Executive Summary
Beginning in 2014, the Patient Protection and Affordable Care Act, signed into law in March 2010, is expected to significantly extend health-insurance coverage in New York by increasing Medicaid enrollment and offering federal subsidies for the purchase of private health insurance. However, there is no guarantee that the newly insured will be able to access the health-care system in a timely fashion as new demand for services outstrips physician supply.
After a similar insurance expansion in 2006, Massachusetts patients had to wait longer for physicians’ office visits, and hospitals noted a surge in emergency-room use. This suggests that New York policymakers should look for new ways to expand access to health-care services well in advance of full health-reform implementation.
In this study, we examine whether retail health clinics (also called “convenient care clinics”) have a role in alleviating pressure on overcrowded physicians’ offices and reducing inappropriate emergency-room use, thereby lowering overall health-care costs.
Published research and interviews we conducted suggest that retail clinics have the skills and organization to serve as convenient and cost-effective providers of basic health-care services, provided that certain troublesome and unnecessary regulatory barriers are lowered or removed. In particular, research suggests that:
• Retail clinics offer readily accessible, high-quality care for a relatively limited set of basic health-care ailments ranging from minor skin infections to sore throats and earaches. For the services they offer, quality appears to be at least equal to—and, in some cases, superior to—that offered by other types of providers.
• Total costs (to insurers and patients) of care at retail clinics appear to be significantly lower than those incurred by other types of providers such as physicians’ offices, urgent-care centers, and emergency rooms. Much of the lower cost can be attributed to the lower overhead associated with their retail location and widespread use of less expensive “mid-level” practitioners such as nurse-practitioners to provide care.
• A significant percentage of emergency-room visits could be safely and effectively redirected to retail clinics, saving millions of dollars annually.
• Patients are seeking care at retail clinics for appropriate conditions, and the availability of retail clinics does not seem to be increasing the utilization of such clinics for unnecessary care.
• Patient satisfaction with the care that they obtain at retail clinics is very high.
Finally, retail clinics may be able to help reduce Medicaid patients’ utilization of emergency rooms for minor ailments, although this would require retail clinics as well as Medicaid officials to create reimbursement and enrollment procedures that encourage appropriate retail-clinic use. Previous reports have suggested that expanding retail-clinic utilization in New York could reduce health-care costs by $350 million between 2011 and 2020.
There are currently fewer than twenty physician-owned health centers operating in New York State in retail stores such as Duane Reade and CVS, and they appear to be expanding slowly. Retail-clinic availability in New York State is also much lower than in other states with retail-clinic access. As of December 2010, New York ranked among the four lowest states in retail-clinic incidence per 100,000 residents, with just 0.1 clinics per 100,000 population, or 75 percent below the median for all states with retail clinics.
Among more affluent urban and suburban areas as well, New York is “undersupplied” with retail clinics. Although New York’s Metropolitan Statistical Area (MSA) is the nation’s largest by population, it ranks at the bottom of the thirty largest MSAs in retail-clinic incidence, with just 0.1 retail clinics per 100,000 population, or more than 80 percent below the median.
Several regulatory barriers keep retail clinics from locating or expanding their operations in New York State:
• Certificate of need: The state requires health-care providers to obtain certificate-of-need (CON) approval before opening or expanding health-care facilities, including what are currently called Article 28 diagnostic and treatment centers—a provision that affects retail-clinic operators. CON approval can increase the cost structure for potential retail-clinic operators to a prohibitive degree. The time and uncertainty involved in seeking regulatory approval can also deter health systems that are considering opening new clinics in retail stores in the state.
• Prohibitions on the corporate practice of medicine (CPOM): New York State currently prohibits retail-clinic operators from employing even nurse-practitioners and other mid-level practitioners upon whom the cost savings associated with the model depend.
• Collaborative-practice agreements (CPAs): The requirement that nurse-practitioners engage physicians to conduct quarterly chart reviews can make the state less attractive than states that offer nurse-practitioners complete practice autonomy. The cap on the number of nurse-practitioners who can be monitored by a single physician can also drive up costs for clinic operators, which must hire additional physicians to provide oversight.
Many states do not require any additional regulation or licensure beyond that required of the providers who treat patients there. New York’s regulations go well beyond this, either prohibiting or making it much more difficult for certain types of retail clinics to operate.
Ideally, legislators would repeal costly regulations that inhibit retail-clinic entry and expansion in New York. However, repeal appears unlikely. A second-best, but still effective, option would be to create a specialized licensure process for retail clinics that would streamline regulation of one or more retail-clinic models and allow corporations that operate retail clinics to employ providers directly, as dialysis treatment centers now do. Nurse-practitioners could also be allowed to practice outside of a collaborative-practice agreement, as nurse-midwives may do. Massachusetts enacted a similar set of reforms in 2008.
These reforms could focus on maintaining basic standards of consumer protection while leveling the playing field between physician-owned clinics and clinic operators that employ nurse-practitioners. An open-door policy toward retail clinics of all kinds would help ensure that federally mandated reforms not only expand insurance coverage but also improve patient access to cost-effective care.
Introduction and Overview
On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act into law. Beginning in 2014, the legislation is expected to extend health-insurance coverage to approximately 32 million previously uninsured Americans through a combination of Medicaid program expansion and federal subsidies for the purchase of private health insurance1 on newly created state health-insurance exchanges.2 In New York, one report projects that nearly half (1.2 million) of the state’s 2.6 million uninsured residents will acquire coverage.3 Hundreds of thousands of New Yorkers eligible but not enrolled in the state’s Medicaid program will also be able to obtain automatic coverage on the exchange.
