ERDMAN E-News – Retail Healthcare

ERDMAN-E-News

NEWS FOR DELIVERING HEALTHIER COMMUNITIES

Retail Clinic Branding, Strategic Partnerships and Clinic Location
Michael Silver Ph.D., ERDMAN

 

Retail clinics were born out of parental frustration with long waits at hospital emergency departments and urgent care clinics for minor pediatric care and diagnostics. Three parents in the Minneapolis market launched QuickMedx in 2000, a small nurse-staffed clinic at a Cub Foods store in a 150 square ft. leased space with a tightly defined scope of diagnostic and wellness services.  In 2002 QuickMedx changed its name to Minute Clinic and the company was purchased by CVS in 2006. QuickMedx can still be used as a case study to examine how retail clinics should brand themselves, leverage potential partners, and choose the best locations to capture and provide access to the biggest portion of their market.

The initial QuickMedx clinics were 120 – 150 sq. ft. kiosks within high volume supermarkets and pharmacies to facilitate convenience and to maintain low costs of operation and customer pricing.   In 2000 these were highly disruptive clinics that existed as alternatives to traditional ED, ambulatory and urgent care facilities.  As the model evolved from a simple first generation business to a second and third generation model, convenience has remained a priority for these clinics.  The early clinics presented 5-10 minute waits. Today, with higher demands, clinics frequently offer appointments or in-store pagers to improve customer convenience.

The majority of the first 150+ retail health centers were co-located within high volume pharmacies, supermarkets or big box stores.  Co-location presents substantial advantages to both the retail store as well as for the retail health clinic.

  • One of the initial strategy challenges facing providers is where to implement the retail clinic: Should the clinic be located within a pharmacy, big box store, a free-standing high volume location or co-location with an urgent care center?
  • Should the retail center be locally branded or adopt a national branding model?
  • What level of health system integration should be implemented?

In 2016 that analysis is more complex due to the existing base of retail health centers, the desire for differentiation and added value performance as summarized in the following table:

Positive Considerations for Big Box/Pharmacy Retail Centers Negative Considerations for Big Box/Pharmacy Retail Centers
  • Lower cost due to limited space, prep and lease
  • Leverage the convenience of the store
  • Leverage store volume to drive new clinic traffic
  • Leverage store clinic awareness to grow volumes
  • Positive strategy for revenue per square ft. and revenue per employee
  • Minimizes entry-level risk for initial retail clinic experience
  • Limited space for future growth
  • Limited brand awareness for provider vs. store
  • Fewer opportunities to engage the target market
  • Limited space limits scope of services
  • Space may limit future chronic care population health related

Establishing a retail clinic in a pharmacy, supermarket or big box store can serve to benefit all partners to the partnership. For the sponsoring health system, the upfront costs for 120 – 240 sq. ft. clinics ( a desk and two exam rooms)  are limited to space preparation (an average of about $70K to $100K),  equipment, space rental ($50 to $100/sg.ft., two nurses or one PA for all shifts, and marketing/sales in support of the strategic and operational plans.  This solution is well documented for low risk, transactional health and wellness services. For the retail clinic provider, it presents the benefit of attracting new customers to services of the business or health system while potentially expanding the footprint of the health system/retail business.

The attraction for the retail store or pharmacy may include added revenues, additional shoppers and incremental purchases such as prescriptions and health related materials. A study by Target Corp. reported that 95% of retail patients filled prescriptions within the retail store (Salganik, M.W. 2004).

Although the in-store model represents potential convenience, growth and cost structure advantages it may also present several operational limitations as well.  This model typically limits the evening and weekend access for the in-store retail clinics. The size of the space (typically 120 – 240 square feet) may limit future expansion of services to meet a broader range of services as they evolve.  This strategy may limit the type of clinical integration and continuum of care integration that may be possible with a larger space. Additionally, retail stores partnering with multiple different and competing health systems may challenge the local branding and health system affiliation value in some markets.

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