Healthcare goes retail

September 22, 2020
Susan Ladika
Volume 30, Issue 9

CVS Health, Walgreens and Walmart are pushing ahead with ambitious plans for in-store clinics and doctor’s offices.

With COVID-19 still leaving many Americans wary of going to the doctor’s office for in-person care, large drugstore chains and retailers are seeing an opportunity for new patients for their in-store health clinics. The clinics are “a one-stop shop” where patients can see a healthcare provider, get help managing chronic conditions, pick up medications and have laboratory tests done, says Kulleni Gebreyes, a principal and physician leader at Deloitte. She says retail clinics haven’t seen a drop in patient volumes since the outbreak began in mid-March. Physician groups, including the American Academy of Family Physicians and the American College of Physicians, have put out policy statements expressing reservations about the clinics possibly undercutting primary care, but retail clinics are now an established part of American healthcare delivery.

The competition is heating up among the retailers. Walgreens Boots Alliance announced in July that it was planning to open 500 to 700 offices inside its stores over the next five years in partnership with VillageMD. Walmart opened two additional Walmart Health clinics in June, giving it four in the South. These Walmart clinics offer dental, vision and behavioral care, fitness programs and assistance with health insurance issues, as well as medical services. And, clearly, Walmart is bringing its low-prices game to healthcare: A price list on Walmart’s website shows a price of $40 for an office visit, $25 for a dental exam with X-rays and $60 for a therapy session for new patients. “Walmart is committed to making healthcare more affordable and accessible for customers in the communities we serve,” Marilee McInnis, a company spokesperson, said in an email.

One of the virtues of the retail clinics is the price transparency, a sharp contrast to the blanket of obscurity that cloaks price in most parts of the U.S. healthcare system (see page 28). Retail clinics allow patients to “clearly see upfront” the cost of care, Gebreyes says, and the retail clinic cost is often two to three times lower than more typical providers. That cost difference may loom large now with millions of Americans being laid off and losing employer-based healthcare insurance, which tends to be more generous in Medicaid or ACA exchange plan coverage.

A growth business

Walgreens’ deal with VillageMD put the drugstore chain in more direct competition with CVS Health, which pioneered the retail clinic with its MinuteClinics and now has ambitious plans for its HealthHUBs, designed to provide services to manage chronic conditions. CVS says it has plans to have 1,500 HealthHUBs operating by the end of 2021. In its first-quarter earnings call, the company said it had almost 100 locations in 17 states up and running in April, but the conversion of more stores had been put on hold because of COVID-19.

Walgreens and VillageMD say they expect to have clinics in more than 30 markets, with more than half located in underserved areas as designated by the Department of Health & Human Services. After a first phase of five years, hundreds of facilities will be added, the companies say. The offices will be located inside existing Walgreens locations, with most taking up about 3,300 square feet, an area approximately three-quarters of the size of a basketball court. Some will be as large as 9,000 square feet. During the first five years, VillageMD is expected to recruit more than 3,600 primary care providers. Walgreens pharmacists will be part of a patient’s care team.

The two companies tested the in-store primary care offices at five Houston-area Walgreens starting in November. “This rollout is a major advancement of one of Walgreens Boots Alliance’s four key strategic priorities, creating neighborhood health destinations,” Stefano Pessina, executive vice chairman and CEO of Walgreens Boots Alliance, said in the press release. As part of the deal, Walgreens is investing $1 billion in VillageMD over three years, and when the deal is complete, the pharmacy giant will hold a 30% stake in the company.

Last year, Walgreens seemed to be in partial retreat from the in-store healthcare clinic market. In October, the company announced it was shuttering the 150 clinics that it operated on its own. But partnership seems to be the company’s strategy. Walgreens has 230 clinics that are run in conjunction with local health systems that provide acute medical care, a spokesperson said in an email. The company also has 14 primary care locations, including five senior-focused clinics operated with Humana. Four are in the Kansas City area and one is in South Carolina, and the companies are evaluating new locations for expansion.

Walmart hasn’t said how many more of its Walmart Health centers are in the works, but McInnis said expansion is planned.

Higher ambitions

Although many of the current generation of retail clinics only provide urgent care for minor acute issues such as strep throat or an ear infection, or routine care such as vaccinations, others have higher ambitions and can play an important role in helping patients manage chronic conditions, Gebreyes says.

If someone has diabetes, for example, they can come to a retail clinic and get the medication and supplies they need, along with foods to help them eat healthily, she explains. Some have a greeter at the door who helps patients navigate the clinic and the services available, says Gebreyes. “(They) respond very positively to it.” The convenience factor also works in favor of the retail clinics. According to CVS Health, the company has more than 9,900 retail locations and more than 1,000 MinuteClinics. Walgreens says it has more than 9,000 drugstores.

James Beem, managing director of global healthcare intelligence at J.D. Power, says patients appreciate the opportunity retail clinics give them to consult with healthcare providers. Patients say that often at doctor’s offices they are “rushed in and out without enough time to converse.” (Some might notice the irony of MinuteClinics giving patients more time.)

Whereas telehealth has taken off during the pandemic, many patients are hesitant to get in-person care, but “(they) still want to be able to have face-to-face consultations and be examined without a digital interface,” says Beem. Now that CVS owns Aetna, the insurer may steer patients with chronic conditions to HealthHUBs, making CVS Health “100% responsible for patient care and outcomes,” notes Beem.

One possible drawback to receiving care at a retail clinic is the lack of integration of your medical information into your core medical record, Gebreyes says. And there is concern that because of their accessibility and affordability, retail clinics could drive up unnecessary utilization of services, she says.

The next frontier in retail clinics could be behavioral healthcare, such as that offered by Walmart, Gebreyes says. An ongoing shortage of mental healthcare providers, combined with the stress many people are feeling because of the pandemic and the rocky economy, are overtaxing behavioral health services. And even if patients can get appointments with a mental healthcare provider, they may be reluctant to visit one in person. “People don’t have great access to behavioral healthcare,” Gebreyes says. “Retail clinics can be a great place for stigma-free care.”

Susan Ladika is an independent journalist in Tampa, Florida, who writes about healthcare and business.

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