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Spurred on by the Affordable Care Act, retailers, health plans and providers are staking strong retail positions that are increasing coverage opportunities and access to care.
In a nod to the changing face of healthcare, Target shoppers in San Diego can visit the in-store clinic operated in partnership with Kaiser Permanente for primary care services.
Members of CareConnect in New York who travel outside of the plan’s service area can access care at CVS MinuteClinics as part of that plan’s provider network.
And in Pennsylvania, Highmark welcomes customers seeking insurance options to its six retail stores, where sales grew 126% in the past year.
Spurred on by the Affordable Care Act (ACA), retailers, health plans and providers are staking strong retail positions that are increasing coverage opportunities and access to care.
From the concept’s beginning in 2000, retail clinics have grown substantially and numbered 1,868 as of January 1, 2015, up from 1,603 a year earlier, according to data by Merchant Medicine LLC, a strategic planning firm. Of the current total, roughly half, or 947, are CVS’s MinuteClinics, followed by Walgreens Healthcare Clinic, Kroger’s The Little Clinic, Target Clinic, and Rite Aid RediClinic.
Growth in 2014 was topped by MinuteClinic’s opening of another 156 clinics. But for giant retailer Wal-Mart, which closed a number of acute care clinics last year, future growth called for a change to its business model.
When retail clinics took off in 2006, Wal-Mart became interested because of its massive footprint and customer volume, says Jennifer LaPerre, senior director of health & wellness for Wal-Mart U.S. In 2007 Wal-Mart began working with local health systems, leasing space within its stores for clinics that grew to 260 locations. But by 2014, that number had declined to 95.
About a year ago, Wal-Mart realized the healthcare landscape was changing and looked at what it needed to do differently, LaPerre says. It also saw its potential influence in the healthcare market as an employer of 1.1 million people and a business serving 140 million-plus customers in its stores each week, she says.
According to LaPerre, Wal-Mart developed a new retail-clinic strategy focused on three objectives. First, it wanted to design a dual model to serve employees as a worksite clinic and to serve customers as a retail primary care clinic. Second, “the price had to matter,” as did price transparency. “We wanted to create a new retail price in the healthcare industry,” she says, which Wal-Mart translated to $40 for a customer’s office visit and $4 for an employee’s visit.
Third, Wal-Mart wanted to broaden the scope of services, moving beyond the traditional walk-in clinic’s model of caring for minor acute needs such as colds, to offering services for people with chronic illnesses such as diabetes. “We wanted to do more,” says LaPerre, “and 75% of healthcare spend comes from chronic conditions, so we wanted to offer an expanded scope of service.”
Using this approach, LaPerre asserts that the retailer’s primary care clinic model, known as Wal-Mart Care Clinic, is different from competitors because it focuses on employees and customers, is “very price disruptive,” and offers more extensive services than many other retail clinics.
Thanks to a partnership announced last fall with Directhealth.com, its model also includes health insurance options. Patients without insurance can now shop for plans and gain coverage with the assistance of independent, licensed health insurance agents who can help them navigate options including Medicaid. “For years, our customers have told us that there is too much complexity when it comes to understanding their health insurance options,” Labeed Diab, senior vice president and president of Wal-Mart Health & Wellness, said last fall when announcing the partnership with Directhealth.com. “[Wal-Mart] addresses that complexity by bringing clarity and increased choice to the insurance enrollment process.”
Unlike its initial approach in 2007, Wal-Mart now is working with a single clinic operator, says LaPerre. “This is a new business for us, so we looked for an experienced partner to get these clinics up and operational,” she notes. In April 2014, the retailer partnered with QualMed, a Milwaukee-based worksite clinic operator that LaPerre says focuses on creating value for employers. Last April Wal-Mart began rolling out pilots and, as of January 23, it has Care Clinics in 17 locations in Texas, South Carolina and Georgia.
LaPerre says Wal-Mart selects its primary care clinic locations based on several criteria: “We look for associate [i.e., employee] density, provider shortages, a high propensity of chronic disease” and in areas with significant numbers of the uninsured, underinsured and Medicaid eligibles. “We are trying to reach people who otherwise would not get care,” she says. “Either they can’t get access or they can’t afford care...We want to serve them.” She says roughly half of Wal-Mart’s clinic patients lack a primary care physician.
As for Wal-Mart’s plans for primary care clinic expansion, LaPerre says: “We will grow if our customers and associates want us to grow, and we’re finding that they do.” She says Wal-Mart is “getting good feedback” from Care Clinic users who are pleased with services and prices.
Where would Wal-Mart put new primary care clinics? The retailer has a large footprint in rural, underserved areas in the U.S., LaPerre says. But she describes it as “important to create density wherever we go” before considering further growth. For instance, in the Dallas-Fort Worth market, Wal-Mart has 140 stores and five clinics, notes LaPerre. But, she adds, “I don’t think we’re probably optimizing density at this point” in that market.
