterworth Med Plus Center.
“Every now and then, we get someone who thinks he has a chest cold or a stomachache, and he’s really having heart problems,” said Rupke, who said that doctors at one of his centers even delivered a baby for a passer-by.
Like Rupke’s facilities, many clinics stay open 12 hours or more a day. They claim to charge fees slightly higher than private physicians but as much as 60% less than hospital emergency rooms charge.
The American Hospital Assn., in a January survey, disputed those cost savings and said that the gap in fees has disappeared. But the clinics still boast of one advantage over hospitals: Many promise to treat walk-in patients within an hour. It’s that fast food-like efficiency that earned clinics the description “docs in a box.”
Clinics may not be as ubiquitous as the fast-food restaurants they model themselves after, but experts say they are transforming the $425-billion-a-year health-care industry in much the same way that fast food changed the manner in which Americans eat.
Hospitals and group medical practices, in particular, are scrambling to become more consumer-oriented because of the competition from emergency clinics, experts say.
Many hospitals have more flexible fees so that patients with less serious ailments such as the flu pay less than patients needing more extensive care, said Keith Deisenroth, a partner in the Los Angeles office of the Ernst & Whinney consulting firm. He added that hospitals are also paying more attention to providing more rapid service.
EMERGENCY CENTERS The number of walk-in clinics grew dramatically in the early 1980s, but a glutted market seemed to slow growth in the last two years.
Number % Year of clinics gain 1980 180 --- ’81 260 44 ’82 600 131 ’83 1,100 83 ’84 2,000 82 ’85 2,500 25 ’86 2,700 8
Source: National Assn. for Ambulatory Care