Even before reform was enacted, policymakers and medical groups recognized that an increasing shortage of primary-care physicians was threatening patients’ ability to access primary care in a timely manner.4 The complex and varied reasons for the shortage include: stagnation or decline in the size of reimbursements by private and public insurers; much more generous reimbursements for specialists, which medical school graduates therefore seek to become; and the rising demands of an aging population for care.
The shortage of primary-care physicians may threaten the ability of the Affordable Care Act to achieve some of its central goals, such as reducing overall health-care costs by relying on primary-care providers to promote disease prevention and manage chronic disease through the medical home concept.5 The lack of access to primary care may also force newly insured patients to delay care or seek it in more expensive places, such as hospital emergency rooms.
The collateral effects of similar reforms enacted by Massachusetts in 2006 suggest that these concerns are not unfounded.6 The expansion of insurance there seems to have exacerbated existing physician shortages and increased patients’ wait times to see primary-care physicians and certain specialists.7 In July 2010, Massachusetts released data showing that use of emergency rooms in the state increased by nearly 10 percent from 2004 to 2008, disappointing hopes that broader insurance coverage would reduce it. The same report noted that “expanded coverage may have contributed to the rise in emergency-room visits, as newly insured residents entered the health-care system and could not find a primary-care doctor or get a last-minute appointment with their physician.”8 Although the Affordable Care Act contains a number of provisions designed to encourage physicians to enter primary care, experts continue to predict a national shortage of physicians in coming years.9
The BlueCross/BlueShield Perspective in Minnesota
BlueCross and BlueShield (BCBS) of Minnesota contracted with MinuteClinic, a retail-clinic chain, in 2003 to provide in-network services to its members, the first partnership of its kind in the nation. Since then, tens of thousands of Minnesotans have visited retail clinics, enjoying very high levels of satisfaction with the range of services, quality of care, and cost savings that they provide. BCBS continues to reimburse MinuteClinic, as well as Target Clinics and several other operators.
Having discovered that costs are lower when patients choose clinics for treatment of minor ailments, BCBS has waived clinic co-payments, making the cost to the patient of a clinic visit cheaper than a visit to a primary-care physician. Indeed, clinics have become so popular that BCBS frequently receives requests, either directly from members or through their agents, to add retail clinics. As for the quality of care, it is equal to that offered by traditional medical offices.10
Before admitting a clinic to its network, the plan determines whether its members have a need for the service in the clinic’s area. If there is in fact a need, the plan reviews the applicant’s license and board certification, including its Drug Enforcement Administration registration and the status of its medical malpractice insurance. The plan also checks to see whether any sanctions have been lodged against the provider. After all these requirements have been met, a standard contract can be offered. (Full details of the credentialing process are available at www.bluecrossmn.com.)
The clinics are particularly useful for filling gaps in care, especially on nights and weekends. Before the advent of retail clinics, members had only a couple of choices: delay care; or utilize an emergency room (ER) or urgent-care center.
As long as the member shares his primary-care provider’s contact information with the retail-clinic operator, the retail clinic will forward to the provider information obtained during the member’s visit, minimizing possible disruptions in care continuity. Increasingly, traditional providers have been recognizing the value of retail clinics; some, such as the Mayo Clinic, have even opened their own. The Minnesota market seems to recognize the ability of both models to serve a particular niche.
Among the scholars, retail-clinic operators, and policymakers with whom we spoke for this study, there was broad agreement about the importance of developing additional venues where patients could access primary-care services. Access problems are probably going to worsen over the next several years as a result of the federal health-reform law. Without convenient alternatives,10 more people will seek nonemergency, even routine, treatment at emergency rooms, the most expensive venue for such care. Retail clinics could become just such a convenient alternative, at least for treatment of certain common health problems.
The benefits that health clinics offer may not be limited to what goes on inside them. They may also have a salutary impact on other types of providers.12 Their emphasis on convenience and customer satisfaction could encourage other providers to be more flexible in scheduling appointments. These providers might also develop more intensive ways of using nonphysicians on staff. And by following evidence-based protocols, which have proved to produce superior medical outcomes, they would be establishing a benchmark that other providers might feel obliged to meet. Finally, by assuming the treatment of minor illnesses, they could increase the efficiency of the overall health-care system by allowing more highly trained providers to devote their skills to treating patients with complex ailments.
These improvements are likely to result in significant cost savings. Indeed, a 2010 report on reducing health-care costs in New York State found that expanding access to retail clinics could reduce the health-care spending of public and private payers by $350 million in 2011–20.13
New York, like other states, will have to find new ways to meet the surge in demand precipitated by the advent of federally mandated universal insurance coverage. The states must as well contain costs in an expensive health-care system that relies heavily on hospital and emergency-room care. Part of this challenge could be met by expanding access to basic primary-care services in nontraditional settings such as retail health clinics.
