Business

Wal-Mart partners with hospitals to rapidly expand in-store clinics

Analysts say the giant retailer wants the good will a trusted hospital name can provide. Hospitals, meanwhile, say they don't intend to compete with physicians.

By — Posted Feb. 25, 2008

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As big-name national retailers and pharmacy chains continue to open in-store clinics, a familiar face soon may enter the fray as well -- your local hospital.

Wal-Mart recently announced plans to partner with community hospitals across the country to open up 400 new retail clinics inside its stores by 2010, in addition to the 55 it already houses. Thirteen of those are owned and operated by hospital systems.

The rebranded "Clinic at Wal-Mart" also will sport the name of the partnering health system providing the nurse practitioners and physician assistants dispensing care, as well as the doctors overseeing them. But Wal-Mart would standardize the clinics so they have a similar look and feel, such as having each clinic post a price list and keep similar hours.

Among Wal-Mart's first expansions will be in its home state of Arkansas, where St. Vincent Health System will own and operate four clinics in Little Rock scheduled to open in April.

At least half of the 400 new clinics will be opened through a deal with RediClinic, a chain owned by AOL co-founder Steve Case's Revolution Health. RediClinic will seek commitments from hospital systems as partners for Wal-Mart clinics, starting in Atlanta and Dallas. Hospitals could be contracted as strategic partners without an ownership stake. Or they might split a stake in the facility, such as RediClinic and Memorial Hermann do in 11 H-E-B grocery clinics in Houston.

While organized medicine is studying the impact that Wal-Mart's expansion may have on physicians, experts say hospital involvement is further proof that the clinics are becoming an integral part of the wider health care delivery system. This conclusion comes despite numerous growing pains, including the late January shutdown of 23 Wal-Mart clinics after its contractor, CheckUps, ran into unspecified financial trouble.

Mary Kate Scott, principal of the Marina del Rey, Calif., consulting firm Scott & Co., said hospital involvement gives the in-store clinic concept "further legitimacy."

Scott is about to publish a guidebook, The Hospital Retail Clinic Tool Kit, in response to the several hospitals she said asked her for advice about entering the clinic market.

Scott said the clinics started integrating themselves with the traditional health care setting when they began accepting insurance.

"In the last two years, they have gotten a lot closer to the hospital systems," she said. Now, more than one-third of clinic operators are affiliated with hospitals.

Two-pronged approach

Scott has seen hospitals both partner with clinic chain operators and open clinics themselves. Systems such as Sutter Health in Northern California and Geisinger Health Systems in Danville, Pa., have opened their own retail clinics. Wal-Mart has partnered with Aurora Health Care in Milwaukee and Memorial Health System in South Bend, Ind., for 13 of its existing clinics.

Wal-Mart hopes that by creating a company-wide brand, the clinics will become more standardized. The move is part of Wal-Mart's corporate strategy to improve its image and change its reputation from one of being bad for communities and a burden on the health care system to one of being a good corporate citizen and a partner in health care access and affordability, experts say.

Other steps have included the expansion of Wal-Mart's health insurance plans, for which more than 70% of its employees are now eligible, and the expansion of its $4 prescription drug program.

The company also is pushing for wider adoption of electronic medical records by requiring clinic operators to use them. And the company is providing personal health records for its employees through its partnership with Dossia.

"Wal-Mart thinks that by affiliating with hospitals it will be creating linkages between the clinics and the hospitals," said Regina Herzlinger, DBA, a Harvard business professor and one of the leading proponents of consumer-directed health care. People who come to these clinics might not have a primary care physician and could find one through a referral from the clinic, "so it's good for Wal-Mart, and I hope good for the hospitals," she said.

Hospitals in the in-store clinic business say physicians have nothing to fear from them.

Michael O'Neil, chief operating officer of Memorial Health System, which runs six Wal-Mart clinics in Indiana, said Memorial entered the retail clinic market as a way to expand access to care and extend its primary care network.

"We don't believe these clinics will be the solution to deal with the health care challenges we are facing as a nation, but we think they can be a catalyst," he said.

Carmela Coyle, senior vice president for policy at the American Hospital Assn., said hospitals are not doing this for financial reasons, or to compete with doctors.

"This is less about taking business away than getting people care when they need it," Coyle said.

