Supermarkets compete with alternative formats to open comprehensive-care medical clinics
There's more to Supermarket Retailing Today than nutritional counseling, blood pressure checks and flu shots. Retailers are making an appointment to add in-store medical clinics that further build on the supermarket's emerging role as a health care destination.
Sometimes referred to as convenient care or retail health clinics, the offices are designed to draw more traffic into stores and also nurture sales of pharmaceuticals and other health-related merchandise. Additionally, the clinics can enhance community relationships by offering area residents convenient and affordable health care.
Across the food, mass and drug channels, the number of clinics is about 700. It is estimated that 1,500 could be in operation by the end of 2008, according to the Convenient Care Association, a Philadelphia-based industry trade group that was formed last year.
The clinics offer no-appointment-needed access to health care for minor ailments such as sore throats and infections, with visits ranging from $40 to $70. Many health insurance plans now underwrite visits, and they are seen as an affordable option for the 45 million uninsured in the United States.
The clinics range from 200 square feet to as large as 600 square feet. Costs to set up a center average $75,000, excluding payroll and corporate overhead, according to the CCA.
Through leasing or licensing agreements, retailers are partnering with health care companies to operate the sites, with 30 such firms providing services, although, as widely reported, Walgreens and CVS have taken their operations in-house by acquiring Take Care Health Systems and MinuteClinic companies, respectively. Meanwhile, Target has a distinctive model provided by an outside firm, yet it has its own corporate executive team that weighs in.
Competition is coming from every direction.
CVS's MinuteClinic is the largest operating network to date. By the end of this year there will be 400 MinuteClinics in 26 states. That includes several already in Cub Foods stores in the Minneapolis market, where it first began. A long-term goal is to open a MinuteClinic in every market CVS operates, for a total of some 2,500 clinics.
The No. 2 player, Walgreens' Take Care, now has 59 Health Corner clinics, with expectations of more than 400 by the end of 2008. And RediClinic, funded by AOL founder Steve Case, currently has 50 sites in operation with partners including H.E. Butt and Wal-Mart, with plans to grow to 500 clinics by 2010.
Through partnerships with RediClinic and others, Wal-Mart plans to have 400 clinics in its stores in two to three years and a total of 2,000 within five to seven years, “if current market forces continue,” according to a company statement.
“We think the clinics will be a great opportunity for our business. But most importantly, they are going to provide something our customers and communities desperately need: affordable access at the local level to quality health care,” said Wal-Mart Chief Executive Officer Lee Scott in a speech earlier this year. Web Golinkin, CEO of RediClinic, noted that the firm's research has shown that “our patients do purchase something in the store.”
Catherine Polley, vice president of pharmacy at the Food Marketing Institute, Arlington, Va., said supermarkets have been taking various approaches to provide health care to consumers, and the rise of clinics “is one way to pursue it, but it doesn't stand alone.”
She pointed out there is already an impressive range of health programs, such as in-store or community seminars, disease management and health-focused recipes. According to FMI's “Supermarket Pharmacy Trends 2007” report, “A large portion of companies are integrating in-store clinics to broaden the one-stop-shopping function of the supermarket.”
Minyard Food Stores, a 59-store chain in Coppell, Texas, is one of them. It's established a multi-pronged health program that includes a rapid expansion of retail clinics. The retailer and health care provider Med Basics opened clinics in three of its Hispanic-themed Carnival stores, a figure that could double by year-end. In 2008 and beyond it anticipates opening another 25 clinics in Carnival units, as well as in its two other banners, Minyard and Sack 'n Save.
“We're incredibly excited about the outstanding success of Med Basics Clinics for our stores, and especially for the families, with the neighborhoods and communities they serve,” said Ron Peters, Minyard's vice president of pharmacy. The clinics are averaging 20 visits a day, and are open during the store's normal pharmacy hours.
The clinics are owned and operated by Texas-based Med Basics. But Minyard's pharmacy department partners with Med Basics on special programs, including health fairs, where free screenings and health information is provided.