Part I: Retail Clinics—the Basics
Structure and Function
Christensen, Grossman, and Hwang (2009) describe retail clinics as a disruptive innovation that gives consumers a “more convenient and affordable way to access basic health-care services, which are based on evidence-based protocols.” The model assumes a store setting (although some clinics do operate as “stand-alone” facilities in malls or other retail areas), most often a pharmacy outlet in which “mid-level” providers like nurse-practitioners or physicians’ assistants provide treatment. No appointments are required, and the vast majority of retail-clinic encounters are concluded in twenty minutes or less.
With lower wages and overhead than physicians’ offices, urgent-care14 clinics, or emergency rooms, retail clinics appear to realize substantial economies by providing a limited menu of basic services, including treatment of basic ear, throat, urinary-tract, and skin infections; physicals (for work and school); and immunizations. Basic wellness or screening services (for chronic conditions such as diabetes and high cholesterol) are also routinely available at retail clinics.
The relatively narrow range of their repertoire of services enables them to provide superior care. Patients who are suffering from more complex, medically challenging problems receive referrals. With those services they do offer, clinics strictly follow treatment protocols, unlike much of American medicine. As a result, they do as well as, or better than, other providers in delivering care.
One scholar with whom we spoke said that she believed that retail clinics can play an important role in two areas of what we might call “basic health care”: immunizations and blood-pressure checks, which should be made more widely available; and acute care for basic health problems such as common infections, which a broad assortment of conveniently located clinics would be in a position to address immediately.
Retail operators and their advocates suggest that the model can also improve access to basic health care for the uninsured, the underserved, and even, perhaps, Medicaid recipients. Diversion of these patients from emergency rooms, to which they frequently turn, could save private insurers and the government considerable sums.15 Some health-care experts and clinic operators further argue that retail clinics could handle the routine screening and monitoring of patients with basic chronic illness. Doing so would promote compliance with treatment regimens and help prevent diseases from going untreated, which usually results in high-cost health-care encounters.16
History and Current Market Structure
Two basic questions regarding any potential health-care innovation are: Is it financially sustainable? And is it replicable? When the first retail clinics opened in 2000, they did not accept insurance, relying entirely on out-of-pocket payments. Today, the vast majority of clinics do accept insurance, and they depend on it financially. Rudavsky et al. (2009) report that almost all retail clinics accept private insurance (97 percent) or Medicare fee-for-service reimbursement (93 percent). Far fewer (60 percent) accept Medicaid, which does not appear to be a significant source of revenue for them. Mehrotra et al. (2008), however, found that out-of-pocket payments remain a significant (30 percent) source of revenue.
Retail Clinic Industry Overview
Initially operated by small, independent companies, the majority of retail clinics are now “fully owned subsidiaries” of Fortune 50 corporations. CVS (MinuteClinic), Walgreens (Take Care), and Target (Target Clinic) operate 73 percent of all U.S. clinics (Rudavsky et al., 2009).
The entry of major corporations into the retail-clinic market helped initiate a period of rapid retail-clinic expansion from 2006 to 2009. As a result of their presence, the market has a stronger financial base.
Like many promising new business models, retail clinics went through a period of rapid expansion and investor optimism, which was followed by retrenchment and more cautious growth. Rudavsky et al. (2009) report that in its first five years, the industry added only twenty-nine clinics; then growth accelerated rapidly, with the industry increasing its number of outlets more than tenfold between 2006 and 2008. This trend reversed in 2009, with the industry closing about 5 percent of its outlets. However, growth is expected to revive as the overall economy revives.17 As of July 2010, thirty-eight different operators ran 1,177 retail clinics in the United States. Three large operators (CVS/MinuteClinic, Walgreens/Take Care, and the Little Clinic) comprise about 80 percent of the market.18 Nationally, through the first six months of the 2010, forty-one clinics opened and fifty-two closed, continuing the downsizing trend. New York currently hosts fifteen total retail clinics, seven hosted by MinuteClinic but owned and operated by Kimberly J. Henderson, MD, and eight hosted by Duane Reade (DR) but owned and operated by DR Walk-In Medical Care.19
At the height of the retail-clinic boom, analysts as well as operators predicted the rapid establishment of several thousand retail outlets nationwide. The current rate of growth does not support their optimistic outlook, but there are signs that the industry is poised for a resurgence.20 One industry consultant noted that the present contraction represents nothing more than the consolidation and restructuring of a maturing industry. A retail-clinic operator we interviewed for this study confirmed that site selection has only recently become sophisticated, giving operators and investors more confidence that newly opened locations will be self-sustaining. Scholars and industry analysts agree that individual clinics require significant daily traffic flow to break even, which is harder to achieve outside the peak winter cold and flu season.21
As a result, several smaller firms—which are typically less well capitalized and thus more vulnerable to short-term fluctuations in revenues—have closed, and some of the larger operators have scaled back their operations. For instance, the Kroger Grocery chain recently reduced the number of its Little Clinic outlets from 147 to 117.22 Wal-Mart, after experimenting with several retail-clinic strategies, announced that it would henceforth expand only in partnership with local health-care systems; as a result, several small regional chains closed the clinics that they operated in Wal-Mart stores.23
However, the period of retrenchment may be ending. CVS/MinuteClinic, the industry leader, with 500 clinics operating in twenty-five states, recently announced that it expects to double the number of its MinuteClinics over the next five years,24 partly in response to the aging of the U.S. population and partly in the expectation that health-care reform will increase demand from newly insured patients for basic health-care services.25 Another industry leader, Walgreens, the owner of 350 Take Care Clinics in nineteen states, recently purchased New York-based Duane Reade and may be considering expanding its retail-clinic operations.
