Bumps in the Road Ahead for Retail Health

MHE Publication, MHE January 2022, Volume 32, Issue 1

Walmart seems to be pulling back and opioid litigation looms.

In this on-demand society in which people want what they want, when they want it, experts are predicting consumers will continue to turn to retail clinics for their healthcare needs in the coming year.

With millions of Americans having received their COVID-19 vaccinations at retail clinics, “people are getting more familiar” with such clinics and “realize this has a real place in the care continuum,” says Neal Batra, a principal in the life sciences and healthcare practice at Deloitte Consulting. “The industry is convinced you’ll be able to (receive) some portion of your primary care not from a classic doctor’s office,” he adds.

The clinics at drugstores such as CVS, Walgreens and Walmart are a draw because of their convenience and easy access, says Joyce Yu-Chia Lee, a health sciences clinical professor at the University of California, Irvine. The goal is to “seamlessly integrate into their (consumers’) busy lives,” says Willie Hoag, co-founder of Tether Advisors, a commercial real estate advisory firm.

Mixed bag

But not everything is so rosy for retail healthcare clinic operators. They are fighting off lawsuits accusing them of responsibility for the opioid epidemic. In late November, a federal court jury in Cleveland found that CVS Health, Walmart and Walgreens had contributed to the cause of opioid overdoses and deaths in two Ohio counties. There are also the headwinds of healthcare delivery’s migration to telehealth and in-person shopping to online. CVS announced in November it was shuttering 900 drugstores around the country over the course of three years, or roughly 1 in 10 of its 10,000 locations. “Organizations are still looking for that magic formula for what works for retail primary care,” notes Batra.

And CVS is still trying to shift from being a retailer of healthcare products and drugs to a provider of healthcare with its HealthHUB locations that offer a variety of healthcare services, such as mental health therapy, screening for chronic conditions and health classes.

During an investor’s day presentation on Dec. 9, Karen Lynch, the company’s CEO, said CVS is “transitioning what we call stores to health destinations.” In the future, Lynch said, the company’s physical locations will fall into one of three categories: primary care clinics with a “high level of clinical services,” HealthHUBs “with products and services that support everyday health and wellness” and traditional pharmacy locations. Lynch did not say how many locations would be in each category. She also painted a picture of CVS moving more fully into primary care, shifting away from what episodic care to what she called “longitudinal care.”

CVS, which acquired Aetna for $69 billion in 2018, is marketing health plans that encourage consumers to use CVS by offering care at its MinuteClinics with no copays.

Meanwhile, Walmart seems to be experiencing healthcare hesitancy. The giant retailer opened just 20 of the 125 clinics it had planned to open by the end of 2021, Insider reported. Walmart executives didn’t even mention retail clinics in their November earnings call. In the August call, Doug McMillon, the company’s president and CEO, said, “The work we did to build some clinics has been helpful, and I think we’ll have more clinics in the future. But the clinics aren’t the thing on its own.” He also referred to the role of telehealth, and healthcare at home and on mobile devices and the importance of directing consumers “to the place to get the right care at the right time.”

On the other hand, Walgreens seems to be forging ahead with its partnership with VillageMD. The retailer announced in October it was investing $5.2 billion in VillageMD to increase the delivery of value-based primary care. With that investment, Walgreens upped its stake in VillageMD from 30% to 63%, and VillageMD plans to hold an initial public offering next year.

With the Walgreens investment, VillageMD plans to open at least 600 Village Medical clinics at Walgreens in more than 30 markets by 2025 and 1,000 clinics by 2027. More than half are slated to be developed in medically underserved communities. Because it is expensive to build clinics, retailers have an advantage by already having brick-and-mortar locations in place, says Hoag.

People are receptive

So far, only a relatively small group of people use retail health clinics. A Morning Consult poll of 2,200 adults conducted last year found that just 8% of respondents indicated they went to a retail clinic for medical services often and 27% said they used the clinics “sometimes.” But more than 70% of the respondents said they trusted retail health clinics and 10% said they would go to the clinics “often” after the pandemic, whereas 45% said they would go there “sometimes.” Additionally, the majority of respondents said they valued the quality of care, cost of service and convenience of such clinics.

But respondents were split when asked whether the quality of services was the same quality as they would receive at a traditional doctor’s office. About one-third said it was the same, more than one-quarter said it was worse and about 30% said they didn’t know.

The pandemic has driven growth in retail clinic usage, observes Gurpreet Singh, U.S. health services leader for PwC, a consulting firm. A pre-pandemic 2019 survey by PwC’s Health Research Institute found that 30% of U.S. adults had visited a retail clinic. A September 2020 survey found that the share of respondents who visited a retail clinic had climbed to 40%, and about three-quarters said they would use a retail clinic again.

The clinics tend to provide care “especially for people who do not have a primary care physician,” such as younger people, notes Lee, the University of California, Irvine, professor. “Retail is more geared to people with less complicated conditions,” she adds.

One aspect of retail healthcare that has perhaps not received as much attention as others is the pricing. Batra notes that prices are transparent, so people know what they are going to be charged, in stark contrast to the often-opaque pricing in traditional healthcare. But he also points out some drawbacks of retail healthcare. The services are often limited. If someone needs, say, three services, they may find that only two are provided by the retail clinic. For that and other reasons, retail health is not going to replace primary care physicians, says Batra.

Hoag believes that the future of the retail clinics lies in providing preventive care — which is consistent with the vision that Lynch mapped out. With their numerous locations, retail clinics can play an important role in increasing health equity, says Singh: “Being part of the community can and should result in more activism in the community and better representation of the demographics.”

Susan Ladika is an independent journalist in Tampa, Florida.