Asked whether Wal-Mart wants its clinics to stand on their own, LaPerre says the retailer wants “to be the destination for our customers’ and associates’ healthcare needs...so we’re looking at it from ‘an entire box’ perspective. We know there’s benefit to the pharmacy and to the box [from the clinic], so it’s creating value for Wal-Mart Stores, Inc.”
Despite its new direction, LaPerre says Wal-Mart values its relationships with those health systems still operating clinics in its stores. “At this point we’re not disrupting those relationships,” she says. “They’re very important to us.” Wal-Mart’s patients may need higher levels of service such as referrals to specialists, notes LaPerre. Whether people go to Wal-Mart clinics as their primary source of care or through their local community providers for after-hours care, “We see ourselves as being part of the continuum of healthcare,” she says.
LaPerre describes the federal government’s health insurance programs--Medicare, Medicaid, and the military’s TriCare--as a big customer for Wal-Mart’s clinics. She adds that the retailer is “working to become enrolled in the commercial space” to work directly with private payers.
Target Corporation launched its first acute care clinic with a third-party vendor in 2001, brought the business in-house in 2006, and now has 84 retail clinics.
But like Wal-Mart, it also saw the value in exanding its clinic model to encompass primary care services. It chose Kaiser Permanente, a health partner with strong brand recognition, as its first partner because the brands share a similar philosophy, says Kevin Ronneberg, MD, medical director for Target. Four medical clinics offering primary care services have opened since the fall in southern California, where the not-for-profit HMO serves more than 3.7 million members.
The move represents Target’s entry into the California retail clinic market and Kaiser Permanente’s first foray into a retail setting. It’s also the first time that Kaiser Permanente’s providers will treat patients covered by other insurers.
“Part of our initial agreement is...clinic care has to be open to all Target guests,” Ronneberg says of the new arrangement. Target also wants “to be a preferred retail partner, not to displace existing provider relationships, and to seek new relationships with established organizations like Kaiser Permanente.”
As a result, it’s running its retail-clinic business on a dual track, he explains. Target’s acute care clinics focus mainly on vaccinations, treatment of acute illnesses and biometric screenings and are staffed by nurse practitioners and physician assistants. Target’s pharmacies also have “health-service rooms” to give vaccinations and review medications with customers, he notes.
Kaiser Permanente’s certified family nurse practitioners staff the new primary care clinics, relying on telehealth technology linked to Permanente physicians and ties to the system’s clinical infrastructure, including electronic health records and lab services.
The clinics go beyond the basic “convenient-care package,” offering pediatric and adolescent care, OB/GYN care, chronic care management, and other services, says Paul Minardi, MD, medical director of business management for Southern California Permanente Medical Group. “It’s very holistic, and certainly for Kaiser Permanente members it’s the same offering we have in our other offices,” he says.
Business at the four clinics is booming, says Minardi, who is also medical director of Target Clinics in Southern California. “In the little over 10 weeks we’ve been open, we’ve seen a little over 2,000 patients,” he notes, adding that about 70% of clinic users have been Kaiser members and 30% have been community members.
People appreciate the convenience of being able to seek care at a retail store as opposed to a doctors’ offices, says Minardi. “It’s a perfect place to engage them in health and wellness” in a personalized manner, he says.
But providing care is not a one-size-fits-all endeavor, notes Christine Paige, Kaiser Permanente’s senior vice president for marketing and digital services. “Some patients will love the convenience of seeing a doctor while they’re picking something up at the store, others will prefer to come into the office, while others will want to call or email so they don’t have to leave the house,” says Paige. “We have to be sensitive to everyone’s preference.”
Related:Payers warm up to retail clinics
According to Minardi, Kaiser Permanente decided to work with Target because of their closely-aligned philosophies on helping customers achieve their health and wellness goals. In fact, the two brands’ similar philosophies became apparent at the start of talks.
Minardi calls Kaiser’s relationship with Target “synergistic”: Target “is well known for its customer experience and service, and is willing to participate together with us, as opposed to us being a vendor in their store,” and Paige agrees.
“Our guiding principle with any significant change we make within our organization is making sure that we provide the best member experience, while providing the highest quality care,” says Paige. “Looking through this lens is incredibly important when it comes to the shift we’re seeing with more healthcare organizations providing retail-like services.”
In a effort to make consumers aware of their options, Kaiser Permanente also has a number of retail kiosks in its service areas where consumers can ask questions and learn about plans, notes Paige.
Minardi explains that Kaiser committed to five stores in its pilot program with Target, selecting stores based on Target’s predictive modeling and analysis of Kaiser Permanente’s system. Growth “is highly dependent on the success of the business model,” he says.
Yet, Kaiser Permanente officials anticipate the model will eventually expand to encompass eight states and the District of Columbia.