The Deloitte Center for Health Solutions (2009b) projects 10-15 percent growth in retail clinics in 2010-12, and over 30 percent growth by 2014. Indeed, the scholars, operators, and policymakers we interviewed for this study were nearly unanimous in their belief that pressures on primary-care access will increase after the full implementation of the Affordable Care Act in 2014 and that retail clinics may help reduce these pressures as well as overcrowding in hospital emergency rooms. (As we noted earlier, Massachusetts’s experience with health-care reform suggests that the increase in insurance coverage may also increase the use of emergency rooms and lengthen wait times for primary-care visits.26 Indeed, Massachusetts created a special regulatory pathway for retail clinics in 2008 in part to improve access for consumers with minor health problems.)27
Increasing numbers of physicians’ groups and health systems have endorsed the concept in the strongest possible way—by going into business with retail-clinic operators or opening their own clinics. Hospitals, health systems, and physicians’ groups account for over half of all operators, according to a RAND study, although they account for only 10-12 percent of all clinics, according to 2008 estimates.28 Retail clinics benefit from the brand recognition and its associations with quality offered by well-established health systems such as Geisinger and the Mayo Clinic.29 For instance, Wal-Mart has begun co-branding in-store clinics with trusted local health systems.30
The clinic model is also expanding outside of the retail space and adapting new models to reach the underserved. In 2009, the consulting firm Mercer reported that 10 percent of the 345 employers surveyed were considering opening primary-care clinics on premises. Lowe’s has already done so under the auspices of Careworks, the Geisinger Health System clinic brand.31 Also, several Federally Qualified Health Centers (FQHCs) and community health centers have expressed interest in opening clinics in retail areas or in retail stores to expand access for underserved populations.32 Wal-Mart has also expressed interest in hosting (on a landlord-tenant basis) local community health centers to offer retail-clinic services to its customers.
The Affordable Care Act calls for a substantial increase in funding for FQHCs, and it is expected that the universal coverage it mandates will increase demand at community health centers and thus revenue. Scott (2010) estimates that the number of community health centers could double over the next five years. To meet the need for a rapid increase in capacity and generally expand access, some community health centers are looking into opening satellite offices in retail locations, where they would offer a streamlined menu of services.
Scott (2010) also surveyed several health centers that were either considering expanding into retail settings or had expanded into such settings, reporting that two community health centers that did adopt the retail-clinic model were able to redirect about 2,000 visits from emergency rooms to their retail clinics, achieving savings of about $3 million over six to eight months of operation.33
In sum, although the industry is experiencing the same recessionary stresses as the broader economy, increased demand due to health-care reform and the entry of new operators suggest that the retail-clinic market is poised for new growth once the economy improves.
Geographical Distribution of Retail Clinics
The geographical distribution of retail clinics appears to be the product of a number of complex variables, including state regulations dictating the scope of practice of mid-level providers (and the degree of oversight, if any, that physicians must exercise); the prohibition of the corporate practice of medicine (CPOM), which prevents clinics from placing caregivers, including nurse-practitioners, on payroll; varying licensing standards; the varying supply of mid-level practitioners; the relative availability of insurance reimbursement for retail-clinic services; and the existing level of access to primary care and its rate of utilization.
The uneven distribution of such clinics nationwide suggests a wide variety of legal, regulatory, and economic circumstances on the ground. Rudavsky et al. (2009) estimate that as of August 2008, forty-two operators were running 982 clinics in thirty-three states.34 Of these, 43 percent were located in the South and 31 percent in the Midwest. Nearly half (44 percent) were located in just five states: Florida, California, Texas, Minnesota, and Illinois. Sixteen states and the District of Columbia had no clinics. (But see on p. 18 the table, “Retail Clinic Presence by State,” in which HealthCare 311, using a different methodology, identifies only five states as lacking clinics in December 2010, twenty-eight months after the Rudavsky survey was conducted.) Nearly 90 percent of clinics were located in urban areas. Rudavsky et al. also estimate that 11 percent of the U.S. population lives within a five-minute drive of a retail clinic and that 29 percent lives within a ten-minute drive.
When they are considering entering a new market, retail-clinic operators report, they first look at state regulations likely to have an impact on their clinics. Retail clinics are a low-margin business, and the costs that regulations impose could deter even the largest operators from entering a state or expanding their operations there. A regulatory issue that tests the very viability of the clinic model is the scope of practice that the various states delineate for nurse-practitioners and physicians’ assistants. One representative of a leading national retail-clinic chain we spoke with said that her company’s interest in developing a “national footprint” has been thwarted by some states’ narrow delineation of the scope of practice permitted such practitioners. States can also substantially add to the cost structure of retail clinics by capping the number of nurse-practitioners that may be monitored by a single physician under collaborative-practice agreements (CPAs)35 and by requiring physicians, as Texas does to some extent, to be physically present at least part of the time when collaborating nurse-practitioners are providing care.