Still, Susan Strate, MD, immediate past chair of the Texas Medical Assn.'s Council on Socioeconomics, said she is concerned that the hospital partnerships will result in more patients going to the hospital for follow-up care rather than a primary care physician. Clinics may steer patients to the emergency department when their problems go beyond the clinics' scope, she said.

A better partnership would be between Wal-Mart and community physician groups, Dr. Strate said.

The American Medical Association adopted policy at its 2006 Annual Meeting acknowledging that retail health clinics were controversial, but ultimately it decided that the clinics fit long-standing AMA policy that encourages "multiple entry points" into the health care system.

In 2007, the AMA board resolved to ask state and federal regulators to investigate possible conflicts between clinics and the hospital chains that are affiliated with them.

The AMA, as well as the American Academy of Family Physicians, has developed principles for in-store clinic operations to ensure patient safety and continuity of care, in addition to helping patients without doctors find one. The American Academy of Pediatrics opposes in-store clinics, saying they add to the fragmentation of the health system.

Tom Charland, president and CEO of Merchant Medicine, a retail operator consultancy group based in Shoreview, Minn., and former senior vice president of strategy and business development for MinuteClinic, said he sees the Wal-Mart clinic expansion as an opportunity for physician groups to enter into joint, in-store clinic ventures with hospitals.

That is particularly the case in smaller metropolitan areas, he said. "I think we will now see an impact ... where the big names have not opened up yet."

Physician groups and hospitals will see this as a chance to "open up with a trusted brand before [CVS-owned] MinuteClinic comes to town," Charland said.

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ADDITIONAL INFORMATION

Wal-Mart clinic locations

The retailer plans to open 400 additional in-store clinics by 2010. The company has 55 clinics operating currently.

ClinicsClinic operator
Arkansas2RediClinic
California4Quick Health
Colorado15SmartCare
Florida4Express Aid, Solantic
Indiana6MedPoint Express, owned by Memorial Hospital & Health System, South Bend, Ind.
Oklahoma2RediClinic
Texas6My Healthy Access
Virginia9RediClinic, in affiliation with Bon Secours Richmond Health System, Richmond, Va.
Wisconsin7Aurora Quick Care, owned by Aurora Health Care, Milwaukee

Source: Wal-Mart

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Where the in-store clinics are

According to a recent study, there were about 500 retail clinics open or planned in the United States. More than 1,500 are expected by the end of 2008. The report counted clinics as of September 2007, so this list does not reflect recent activity such as CheckUps going out of business, or other clinics such as MedPoint Express that have opened more locations.

Clinic operatorClinicsLocations
AtlanticCare HealthRite4N.J.
Aurora QuickCare20Wis.
Bellin Health Fast Care3Wis.
Corner Care Clinic14Ill., Ind., Ohio, N.Y., Pa.
Early Solutions Clinic6Mich.
FastER Care5Calif.
Geisinger CareWorks Convenient Healthcare2Pa.
Healthy Access7Md., Texas
Lindora Medical Clinics1Calif.
MedBasics2Texas
MediMin3Ariz.
MedPoint Express3Ind.
MinuteClinic168Ariz., Conn., Fla., Ga., Ind., Kan., Md., Mich., Minn., Mo., Nev., N.J., N.Y., N.C., Ohio, Tenn., Texas, Wash.
ProntoClinics4Fla.
Quick Quality Care (CheckUps)23Ala., Fla., La., Miss.
QuickClinic6Ohio
QuickHealth9Calif., Idaho
RediClinic46Ark., Ga., Okla., Texas, Va.
SmartCare Family Centers19Colo., Ga.
Solantic13Fla.
Sutter Express Care6Calif.
Take Care Health Systems50Ill., Kan., Mo., Pa.
The Little Clinic24Fla., Ga., Ind., Ky., Ohio
Trinity MedXPress1Iowa

Source: "Health Care in the Express Lane: Retail Clinics Go Mainstream," Scott & Co., September 2007

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Recent closures

While new retail clinics continue to open, there have been some notable closures. Experts say it takes between 24 and 36 months for clinics to begin making a profit. Having too little capital has been blamed for many clinic closures.

Clinic operatorLocations
Affordable Basic CareInd., Mich.
Corner Care ClinicInd.
CuraQuickIowa
InstaClinicMiss.
CheckUpsAla., Fla., La., Miss.
Smarter CareCalif.
Wellness ExpressCalif.

Source: Tom Charland, retail clinic analyst; "Health Care in the Express Lane: Retail Clinics Go Mainstream," Scott & Co, September 2007

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