Plans are also in the works for Target to contract with Medicare, Medi-Cal, Blue Shield of California and other major health insurance plans in the area for certain services, “Lots of things are in play,” says Minardi.
Despite retail clinics’ dramatic growth, only 15% of consumers responding to an Oliver Wyman survey in 2014 said they used such clinics. And while 57% of respondents said they would like to receive care in a retail clinic, 28% were interested only if the clinic was run in partnership with a local hospital or healthcare provider. Quality of care topped consumers’ criteria for choosing a healthcare site, above cost and convenience, the survey found.
“Use [of retail clinics] is low, but [consumer] awareness is high. To me that implies a deficiency in the business model,” says Graegar Smith, a principal in Oliver Wyman’s health and life sciences practice and co-author of the April 2014 report, “Are Consumers Ready for Retail Healthcare?” The report concludes that the line between healthcare and retail is blurring, and retailers, payers and providers should work carefully together to maximize future opportunities.
“You have to emphasize the quality element as well as convenience” with respect to retail clinics, Smith says. “And the other element of the business model is experience and economics. It’s still an industry that is finding how to make money...The numbers [of retail clinics] are impressive in terms of growth, but you still need to improve the economic model for the business.”
Smith describes the early evolution of the retail clinic model as “quite adversarial” to the healthcare system. Some physicians thought retail clinics promoted fragmented care, he says, “but now it’s version 2.0 of the model, and clinics and payers or providers are working more in lock-step.” Closer alignment could help address quality gaps and free up new methods for payment, and it also could help to differentiate retail clinics in consumers’ eyes, he says.
Aside from retail health, there’s the shift to value within the healthcare industry, Smith says. For providers or payers thinking about costs, clinical outcomes and patient satisfaction, “retail options have a huge potential benefit if you can figure out the right model. If you’re a provider system trying to make a play for population health [management], having a retail front-end makes sense.”
Tom Charland, Merchant Medicine LLC’s chief executive officer, describes several sub-markets of primary care medicine: preventive medicine, chronic disease management, convenient care/retail clinics, urgent care, work-site clinics and telehealth. Combined, these sub-markets are critical as population health management and risk-based contracts proliferate.
Some clinics are already differentiating and are now being integrated into accountable care organizations and plan networks, notes Charland.
The big question is how to make the economics work, Smith says. While some retail clinics are profitable, he says, the question becomes whether it is actually the clinic itself, the clinic plus pharmacy scripts or the clinic plus the front-end store.
Most retailers, he notes, want to figure out a way to make the clinic--which uses valuable space--economically viable on its own; they don’t see the clinic as a loss leader designed to bring in more pharmacy and front-end volume. Yet, payers and providers assume the clinic will be a loss leader.
Retail clinics tend to be underutilized, says Smith, with few reaching the 20-patients-a-day volume that would be considered reasonable. In order to make retail clinic ventures viable, Smith recommends that stakeholders find ways to increase volume by utilizing telehealth to adjust staffing levels, tweaking the size of the clinic’s footprint in the store, targeting new sources of revenue by expanding the type of services offered, and securing appropriate contracts to ensure maximum reimbursement.
When North Shore-LIJ Health System became licensed in July of 2013 to sell health insurance, plan officials knew up front they wanted to take a retail approach to the business, known as CareConnect Insurance Co.
“We looked around and said, ‘Healthcare is the last industry that hasn’t focused on customer service,’ so that became a guiding principle for us,” says company spokesperson Lisa Davis.
North Shore-LIJ has an annual operating budget of $7.8 billion, 19 hospitals and affiliations with about 10,000 physicians. CareConnect’s members have access to a network of more than 20,000 physicians, including the system’s affiliated physicians as well as doctors at several other hospitals, health systems and medical groups in the expanded service area.
“I often say CareConnect is a customer service company that happens to be an insurance entity,” says Alan Murray, president and chief executive officer of North Shore-LIJ CareConnect Insurance Co. Inc.
In 2014, CareConnect sold individual, small group and group policies through state exchanges in several New York and Long Island communities. When it expanded into Brooklyn, the Bronx and Westchester County in September of 2014, it did so by extending its provider network with the addition of CVS’ MinuteClinics.
“MinuteClinic is helpful for us because CareConnect is an EPO (exclusive provider organization), so there are no out-of-network benefits,” Murray says. “So one of the hurdles we had to get over was what would happen if [members] travel outside of our service area.” MinuteClinic “is retail. It’s convenient” and walk-in healthcare tides over members until they return to CareConnect’s service area.
Murray stresses that walk-in clinics are part of the industry’s larger effort to adapt to the consumer. “For me, retail is not necessarily about MinuteClinics,” he says. “It’s about the new focus on the individual and about what will make their lives easier. That’s the challenge healthcare has to overcome: surrounding our industry around the individual, not having the individual fit into our industry.”