The strictest CPOM states preclude corporations even from employing physicians’ assistants and other mid-level practitioners. New York and California are two of the strictest. Other rules (which we will discuss in our section on state regulations) can require what are termed “clinics” to meet construction requirements going well beyond basic health or fire-code standards or to exclude from the menu of services available to patients even procedures for which nurse-practitioners have been trained and licensed. Both types of regulation can drive up operating costs and make it impossible for clinics to turn a profit.36
Clearly, the cumulative costs of regulation affect the feasibility of doing business in a given state or expanding operations there. But some regulations are greater impediments than others. Firms such as Wal-Mart that serve simply as clinics’ landlords worry that the local health systems that would be their lessees may not be able to obtain certificate-of-need (CON) approval for new retail clinics, or may be able to do so only after a long, onerous, and expensive process that proves to be not worth pursuing. Retail-clinic owner/operators worry about CPOM and scope-of-practice rules affecting nurse-practitioners, on whose availability the economic viability of the model depends. In New York, as we will discuss later, retail-based clinics (or “health centers”) that are operated by physician-owned professional corporations (and thus classified as physicians’ offices) do not face any special regulatory requirements or barriers.
Concerns and Questions
Retail clinics first appeared only eleven years ago. Consequently, peer-reviewed studies of the phenomenon are relatively few in number, making sweeping judgments about their quality and their potential effect on the overall health-care system difficult to form.37 This has not prevented some physicians’ associations from expressing concern that the very attributes that make retail clinics attractive to consumers (particularly their retail setting and reliance on mid-level practitioners) may:
• Reduce the quality of care
• Disrupt the physician-patient relationship, a result of which could be limiting opportunities to provide preventive services
• Induce unnecessary care (such as the overprescribing of antibiotics)
• Reduce the financial sustainability of primary-care medical practices
Indeed, some researchers have cautioned that the very convenience of retail clinics may actually induce an increase in the number of medical visits for ailments that do not require medical treatment, adding costs to an already expensive system.
Perhaps the most serious concern is how (or whether) retail clinics fit into one of the central goals of U.S. health-care reform: creating and implementing a comprehensive, integrated framework for health-care delivery. These would be centered on Accountable Care Organizations (ACOs) that direct “bundled” health-care payments to the most efficient and effective providers. One of the most frequent criticisms of the current U.S. health-care system is that it is severely fragmented, with relatively little communication among providers or accountability for patients’ care, particularly of serious chronic conditions. Policymakers and providers may genuinely wonder whether retail clinics’ provision of episodic treatment will only increase fragmentation and frustrate reformers’ efforts to improve continuity and comprehensiveness of care.
The following section presents an overview of several key studies in the academic literature that examine questions relating to concerns about retail clinics’ impact on health-care costs and quality. It also discusses important limitations of the existing research and areas for further exploration.
Retail Clinics: Literature Review
A. Whom Do They Serve?
Research indicates that retail-clinic users are different in some significant respects from users of other primary-care providers. Mehrotra et al. (2008) compared details of 1.3 million visits to retail clinics in 2000-2007 with national data on visits to primary-care physicians and emergency departments. This study found that retail-clinic users were disproportionately young: 43 percent of them were between the ages of eighteen and forty-four, while only 23 percent of the patients of primary-care physicians belonged to that age group. Retail-clinic users were more likely to lack a regular relationship with a primary-care physician: only 39 percent had one, as compared with 80 percent of patients nationally who identified a usual source of care.
Drawing on administrative claims data for 2004-07 from a large national insurer that reimbursed charges of retail clinics that were in-network providers,38 Parente and Town (2009) found that users of retail clinics were younger than nonusers and in better health. They were also more likely to be female and living in less affluent zip codes in proximity to a clinic.
Some supporters of retail clinics have argued that the clinics would make medical care more available to low-income or other underserved populations. As yet, however, retail clinics appear to be less common in areas with such populations than they are in other areas. Rudavsky and Mehrotra (2010) reported that while 21 percent of the overall U.S. population resides in a designated health-professional-shortage area (HPSA), only 12.5 percent of retail clinics were located in one. The authors also note that “compared with other urban residents, the population that lives within a 5-minute retail clinic catchment area has a higher median household income … is better educated … [and] is less likely to live below the poverty line.”39 Distributions by gender, age, and number of uninsured match the general pattern for urban residents.
In short, Rudavsky and Mehrotra report there is little evidence that retail clinics are “preferentially” located in areas with underserved populations. This is to be expected, since “retail clinics are most commonly run by for-profit companies who want to reach as broad a segment of the whole population as possible…. [P]rimary care physicians’ offices are [also] often preferentially located in higher-income areas.”40 Urban areas also tend to offer the economic advantage of heavy foot traffic. Yet the greatest need for new primary-care options lies in rural areas, with their low population densities.
In contrast to Rudavsky and Mehrotra, who analyze the communities surrounding retail clinics, Tu and Cohen (2008) analyze a survey of retail-clinic users and find some support for the thesis that retail clinics may expand access for low-income and minority populations. They theorize that retail clinics benefit “the uninsured and those with high-deductible health plans who must shoulder the full cost of care out-of-pocket…. [C]linics could represent a more affordable, accessible option than the alternatives, especially hospital emergency departments.”41 Also, lower-income residents with less flexible work arrangements could benefit from retail clinics’ longer hours and walk-in policies.
