Are Retail-Based Clinics Good Health Care?

Retail-based clinics (RBC) such as CVS Corp.’s MinuteClinic and Walgreen’s Health Corner Clinic are becoming a fast-growing business trend. But are they good for you? When you need convenient and affordable access to basic healthcare services, going to an RBC could be your best choice.

RBCs have been in operation for over seven years, but they have been expanding phenomenally over the last three years. There are over 200 RBCs nationwide and an estimated 700 more are expected to open in 2007. These clinics are run by independent businesses that lease space from drug retailers and provide foot traffic in the pharmacy as well as the front end. This growth is driven by demand for easily accessible, readily available, affordable basic medical care, and drug store chains are leading the charge to fill this demand.

In December, Walgreens opened 16 Health Corner Clinics in Atlanta and 2 in Las Vegas, bringing their RBC count to over 45 with about 30 more scheduled to open this quarter. CVS is the largest operator with over 110 clinics; the company purchased MinuteClinic last year. Two MinuteClinic RBCs still operate in Target Stores. Rite-Aid has 11 clinics in California. Jody Cook Rite-Aid spokesperson said, “We like the concept and are looking for the right opportunities to expand nationwide.”

RBCs are operated by healthcare companies such as MinuteClinic (the largest operator), RediClinic, which has teamed up with Wal-Mart, and Take Care Health System that has partnered with Walgreens. Take Care operates over 36 in-store clinics and plans to open hundreds more across the country. The company completed a $77 million round of equity financing last year, one of the largest to date in the sector.

The RBC sector bears watching as drug stores work to meet consumer demand for an alternative to the slow, inconvenient and high-priced service offered by traditional physicians’ practices, emergency facilities and HMOs. Many primary care physicians offer short hours, “bankers’ hours” and some don’t even offer the weekend hours that some banks now offer, making it difficult for the high percentage of working mothers, who are usually the parents with children needing service.

Moreover, hospital emergency rooms are for serious emergencies, not where the average consumer should choose to go for basic healthcare service. Uninsured consumers who were about 16 percent in the U.S. in 2004 and the insured with high deductibles will continue to fuel the growth of the RBC sector.

Doctors and their industry associations see these clinics as “encroaching on the economics of their business”, which is, in fact, the case. Although critics of the clinics concede that the clinics are capitalizing on consumer frustration with traditional health care delivery systems, the traditional medical establishment has begun to fight back by generating negative publicity. The American Medical Association complained that the clinics “are spreading too far, too fast.” The criticism implies that the AMA should decide how far and how fast their competition should increase, a really bizarre idea in a free market economy. Moreover, the American Academy of Family Physicians noted that “RBCs are here to stay and traditional medicine would have to adapt to survive.”

However, the number of RBCs continues to increase, which may lead to an escalation of resistance from the medical establishment. Adverse publicity regarding these clinics may discourage consumers from using them to their own detriment as well as that of the clinics and the drug stores that house them.

Syble James, MBA, is President of Alpha Health Source, a retailer of health and fitness products and services, online at alphahealthsource.net. alphahealthsource.net. She conducts consultations and writes analyses on issues in the food and beverage, VMS, MLM, and fitness industries for Gerson Lehrman Group. Ms. James also writes for other online publications and provides research and consultation services for individuals.

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