To get the word out to the community about its clinics, in addition to its wide community network of programs with local hospitals and health groups, Minyard uses store fliers, bag stuffers and ad circulars, said Peters.
Spartan Stores of Grand Rapids, Mich., one of the numerous supermarket operators that has jumped into the health care business, just added a second clinic in its Family Fair store in Allendale, Mich., in a partnership with Advantage Health of Michigan. Its first clinic in its Pharm store in Oregon, Ohio, is through Bay Pointe Medical.
Eddie Garcia, Spartan's director of pharmacy, said it is too soon to tell if pharmacy sales will be positively impacted, although that is the expectation.
“Logic tells you that if I get a prescription and there is a pharmacy a few feet away, there is a good chance I will fill my prescription there,” he said. “Of course, that is not a requirement, but it may happen.”
To draw attention to the new clinics and the pharmacy, Spartan is planning to host flu shots and screenings for blood pressure, cholesterol and bone density, noted Garcia.
“These clinics are both located adjacent to our pharmacies,” he said. “There is a natural tie-in with these health professionals that works to improve the total health care opportunities for our customers, or patients, as we like to call them.”
Like Spartan, most retailers have built clinics close to the pharmacy and HBC sections for customer convenience. Alison Bendler, spokeswoman for Bashas', Chandler, Ariz., said they see the four clinics they currently operate as their way of “providing a one-stop shop.”
Lisa Loscalzo, executive vice president of The Little Clinic, which now licenses clinics in 40 Kroger and Publix stores, said her company has so far exclusively focused on supermarkets because of their distinct nature and reliable traffic.
“[Shoppers] are in [the] store several times a week. It is a great opportunity to build customer relations, and we like the connection of food and health,” she said. “It is a prime setting to educate customers around what they eat and what not to eat.”
Not everyone shares Loscalzo's enthusiasm, however. The American Medical Association is concerned that the joint ventures between store-based health clinics and pharmacy chains pose a conflict of interest. The AMA also raised objections to the quality of care given to patients at retail health centers, which are typically staffed with nurse practitioners and physician's assistants. In some cases, health insurers have waived or lowered co-pays for retail clinic visits, making it more enticing for a patient rather than a doctor visit.
Retail clinics operate under individual state guidelines. According to the Convenient Care Association, 20 states allow nurse practitioners to treat and diagnose patients, while the remaining states call for physician oversight to some degree. There are only 11 states that allow NPs to prescribe without physician involvement.
Do consumers share the level of concern about qualifications? That remains an unanswered question. At some point, there's likely to be a shakeout, according to Tom Charland, founder of Roseville, Minn.-based consulting firm Merchant Medicine, and a former senior vice president at MinuteClinic. Speaking at a conference this month, Charland outlined potential challenges down the road as markets become saturated. To be profitable, Charland estimated, clinics would need to draw two patients per hour to cover nurse practitioners' wages, which average $45 an hour.
“To get to 24 patients a day is no easy feat,” he said.
- Engender the trust of patients by clearly stating the qualifications of the medical staff.
- To get word out into the community, meet and leave literature with schools, small business associations and even libraries.
- Let patients know what insurance plans are accepted.
- Use the clinics to host in-store outreach events.
While there has been much publicity surrounding the emergence of retail health clinics, the actual number of U.S. consumers visiting them is lower than might be expected.
According to Forrester Research, Cambridge, Mass., 3% of the population has been treated at in-store clinics so far. More than half said they would return. The reasons they cited include no wait time, location and extended hours.
“The desire to return is driven by convenience, not superior care,” noted Forrester researchers. Only 7% of the patients polled said they believed they received superior care at a retail clinic as opposed to a doctor's office.
Forrester also found that patients tended to be younger, educated and more affluent, with household incomes averaging $64,000. Most had children.
Adding to those findings, the Philadelphia-based trade group Convenient Care Association found that patients are evenly split between men and women, with 30% between the ages of 19 and 30. Forty percent have minority backgrounds.