Tu and Cohen report that about a third of clinic users were uninsured and that such users utilized the clinic at a higher rate than other groups. Underserved populations as well relied on retail clinics at greater rates than other groups. Families that reported “not getting or delaying needed medical care at some point in the previous 12 months were almost 2.5 times as likely to have used retail clinics as families without such problems.”42 In addition, “minorities, especially Hispanic consumers, were more likely to use retail clinics than white consumers.”43 Retail-clinic users reported convenient hours and location, flexible scheduling, and low cost as major reasons for using retail clinics. More than one in three users cited the lack of a usual source of care as a reason for choosing a retail clinic over other care options, such as an emergency room. Tu and Cohen warn: “If the growth of retail clinics falters, underserved groups already facing access pressures may suffer from the loss of alternate sources of care more than the rest of the population.”44
Overall, the research suggests that, like primary-care physicians’ offices, retail clinics tend to be located in affluent neighborhoods. However, it also suggests that for low-income and minority users of retail clinics that operate in their neighborhoods or nearby, retail clinics are an important and affordable care option. One scholar we interviewed who has studied retail-clinic access among the underserved says that there are a significant number of retail clinics in underserved areas but many more in “more affluent” areas. Still, he noted, studies have found that a “fair number” of the uninsured rely on the clinics for basic health services. He also recommends testing the model of FQHCs located in retail stores as a way of expanding access for the underserved.
RAND Retail-Clinic Snapshot
RAND researchers have published the most extensive empirical analyses of the retail-clinic industry. In a 2010 synopsis of eight RAND Corporation studies on retail clinics published in peer-reviewed journals (Health Care on Aisle 7), RAND reported that nearly 90 percent of retail-clinic visits were for “ten simple acute conditions and preventive care: upper respiratory infections, sinusitis, bronchitis, sore throat, immunizations, inner ear infections, swimmer’s ear, conjunctivitis, urinary tract infections, and screen blood tests. The same conditions account for 18 percent of visits to primary care physician offices and 12 percent of [emergency department] visits.”
Although the RAND research did not examine the impact of retail clinics on existing physician-patient relationships, it found notable that, “in multiple studies, the majority of retail clinic patients did not have a regular provider, so there was no relationship to disrupt…. The profiles of [emergency department] and retail clinic users were similar, and … it is possible that retail clinics could be a substitute site of care for some patients who now seek care in [emergency departments].”49 These served a population that lacked regular access to health care, treated a limited number of conditions for less cost than physicians’ offices or emergency departments charged, and had comparable quality scores, according to metrics developed by RAND.
However, RAND found little evidence that the clinics improved access to care for the medically underserved. It also found that clinics tended to be located in more affluent urban areas. While data showed that one in four patients at retail clinics utilized an emergency room when a retail clinic wasn’t available, clinics’ limited scope of practice and low fees for minor treatments suggest that their overall impact on overall U.S. health-care spending would be modest “at best.”
Retail-clinic operators have reported that low Medicaid reimbursements45 and the difficulty in becoming registered Medicaid providers act as disincentives for serving as many Medicaid recipients as they might otherwise serve. There is also some evidence that Medicaid’s requirement of a primary-care physician’s prior approval of visits to another provider prevents some beneficiaries with immediate medical needs from visiting participating retail clinics, out of unwillingness or inability to pay out of pocket.46
The research literature and interviews we conducted for this project suggest a number of other factors that may be constraining the use of retail clinics by Medicaid recipients or others living in underserved areas:47 for-profit firms’ location in more affluent urban and suburban areas; low Medicaid reimbursement rates (and slow reimbursement when claims are submitted); and complex Medicaid provider enrollment procedures. However, community health centers, including FQHCs, which serve underserved communities, are actively considering expanding services into the retail environment.48 Operators we interviewed that did not currently accept Medicaid indicated that they remain very interested in developing partnerships with state Medicaid programs, and would participate in pilot programs offering ways of reducing undue reliance on emergency rooms if they led to more generous reimbursements.
B. Are Retail-Clinic Users Satisfied with Their Experience?
Patient satisfaction with retail clinics appears to be very high. Hunter et al. (2009) report that 96 percent of patients were satisfied or very satisfied with their care; 96 percent also report waiting “not at all” or “less” than they had expected. A 2008 Harris Interactive/Wall Street Journal online poll asked, “Overall, how satisfied were you with your or your family member’s experience using an on-site health clinic in a pharmacy or retail chain?” Nearly 90 percent of respondents indicated they were very or somewhat satisfied with the quality of care; 86 percent were satisfied with the cost; 93 percent with the convenience; and 88 percent thought that clinics had “qualified staff to provide care.”
In a small study, Wang et al. (2010) conducted interviews with sixty-one patients at six retail clinics operated by two different companies (Sutter Express and Quick Care) in California. The top three reasons patients gave for using retail clinics were: short travel distance from home or work (77 percent), reasonable pricing (69 percent), and fast service (62 percent). Interestingly, 36 percent gave as their reason dissatisfaction with other providers such as primary-care physicians and emergency departments. Wang recounts, “One theme of the patient narratives was a ‘triage’ decision by the patient, taking into account the severity of their symptoms, their insurance status, and ability to pay for health care. This was illustrated in the idea that for appropriate minor conditions, retail clinics seemed a superior choice to urgent care centers or the [emergency department] … [or] provided a reassuring alternative to the wait-and-see approach of self-care because they could now ‘get a health care professional’s opinion.’”50
If a retail clinic was not an option, patients’ next strategy was to see a physician when they could (38 percent), or “wait and see” whether their condition resolved itself (30 percent). Emergency care (26 percent) and urgent care (18 percent) were the next alternatives. The uninsured were much more likely than the insured to seek care at an emergency department.
