Two major drug chains — CVS/pharmacy, Woonsocket, R.I., and Walgreen Co., Deerfield, Ill. — now dominate the in-store health clinic business, and this will continue for the foreseeable future, said Tom Charland, chief executive officer, Merchant Medicine, Shoreview, Minn., which consults on clinics.
Of a total 1,063 clinics in the United States, CVS has 519 and Walgreens has 245, according to Charland's October “Merchant Medicine News” newsletter. Both own their clinic operations: CVS's MinuteClinic and Walgreens' Take Care Health Systems.
“If you look at CVS and Walgreens combined, they represent more than half of all the clinics out there,” Charland said. “That clearly is the biggest anchor to the industry. Also, those two combined will represent the greatest growth in raw numbers of clinics going forward, at least for the next 12 months.”
Following on the list are Publix, Lakeland, Fla., with 43 clinics; Wal-Mart Stores, Bentonville, Ark., with 35; Kroger Co., Cincinnati, with 28, plus its Smith's banner, which has another five; and Target Corp., Minneapolis, with 24.
As a result of the shakeout in the clinic business, Wal-Mart is down from 76 clinics in April 2007, when it made an announcement that it would expand its clinics. The company has since focused on health systems to run its clinics, but this has gone slowly, Charland said.
Wal-Mart's decline is the result of the same phenomena that eliminated many supermarket clinics: impatient investors and a slower-than-expected path to profitability. “Wal-Mart didn't spend a lot of time vetting the operators that were going in their stores,” Charland said.
“The clinics that have closed were almost exclusively operators that were privately backed. They completely underestimated when they would get to cash flow break-even, burned more cash, kept going back to their investors for more cash, and eventually they were shut down.”