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A new RAND analysis of retail clinics finds they could be increasing healthcare costs.
A common assumption is that retail clinics will reduce healthcare costs, by reducing unnecessary emergency room visits. However, a March 2016 study in Health Affairs by RAND revealed a $14 increase per year in total healthcare spending per person with low-acuity conditions, whether they received care in a retail care setting or a physician’s office.
According to researchers, 58% of retail clinic visits for low-acuity conditions represented new utilization, while 42% represented substitutions for a visit to a physician office or emergency department. This suggests most consumers using retail clinics weren’t using them as an alternative to care at a costlier site. In fact, the convenience of retail care could be driving people to seek care at clinics that they might otherwise not have sought out.
The study focused on 11 low-acuity conditions-such as upper-respiratory infections, urinary tract infections, and influenza-which represent more than 62% of all visits in retail health settings. It included 519,542 patients with at least one retail clinic visit and 861,557 other enrollees chosen at random; the randomly chosen patients were selected based on similarities with patients who went to retail clinics (similar demographics such as sex, age, location, and health status). Capturing data on patient visits from 2011 to 2012, the study included patients who received coverage from insurer Aetna, which provided the data.
Researchers defined retail clinics as those located in pharmacies, grocery stores, and “big-box stores” such as Walmart and Target. The clinics primarily provide care for a limited set of low-acuity acute conditions such as urinary tract infections as well as preventive services such as immunizations.
MehrottaAteev Mehrotta, MD, associate professor of healthcare policy and medicine at Harvard Medical School and one of the study’s researchers, says he wasn’t surprised by his team’s findings. If you make care more convenient for patients, they are more likely to access it, he says.
Emily Zuehlke, research consultant with The Advisory Board Company consulting firm, notes that while retail clinics have acted as “a pressure-relief valve for physicians’ offices,” a long-term view is important when considering how these clinics impact healthcare costs. “Some estimates show that, by preventing health risk escalation and thus downstream utilization, retail clinics can reduce total healthcare spend by a few hundred dollars per patient. Long-term savings could therefore outweigh the $14 per person cost that this study shows can result from increased retail clinic utilization to manage low-acuity conditions,” says Zuehlke, citing a 2013 study published in The American Journal of Managed Care.
Next: Partner or compete
HafnerMost health system executives have a hard time determining whether they should compete or collaborate with retail clinics, says Zach Hafner, partner at The Advisory Board Company. Initially, many executives-especially those with trusted brands-decide that the clear choice is to compete. But Hafner often counsels that this perspective is “inside out.”
What to consider instead, says Hafner, is an “outside in” strategy, focusing on what consumers want-and, namely, that’s better, or even immediate, convenient access to the healthcare system, which a retail clinic can help provide. Still, this varies depending on the market, he says. In some markets the health system is better positioned than the retail clinic provider, and partnering with the retail clinic doesn’t make the most sense, he says.
Health system partnerships with CVS-Minute Clinics and The Little Clinic are branded affiliations with medical oversight, while partnerships with Walmart are examples of a health system having full control or operational control over the retail clinic. For example, providers triage the referrals in network and directly accrue clinic revenue, says Zuehlke.
Collaborating with retail clinics is also a good move for payers who are interested in setting up a narrow network product while providing convenient options for members. This can be a mutually beneficial arrangement, since it also provides members with access to care in exchange for lower premiums. In addition, Hafner says, for self-insured employers, access to care for employees at retail clinics is a “real satisfier” because it doesn’t require negotiating rates with a wide variety of providers.
Aine Cryts is a writer based in Boston.