As of January 1, 2015, CareConnect had grown to 18,000-plus commercial members and more than 1,500 members in Medicaid-managed long-term care. Murray says CareConnect’s member retention rate was “well over 90%” between 2014 and 2015 He cites various contributors to this retention, including CareConnect’s call center that fields customer calls within six seconds on average. “Eighty-eight percent of calls are resolved by the person picking up the phone, leaving customers very satisfied,” notes Murray.
Because it’s part of an integrated system, CareConnect is relatively easy to market, says Murray. Both “work hand-in-hand to make sure clinical pathways are the most opportune for our members.
“Care is coordinated with our doctors to ensure the right care at the right time at the right place.” Such an approach, says Murray, leads to a second advantage: administrative simplification. CareConnect’s denial rate for procedures and services requiring pre-authorization “is about 1%,” well below the industry average, he says, “because CareConnect’s clinical practice guidelines are taken from the health system, so we’re on the same page as our doctors.”
Blue Cross Blue Shield of North Carolina’s (BCBSNC) strategies include use of the Internet--the insurer recently introduced a new pricing transparency tool for consumers--and a brick-and-mortar presence. Its retail stores focus on supporting individual members and complementing its online presence.
The Blues insurer opened its first retail store in 2012 as a way to offer face-to-face help for consumers preparing for the ACA’s first open enrollment period, says Ashlee Smart, BCBSNC’s director of new channel sales. Currently, the insurer has seven retail locations--staffed by customer service representatives and licensed agents--across the state.
BCBSNC also uses pop-up kiosks in malls set up near food courts during open enrollment periods, Smart says, and a mobile unit that travels the state for one-day events that “allows us to meet the customers where they are....The customers have appreciated the convenience.”
Related:Self-service kiosk use grows
Why add retail stores to the mix? “We feel it’s important to round out all of the other options we have available,” from online tools to community events, Smart says. “We offer all of these options so people can meet us where they’re most comfortable...[and] wherever it is most convenient to them.”
In 2014, BCBSNC says 257,704 individuals enrolled in its exchange plans, and an additional 57,138 enrolled in its plans outside the exchange. BCBSNC says it had 238,800 individual policyholders enrolled in grandfathered and transitional plans last year.
In 2012, BCBSNC began a strategic collaboration with FastMed Urgent Care, investing an undisclosed sum to help FastMed expand its network of physician-owned clinics across the state--there are now 50-plus locations--and also to launch programs for Blues customers. BCBSNC officials said working with FastMed was desirable because of FastMed’s capability for a dual model of care--primary care during the day, urgent care at night--and because it offers suturing and bone-setting.
Through organic growth and acquisitions, FastMed projects that it will serve more than 1 million visitors in 2015 at its 87 clinics in North Carolina and Arizona.
Brian Caveney, MD, BCBSNC’s vice president and medical director, says the insurer “actively promotes to our individual and employer group customers that we can help them get the right level of care from the most efficient resource, including finding a primary care home, using our Health Line Blue where a nurse is available to answer questions around the clock, retail clinics, urgent care centers, and emergency rooms when appropriate.”
In 2014 BCBSNC saw its lowest emergency room utilization rate in the decade, Caveney says, which he partly attributes to the significant increase in members’ use of urgent care centers and retail clinics. BCBSNC “has nurse care managers in high-volume FastMed clinics...[who] can help identify and close care gaps and streamline the process of additional services,” he notes.
Over the past six years, Highmark, the Pittsburgh-based Blue Cross Blue Shield insurer, has opened six retail stores within its service area. In its stores, Highmark handles customer service for members and discusses products with potential customers, serving Medicare and the under-65 population alike. “It’s interesting, because they have very different needs,” says Anthony Ryzinski, Highmark’s vice president of marketing. “We have great demand. We actually have capacity issues.”
He estimates about half of Highmark’s retail store business is Medicare, which he describes as a substantial increase over its previous share. “We have 126% more sales this year [in 2015 over 2014], so the sales keep increasing,” he says. “We also look at the mix of customers we bring in, because we want the stores to make business sense, and we’re happy with where things are headed.”
Indeed, Highmark anticipates further expansion of its retail stores. “We’re looking at different geographies to figure it out, but we intend to expand,” Ryzinski says. “All I do know is we’ll retrofit existing stores to accommodate more people. That’s a near-term adjustment.” He says Highmark has made other adjustments, including a shift to longer hours during open enrollment periods and to seven days a week.
“When a person walks in the store, there’s an extremely high conversion rate. When they come, they come to buy,” he says. The bottom line? “People want a personalized experience...You have to bring your customers along with you, and they have to see a reason to engage.”
Judy Packer-Tursman is a journalist based in Washington, D.C. who has covered healthcare issues for nearly 30 years.