Seasonal slump shutters 89 MinuteClinic locations

Gaining patients year-round has been a problem plaguing several retail clinic chains.

By Pamela Lewis Dolan — Posted March 30, 2009

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MinuteClinic's decision to shut down 16% of its locations for the spring and summer shows what one analyst calls "a structural flaw" in the retail clinic business -- attracting patients when the heavy illness season ends.

Industry watchers say retail clinics, originally pitched as a cheaper way for the uninsured to get primary care, instead are more likely to see families with two working parents who can't get themselves or their children in during the day for a sick visit with a physician.

They say MinuteClinic's move could indicate that the in-store clinics most likely to succeed are those run by hospitals and physician groups. That's because they have the existing patient populations to sustain business year-round, or at least offset lower in-store clinic traffic with visits at other practices and facilities.

Analysts expect other chains to move toward an approach similar to MinuteClinic's -- but that comes at a risk to the image of convenience the clinics sell.

"You can't preach convenience and consistency out of one side of your mouth and then have it sort of up in the air as to whether that clinic is open or not," said Tom Charland, president and CEO of Merchant Medicine, a Shoreview, Minn.-based retail clinic consultancy firm.

CVS Caremark-owned MinuteClinic, the first and largest retail clinic chain in the U.S., said in March it would shut down 89 of its 545 clinics as part of a new strategy to operate some locations on a seasonal basis. The clinics are scheduled to reopen next fall, when flu season begins. The company said the decision was made to adjust to consumer demand.

Some industry insiders think the move likely will be the catalyst that prompts other clinic chains to follow suit as they all have struggled to fill capacity outside of cold-and-flu season.

Ted Epperly, MD, president of the American Academy of Family Physicians, said the existence of retail clinics is further evidence of the core problem in health care, which is a shortage of primary care physicians. He said retail clinics are gaining business from patients who can't get in to see their primary care physicians, a problem that is at its worst in the winter months.

Tine Hansen-Turton, executive director of the Convenient Care Assn., the trade group to which several retail clinic chains belong, including MinuteClinic, said the organization's focus has been on serving more patients, not necessarily on the number of clinics in operation.

"As the industry grows, we expect to see increased adaptation of the model, based on input from consumers and usage patterns," she said in an e-mail to American Medical News.

According to Charland, filling capacity during the slow season has been the "structural flaw" of the retail clinic model. Industry experts say it takes about three years, on average, for convenience clinics to start turning a profit. But many have run out of money and have closed before then.

Some notable closures include CheckUps, which closed 23 of its clinics inside Wal-Mart stores in January 2008, and SmartCare, which shut 15 of its Wal-Mart clinics last summer. Still, the number of retail clinics is on the rise, with more than 1,100 clinics in operation, up from about 200 at the close of 2006.

Those that either have figured out a way to bring the retail clinic model to other sites or have found a way to drive business year-round are the chains that are thriving and will be the ones that survive, Charland said.

For example, Take Care Health, now owned by Walgreen Co., had its own growing pains in 2006 when it pulled completely out of the Portland, Ore., area because of low patient volumes. But it has expanded its business by entering the worksite clinic market.

"We believe that we are more than just a cold, cough and flu clinic," said Take Care Health spokeswoman Lauren Nestler. "And no doubt there is seasonality to any health care business. But it's really about making that commitment on a year-round basis. So being a part of this larger network of the Walgreens health and wellness division definitely helps create the platform and that foundation for us to provide solutions not only at the workplace but also in the communities year-round."

Dr. Epperly said many AAFP members are changing their practices' business models to include urgent care hours convenient to those who are most likely to use the retail clinics -- families with two working parents.

Because existing patients with insurance have been among the most likely to use retail clinics, it really presents an opportunity for hospital and physician group-run retail clinics. Those clinics "have access to patients that can offset the seasonality," Charland said.

Clinics run by hospitals and physician groups can drive existing patients to the retail clinics for non-acute, year-round needs such as chronic disease management, wellness checks and physicals, he said.

But MinuteClinic is far from giving up on year-round clinics. In fact, soon after announcing the seasonal shutdowns, the company opened new, year-round locations in Massachusetts.

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