In-store health clinics may soon be non-optional for supermarkets.
The old rationale of not enough space for a new service is becoming null and void as the grocery industry watches much smaller drug stores make room for the clinics.
As a result, the number of the health clinics in supermarkets, as well as drug stores and mass merchants, is increasing rapidly. With entrepreneurial operators and large health care companies seeking a foothold in this relatively new service area, it is up to supermarkets to figure out which business model is right for them.
"Everyone I spoke to at the National Association of Chain Drug Stores conference in August, every supermarket chain and pharmacy chain, is getting into clinics in some way, shape or form," said Vinnie Mainella, vice president of pharmacy, Price Chopper Supermarkets, Schenectady, Ill.
In the past month, Wal-Mart Stores, Bentonville, Ark., has signed agreements with Intrepid Holdings Inc., Houston, and CheckUps, New York. Both of these service providers plan to open clinics in several markets this year.
Meanwhile, Walgreen Co., Deerfield, Ill., signed on with Take Care Health, Conshohocken, Pa., to open Health Corner Clinics in the Greater St. Louis area as well as in Chicago, Atlanta and Las Vegas. Walgreens is also working with InterFit Health's RediClinics, Houston, and with Pinnacle Health System, Harrisburg, Pa., to plan clinics for later this year.
Just before signing with Walgreens, Take Care joined with SSM Health Care-St. Louis, a full-service health care network, to coordinate with physicians and the nurse practitioners who will staff the clinics.
In March, Take Care received $77 million in
financing from Beeken, Petty, O'Keefe & Co., a Chicago-based private equity firm.
In July, CVS Corp., Woonsocket, R.I., acquired MinuteClinic, Minneapolis, and expects to roll out the concept in 1,500 stores nationwide.
Target Corp., Minneapolis, once affiliated with MinuteClinic, said in August it will stay in-house and launch its own medical clinics this fall.
Among the supermarkets to have most recently added the service: the Fred Meyer division of Kroger Co., Cincinnati, partnered with Smartcare Family Medical Centers, Greenwood Village, Colo.; Supervalu, Eden Prairie, Minn., is working on an investment agreement with NOW Medical Centers, Minneapolis; Minyard Food Stores, Coppell, Texas, opened its first MedXpress (Addison, Texas), in its flagship Carnival Supermarket in Dallas last month; and Publix Super Markets, Lakeland, Fla., is set to open its first Little Clinic (Louisville, Ky.), in Orlando, Fla., later this month.
"Thus far, we have identified 24 Publix locations in the Tampa, Orlando, Miami and Atlanta markets for Little Clinics in 2006," Publix spokeswoman Maria Brous told SN.
Schnuck Markets, St. Louis, will open four InstaClinics, also based in St. Louis, in its stores by fall. "We've got the first one due to open in October and we are going to do one a week after that," said Bob Mueller, director of pharmacy, Schnucks.
Schnucks decided on a lease agreement with a local clinic provider because "we are hometown and they are hometown and we felt like some negative vibes some clinics are getting are related to the fact that they are out-of-town conglomerates," Mueller said.
Generally, nurse practitioners staff the clinics, treating common ailments, doing health screenings, or providing physical exams as well as vaccinations. Fees for visits are usually $40 to $50.
Medical Coordination
"In a lot of cases, local family physicians are sending their 'common cold' patients to the clinics because it is better for the physicians to work with folks who have a more serious illness," said Tine Hansen-Turton, chief executive officer of the National Nursing Centers Consortium, Philadelphia.
Price Chopper recently partnered with ProHealth Physicians, the largest primary care physician practice in Connecticut, based in Hartford, to provide clinics in seven Connecticut stores by the end of the year. "ProHealth took this deal as an offensive move," Mainella said. "Rather than having another clinic come into town and chip away at their practice, this is now a part of their practice and they are using this to refer people to the hospital and their own physicians when necessary."
Pointing out the difference between CVS' decision to purchase MinuteClinic and Walgreens' move to diversify with three different clinic providers, Schnucks' Mueller said, "I think at this point it is best to outsource the clinics. It is important for the people running the clinics to maintain that entrepreneurial spirit and to have an identity within their own company."
The variety of combinations of businesses getting into clinics is a good sign, Hansen-Turton said. "The broader a business model the clinics have, the healthier this industry will be."
Supermarkets seem to be taking a slower approach, according to Joseph Agnese, supermarket and drug store analyst, Standard & Poor's Equity Research Services, New York. "The supermarkets are not going to be able to get them out as quickly as, say, CVS will, because of their experience integrating and their acquisition [of MinuteClinic]. If supermarkets are too slow, however, they may lose customers to faster-moving stores."
Consolidation is inevitable for clinics, Mainella said. "In order to roll them out at a rapid pace they need equity behind them so you will see a lot of clinics being bought up by groups with the capital to push them through."
Easy Access
"When you look at who is going to benefit the most, I think it is going to be drug stores and supermarkets over supercenters, because if you are sick, it is more of a hassle to get into a supercenter," Agnese said.
As far as the concern that customers may be averse to having a clinic in the same building as their food, retailers and industry experts told SN it's a moot point. "The fact is that sick people are in the store all of the time; this just raises awareness of them. This is a perceived problem but not an actual problem," Mueller said.
Price Chopper customers have reported that they are comforted by having a medical professional in the store, Mainella said.
The entire health care community is watching the development of these clinics with an eye for possible shortages of health care professionals to staff them.
Right now, there are a sufficient number of nurse practitioners to staff the clinics, experts said. "We certainly can't afford a shortage of nurse practitioners like the one on the family physician side," Hansen-Turton said. "There is a 25% shortage in family practitioners."
This is one factor that's making the health care market so ripe for retail clinics; however, the hope is that as the retail nurse practitioner job market becomes more visible, it will stimulate enough interest to meet the demand, she said.
"Finding nurses is why we went with a local company, because we felt they'd have a stronger reputation among nurse practitioners," Mueller said. "The supply is stable right now but demand will increase."
For chains running clinics in multiple states, finding a business model may pose a challenge due to state regulations on nurse practitioners. "One of the things we bumped into in Missouri is the amount of time a nurse practitioner is required to spend in practice with a physician before working alone," Mueller said.
Chains have to be up to speed on these issues and vary business models to comply, Hansen-Turton said.
A New Voice for Health Care
A new association is on the way to streamline business practices at retail health care clinics.
As a result of an industry meeting over the summer, the Convenient Care Association will debut this fall to brand retail health care as one industry and set industrywide standards, said Tine Hansen-Turton, chief executive officer of the National Nursing Centers Consortium, Philadelphia, and co-leader of the new association.
This means industry groups are coming together and working on an agenda to address policy issues at state and federal levels, as well as finding universal evidence-based guidelines across the industry, she said.
The moniker Convenient Care "resonates well across all the different clinics that are out there because it really is about having accessible and convenient care," she said.
So far it has been decided that the guidelines will be based around performance and patient satisfaction and will act as "consumer-driven performance standards," Hansen-Turton said.
Among the guidelines determined by association founders so far: clinics should have a referral system in place for other health care providers and physicians, a monitored quality improvement program, an emergency response plan, use electronic medical records, and discharge instructions and educational materials to give to patients upon leaving.
Hansen-Turton said a white paper explaining the industry and its guidelines is expected from the new association some time this month.