Overall, Wang et al. found patient satisfaction to be as high as that found in self-reported surveys conducted by retail-clinic operators and in direct consumer surveys. They conclude that “our study lends credence to the potential for retail clinics to serve as a mechanism to deter unnecessary [emergency department] visits and thereby help alleviate [emergency department] overcrowding…. With many public health facilities and safety net hospitals facing budgetary constraints, retail clinics may offer a market-based solution to provide health care at a price that is sensitive to patients’ willingness and ability to pay.”51
C. Metrics of Quality and Cost
One of the most serious concerns about retail clinics is that they might have a negative effect on the quality of patient care. A second concern is that in the pursuit of profit, they may prescribe too many pills or provide unneeded care. Physicians, in particular, have expressed concern that the addition of a new mode of service may further fragment care.
Researchers have tried to determine whether retail clinics offer more cost-effective care than other providers do. At first glance, retail clinics’ fees appear to be significantly lower than those charged by other providers for the same services. Prices are clearly listed and range from $50 to $75, with the majority priced around $60. Appointments with physicians can range from $55 to $250.52 As we discussed earlier, retail clinics have gone from being a “cash only” business to one increasingly covered by the benefits packages of employers, 42 percent of whom offered these packages in 2009, according to the National Business Group on Health.53 Co-pays are roughly what they are for visits to physicians’ offices, and some insurers waive these fees entirely.
Clinical Guidelines, Quality of Care, and Preventive Care
Woodburn et al. (2007) examined 57,331 MinuteClinic visits for adherence to clinical guidelines for the treatment of acute pharyngitis (sore throat). Nurse-practitioner and physician-assistant staff at MinuteClinics seeing patients who received a negative result from the rapid strep test adhered to such guidelines in 99.05 percent of cases and did not dispense antibiotics, while 99.75 percent of patients with a positive rapid strep test received an “appropriate antibiotic prescription.”
By way of comparison, Woodburn cites one national survey finding that 70 percent of adults presenting with pharyngitis were inappropriately prescribed an antibiotic. Woodburn et al. conclude that “clinical support tools built into an [electronic medical record] and practitioner staff training related to adhering to nationally established, clinical practice guidelines” were responsible for MinuteClinic’s very high rates of appropriate care management.54 An earlier (2006) study from the Minnesota Community Measurement Health Care Quality Report gave MinuteClinic a 100 percent rating for the treatment of pediatric sore throats; for the sixty other providers rated in the report, “ranging from large medical groups to Minnesota pediatric practices,” the average score was 81.9 percent.55
In one of two studies we reviewed that rely on HealthPartners data in Minnesota, Mehrotra et al. (2009) compared the treatment at MinuteClinic of three common acute conditions (ear infections, sore throats, and urinary-tract infections) as to cost of care, quality of care, and rates of preventive care delivered following treatment in physicians’ offices, urgent-care clinics, and emergency departments. The three conditions selected for study account for nearly half of all retail-clinic visits nationally. Evidence-based treatments have been developed for all three conditions.
For their study, Mehrotra and his colleagues collected claims for 2005–06 from HealthPartners, aggregating the initial encounter, any and all follow-up, testing, and prescriptions into a single episode. Costs included co-payments. Cases were matched according to condition, age, sex, co-morbidity, and income (averaged for the census tract of residence). Determination of the extent of preventive care provided depended on how many of the following services a patient received on an initial visit or within three months:
• Vaccination
• Mammogram
• Pap smear
• Colon-cancer screening
• Cholesterol testing
Mehrotra et al. found savings comparable in size with those found in an earlier study by Thygeson (2008), which we discuss below. Total costs (including patient co-payments) of episodes at retail clinics ($110) were significantly lower than their counterparts at physicians’ offices ($166) and urgent-care centers ($156) and much lower than they were at emergency departments ($570). Mehrotra and colleagues note that the differences primarily reflected the providers’ cost of evaluating and managing the patients’ care. Unlike Thygeson (who theorized that there might be a small increase in follow-up treatments), they found that every type of treatment venue generated roughly the same number of follow-up visits, with the exception of emergency departments, which showed significantly higher follow-up rates.
Quality scores were similar for retail clinics, physicians’ offices, and urgent-care centers, but lower for emergency departments. Mehrotra et al. note that “for most measures, quality scores of retail clinics were equal to or higher than those of other care settings.” The sole exception was the smaller proportion of urine cultures performed for high-risk patients at retail clinics.
Roughly the same proportion of patients received preventive care at their initial visit or within three months at retail clinics, physicians’ offices, and urgent-care facilities. Emergency departments, not surprisingly, posted lower rates of preventive-care services.56 Another concern expressed about retail clinics—the risk of their disrupting patient-physician relationships—does not find a basis in the literature. Many retail-clinic users report that they don’t have a usual source of care, or thus any relationship to disrupt. Although evidence on the impact of retail clinics on preventive-care services received by patients who use retail clinics is limited, none of it indicates that they are responsible for a decrease in such care. (Scholars we consulted confirmed that, according to the available data, treatment at retail clinics had no impact on the likelihood of receiving preventive care.)
Mehrotra et al. conclude that the availability of retail clinics for the treatment of mild illnesses is likely to lead to efficient “self-triage”57 by patients, bringing about a better allocation of health-care resources.
