Last Thanksgiving, Bobbi Radford showed up at the CVS MinuteClinic in Batavia, Ohio, because of pain in her arm.
“I waited an hour and then I was told to go to the (emergency room),” Redford said. After detailing her history of congestive heart failure to staff, she was directed to go to the emergency room. But after she did, the emergency room determined she had tennis elbow, Redford said.
“It was a waste of my time, and I still had to see my family doctor,” Redford said.
Despite its early promise of convenience and accessibility, in-store clinics have not become the golden goose that many retailers originally envisioned. That’s why Walmart recently announced it would close 51 of its in-store full-service medical centers. Another symptom of the market downturn is Walgreens, which announced 160 VillageMD locations closed (Walgreen owns 63% of VillageMD, which also operates independent clinics). MinuteClinic at CVS, the largest in-store clinic with more than 1,100 locations, has announced Dozens of clinics closed This year in Southern California and New England.
Not all patient experiences are negative. Karla Lemon of Conway, South Carolina, said she uses MinuteClinic at CVS to get vaccinations or treat sinus infections. “My experience with them has been great,” Lemon said.
But the business experience in the retail health clinic space has been largely disappointing. For Timothy Hoff, a professor of managed health systems at Northeastern University, this is no surprise. Hof studied retail medical clinics and how they provide primary care and said profits can be thin or non-existent and many other challenges hinder their success. What was considered a “2.0” version of primary health care not long ago is now being left behind as in-store clinics close.
“1.0 was the rise of urgent care centers. These places gave people an alternative to their primary care physician 20 or 30 years ago,” Hough said. But about 15 years ago, Hof said, the space started moving into high-traffic stores, like grocery stores and department stores, and providing health care services to try to meet people where they are. But this brings with it challenges that many retailers, and even some suppliers, are unfamiliar with.
“Some of these organizations are growing this part of their business too quickly and are not aware of the cost model to sustain these businesses,” Hough said. Insurance reimbursements at these clinics are low, but costs rise significantly. Hough added: “I just think the math isn’t there in a lot of places right now. Some of these large organizations are retrenching and pulling back.”
Retail clinics rely on sales. “If you can’t pump blood to a large number of patients, then it’s not going to work,” Hof said. Staffing has also been a struggle. “They ended up having higher operating costs than they thought, and combined with the labor shortage, they simply couldn’t work.”
There’s also the issue of cross-selling. Many retail chains view clinics as loss leaders, directing customers to other products and services they sell: luring customers in the hope they buy something else. But the model never materialized. If someone is seriously ill and needs medical treatment, they may not be in the mood to buy a pint of ice cream or socks when they go out. Likewise, “people who come to buy groceries don’t necessarily go to the clinic,” Hof said.
MinuteClinic’s Retail Reality Check
Colleen Sanders is a family nurse practitioner in Washington, D.C. who now works in health care education and has worked at MinuteClinic for two years. She pointed to profit and staffing issues she witnessed.
“Healthcare is a business in America; while we’re seeing huge numbers in the billions of dollars being generated, that doesn’t mean there’s going to be big profits. I think retailers have realized they’re not going to make the numbers. Millions of dollars. “The margins are small. “
At the same time, staffing costs cut into already slim profits, meaning that when Sanders worked at MinuteClinic, she had to do everything from checking people in, billing at the end of the day and cleaning clinics without any support The personnel were inadequately trained at best, she said. “It’s a model to make sure they can do that so they don’t have to add staff. But as volumes increase, you need support staff so professionals can spend their time caring for patients because that’s what you can charge insurance for.” And where the income is.
The 15 minutes she is allotted to visit a patient are often not enough to treat the complex illnesses people sometimes suffer from. For some patients, service simply wasn’t fast enough: Sanders recalled a 7-year-old she was treating who said the session took more than a minute. Ultimately, America’s “want it now” culture doesn’t align with medicine, and that’s exactly what the closure of retail clinics is sending. “The pace at which we want health care to work is not commensurate with the level of service we actually provide and the cost of support staff,” Sanders said. “If we want to make progress in retail health care, then we will have registered nurses instead of Medical Assistant, but that would cost too much.”
CVS would not comment directly on the closures, but a spokesperson described the latest strategy as a combination of care delivery capabilities — a combination of virtual, in-store and at-home services — to provide a “more convenient experience.”
Walmart and quantity and price issues
In 2019, Walmart announced a bold move to open 4,000 in-store health clinics by 2029.
“Primary care is a low-margin business,” said Arielle Trzcinski, principal analyst for health care at the research firm. Forrest. “Healthcare is a fundamentally different business than what they see in traditional retail,” Trzcinski said, citing challenges faced by insurance companies and the administrative burden that comes with health care.
Retailers cannot recoup money by providing primary care at a loss like other health care organizations.
“Primary care is for patients who need higher acuity services, such as surgery or specialists. Hospitals make money on the back end, and Walmart or Walgreens don’t have that,” Trzcinski said. CVS is doing better because it merged with health insurer Aetna and can now upsell other services, including mental health.
“Walmart ultimately thought they were solving an important problem,” Trzcinski said. But she added that Walmart never really committed its full marketing efforts to supporting the effort, nor did it build relationships with other employers to create pathways into clinics. “They’re committed to making health care more affordable and convenient for their customers. But to do that, you need volume… It takes volume or a different pricing structure to make it work, and Walmart Ultimately neither calibrated correctly.
Rural America’s missed opportunity
Saunders said the limitations of the business model even undermine one of the great promises of the retail clinic concept: delivering care to rural areas.
“Walmart is trying to go into rural areas where suppliers are scarce and meet community needs; I think that’s a good idea because everyone knows where the local Walmart is. But it’s really challenging to get suppliers to work in rural areas. Small towns. The quality of life and the things people can do are not as attractive as in urban centers, so they pay vendors extra to have them work there,” Sanders said, which is another thing that eats away at revenue.
Retailers will continue to experiment with this model.
Dollar General, for example, tried a “workaround” by offering mobile clinics to some of its rural locations and offering a variety of small medical services.
Amazon’s recently launched One Medical, which charges existing Prime members a $9 monthly subscription fee, offers another way to make money.
“Whether you end up using the service or not, they charge you cash, and if you need care, it’s a great deal,” said Virgil Brantz, CEO of MacroHealth, a fintech health platform based in Washington. Care is virtual, but if you Close to One Medical facility, you can walk in. Unlike most models that rely on patients to make money, “Amazon makes more money if you don’t show up. So this retail model is a little different,” Brands said.
In-store health clinics can be profitable and viable, and retailers are experimenting with piecemeal approaches tailored to local markets. Walgreens recently announced the opening of several in-store health clinics in Connecticut, which will be operated by Hartford HealthCare and will be called “Hartford HealthCare at Walgreens.” Patients will be able to go beyond typical small clinic services and take advantage of Hartford’s larger network of specialists and care options.
In Phoenix, a Be Well Health clinic specializes in sexual health issues at a Walgreens near the Arizona State University campus.
“The common denominator is that it’s a local partnership with a local supplier with the shared goal of providing convenience and convenience,” a Walgreens spokesperson said.
Meanwhile, in Atlanta, Kroger’s in-house Little Clinics are opening The focus of services shifted to elderly care.
Walmart and Kroger did not respond to requests for comment.
It’s all part of what Hof calls “Healthcare 3.0,” the continued disruption and evolution of primary care services based on market and customer needs, including retail clinics. New models will emerge, but not all of them will work.
“Every few years, there’s a group of outsiders trying to make changes in health care, for better or worse,” Brands said. Inevitably, they “run into the reality of health care’s complexity.
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