Latest Retail Niche: Clinics
Coming soon to a store near you: health clinics.
Seeking to capitalize on the country’s costly and often slow healthcare delivery system, a number of start-ups are building storefront clinics that offer quick and cheap medical services inside chain pharmacies and large retailers such as Wal-Mart Stores Inc. and Target Corp.
There are currently more than 150 such clinics nationwide. None are in Southern California, but thousands of new clinics are planned nationwide in the next year or two, according to a report to be released today by the California Healthcare Foundation, an independent Oakland-based research institute that advocates for affordable healthcare. Los Angeles could have its first retail clinic this year.
Retail clinics are small, typically no bigger than a sandwich shop. They are open seven days a week and treat minor, non- urgent illnesses including strep throat and ear infections. Appointments are not necessary and most visits last 15 minutes for treatments that cost $40 to $70, which are clearly posted on menu-style boards on the wall.
“Imagine if Starbucks was running your doctor’s office,” said Dave Mandelkern, chief executive of Burlingame, Calif.-based QuickHealth Inc., which has three clinics in Northern California and plans to open seven more before year’s end, including one in Los Angeles.
Doctors and some consumers have raised concerns that these clinics may jeopardize the quality of care in the name of convenience and cost cutting. Most facilities are staffed by nurse practitioners, not physicians.
But proponents say retail clinics could be the answer for millions of patients, including the uninsured and underinsured who often can’t afford medical care even when their illnesses are easily treatable. For the insured, the clinics are mainly a convenience, a better option than waiting for a doctor’s appointment or waiting hours at an emergency room over a minor ailment.
For the industry, the trend -- still relatively new, with the first clinics opening in 2000 -- points to further segmentation of the country’s healthcare delivery system.
Traditionally, doctors’ offices and hospitals provided the bulk of medical services, including treating simple rashes and performing heart bypass surgeries. But over the years, an array of specialized facilities, from ambulatory surgery centers to urgent care clinics, have divided healthcare into niche markets. Retail clinics represent one of the latest.
“Is there any reason why medicine should be practiced exactly the way it was 20 years ago?” said Margaret Laws, director of public financing for the California Healthcare Foundation. “I don’t think anyone would agree that you need 12 years of training as a doctor to treat a strep throat.”
The foundation’s report likens retail clinics to discount stock brokerage firms or no-frills airlines that have found ways to cut costs by eliminating things consumers are willing to do without or don’t need in certain circumstances.
Health insurers are cautiously optimistic about the trend and its potential to drive down costs. About 40% of retail clinics accept insurance, the foundation report said.
The clinics say they are not trying to replace doctors or hospitals, and when patients need a higher level of care they are directed to go to them.
But doctors and hospitals “treat a broader range of conditions, and when you are at a doctor’s office you may be waiting behind a person who has a broken bone or a laceration,” said Web Golinkin, chief executive of Houston-based InterFit Health. Its RediClinic division owns 11 clinics around the country with 75 more on the way, mostly outlets in Wal-Mart stores.
At RediClinic outlets, patients are told that their treatments won’t take longer than 15 minutes, Golinkin said, and they are given a pager so that they can shop while they wait.
The hosting stores or pharmacies often lease the space to the clinics and benefit from higher traffic.
“The clinics increase our portfolio of offerings,” said Kevin Gardner, a spokesman for Wal-Mart, which hosts 12 clinics and has plans to add 38 more by year’s end. Gardner said it was too early to call the store additions a success, but said the company was satisfied with the initial reaction by customers.
Convenience is key. The tag line for Minneapolis-based MinuteClinic Inc., with 86 locations and 250 more on the way, is: “You’re sick. We’re quick.”
California -- with only three clinics -- is lagging behind the trend, the foundation report said. Strict state regulations regarding physician oversight of medical treatment make retail clinics harder to implement, the report said, but the California market is too big for companies to ignore and most have plans to open clinics soon.
QuickHealth plans to have 35 clinics in California by the end of next year, CEO Mandelkern said. He declined to discuss details, but said the company would partner with a large chain.
The company runs clinics in San Francisco and Oakland at Farmacia Remedios drugstores, which cater to Latinos, and a third at a Longs Drug Stores Corp. site in San Mateo.
Unlike many clinic operators, QuickHealth staffs its sites with a physician and medical assistant and, to keep costs down, does not accept insurance. A basic office visit costs $39.
“The real cost savings are in the overhead,” Mandelkern said. “The chief cost [for health clinics] is insurance billings. We don’t have that. We don’t have appointments so we don’t need a receptionist. We don’t have fancy offices for the doctors to hide away from the patients.”
But some doctors are concerned. The American Medical Assn. released a report last month that said retail clinics could lead to inconsistent care and cited a recent poll showing that consumers, although interested in retail clinics, were worried about quality.
But as co-pays and deductibles rise, retail clinics may become more enticing for many patients, the California Health Foundation said. “You may not like going to Wal-Mart” for medical treatment, Laws said. “But you might like it better than the alternative.”