Retail-Clinic Costs Compared with Costs of Other Providers
There seems to be broad agreement that retail clinics are low-cost providers. Thygeson et al. (2008) examined the claims database of HealthPartners, a nonprofit insurer, on retail-clinic use and costs over four twelve-month study periods from November 2002 to October 2006 (MinuteClinic became a provider available to members in 2003). Thygeson reported that requests by many large employers for data on the use, cost, and quality of MinuteClinic services precipitated the study.
The researchers identified five conditions of interest (conjunctivitis; otitis media; minor throat infections, including tonsillitis, adenoiditis, and pharyngitis; acute sinusitis; and infections of the lower genitourinary system) for the study periods, beginning twelve months prior to MinuteClinic’s inclusion in the HealthPartners network of providers and including the three subsequent twelve-month periods, from which those above age two who were covered by private insurance suffered.
Researchers found that total costs of care were lower at retail clinics. On average, the cost was $51 less at MinuteClinic than it was at an urgent-care facility; $55 less than at a primary-care physician’s office; and $279 less than it was in an emergency department. Supporting the findings of other researchers, Thygeson et al. found that retail-clinic users were in better initial health than recipients of treatment rendered by other types of providers but concluded that this did not account for the significant difference in cost between retail clinics and the others.58 They also reported a slight (2 percent) increase in follow-up treatments from episodes initiated at a MinuteClinic location but noted that the increase could also be due to the appropriate referral of more complex ailments to more qualified providers.
Parente and Town (2009) tried to find out whether retail clinics induce patients to seek care unnecessarily. In a review of claims data from United Health, Parente and Town estimate that, even after adjusting for the possibility that retail clinics attract patients in better overall health than other providers do, “retail clinic utilization significantly reduces medical care expenditures” by plan members who used them and that their availability did not induce plan members to seek treatment more often than they had before such clinics were available.59
Corroborating other studies’ findings, Parente and Town found that, for conditions commonly treated at retail clinics, total costs of care were 75 percent ($153) less than costs incurred at physicians’ offices, and 119 percent ($295) less than costs incurred within emergency departments or urgent-care settings. Nor were these savings dissipated in other ways. For example, the authors did not find any evidence that patients who used retail clinics increased their reliance on emergency departments thereafter or were admitted to hospitals more often. While some physicians’ groups have expressed fear that continuity of care of chronically ill patients who relied on health clinics for treatment of acute episodes would be disrupted, Parente and Town could discern no impact that clinics had on “cost, hospital admission probability or the likelihood of emergency department use” by this group.60
Finally, extrapolating from United Health data, Parente and Town suggest a cumulative consumer benefit61 of $449 million, or 0.04 percent of total private health-care spending, from the introduction and spread of retail clinics—a relatively modest sum. Similarly, a RAND report on Massachusetts retail clinics found that they would reduce total expenditures on health care in that state by 1 percent.62
Limitations of Existing Research
A number of important limitations apply to the research conducted thus far. Several studies are small or focus on only one provider (such as MinuteClinic) or one state (Minnesota). Others focus on a narrow range of treated conditions (such as sore throats). Despite researchers’ best efforts to compare apples with apples, so to speak, it is possible that patients who seek care outside of retail clinics are significantly different—and perhaps sicker—in ways that are difficult to measure but that add costs and make the services of retail clinics only look less expensive. There is little evidence that the availability of retail clinics generates unnecessary office visits, but only one study that we are aware of directly addresses this issue. There is also little evidence of the impact (financial or otherwise) that retail clinics are having on other care providers, such as primary-care physicians—and thus no way to buttress or refute the concern that retail clinics are diverting revenue on which they depend. These are all subjects that warrant additional research.
In conclusion, the evidence on retail clinics is generally positive but narrow. It is nonetheless sufficient to support the conclusion that clinics are providing high-quality care and that inordinate numbers of follow-up visits to other kinds of providers are not being made. There is also sufficient evidence to conclude that retail clinics probably have a self-limiting63 role in improving the cost, quality, and convenience of American health care.
In particular:
• Services offered by retail clinics for treating a limited set of uncomplicated conditions are of high quality and at least equal to services offered by other types of providers.
• Total costs (to insurers and patients) of such clinics are significantly lower than those incurred at other types of venues, such as physicians’ offices, urgent-care centers, and emergency rooms.
• Patients seem to be directing themselves (“self-triage”) to retail clinics for the appropriate conditions, and the availability of retail clinics does not seem to be bringing about unneeded care.
•
Patient satisfaction with the care they obtain at retail clinics is very high.
• Clinics may free up physicians to devote more attention and higher levels of skill to patients with more serious complaints.
• The entry of retail clinics into new markets and their expansion there can be deterred by the cost of compliance with states’ rules.
Clinics’ validity having been demonstrated, the next section will examine:
• The regulatory environment for retail clinics nationally
• The regulatory environment in New York State, including the extent of oversight of nurse-practitioners, legal restrictions on their scope of practice, and prohibition of the corporate practice of medicine
• The number and type of retail-clinic services currently offered in New York State
• Challenges to primary-care access, particularly for Medicaid recipients and the underserved in New York, including inappropriate ER use.
In the final section, we will suggest reforms and pilot projects that we would hope would result in improved access to high-quality retail-clinic services in New York for underserved and other populations and would help reduce the overall costs of health care.
<<Part II>>
