Skip navigation

IN-STORE HEALTH CLINICS DRAW INVESTORS, RETAILERS

Retail health care is in the midst of a major growth spurt.In just two weeks, these small, nurse-staffed clinics have drawn big retailers, big investors and big criticism.Once run by entrepreneurial firms and marketed on a shoestring, the in-store clinic business now appears poised for a big expansion.For example, in a move that might signal trends to come, CVS Corp., Woonsocket, R.I., this month

Retail health care is in the midst of a major growth spurt.

In just two weeks, these small, nurse-staffed clinics have drawn big retailers, big investors and big criticism.

Once run by entrepreneurial firms and marketed on a shoestring, the in-store clinic business now appears poised for a big expansion.

For example, in a move that might signal trends to come, CVS Corp., Woonsocket, R.I., this month entered into a definitive agreement to acquire retail-based health care clinic provider MinuteClinic, Minneapolis.

Meanwhile, four supermarket retailers have partnered with various health care providers to add clinics to stores, invest in them, or both.

"We are going to see a lot of different combinations of major companies investing in these clinics," said Don Stuart, partner, Cannondale Associates, Wilton, Conn. "Retailers, individual investors, health care groups and private equity will all be getting involved."

Recent activity includes:

MinuteClinic, the largest provider of direct retail health care services in the U.S., will become a wholly owned subsidiary of CVS with completion of the transaction, which is expected this summer.

The Fred Meyer division of Kroger Co., Cincinnati, entered into a partnership with SmartCare Family Medical Centers, Greenwood Village, Colo., to open retail clinics inside stores located in Alaska, Idaho, Oregon and Washington.

Schnuck Markets, St. Louis, will begin operating health care clinics by instaClinic, St. Louis, in four Schnucks stores this fall.

Supervalu, Eden Prairie, Minn., is working on an investment deal with NOW Medical Centers, Minneapolis, according to media reports.

Price Chopper Supermarkets, Schenectady, N.Y., has partnered with ProHealth Physicians, the largest primary care physician practice in Connecticut, with almost 200 physicians, to provide in-store clinics located next to Price Chopper pharmacies.

The number of retail clinics in the United States is poised to grow from fewer than 100 today to several thousand by the end of 2007, according to a report released last week by the California Health Care Foundation, Oakland.

With its new investment in MinuteClinic, CVS will be contributing to this growth of primary care services at retail. "By acquiring majority control, we will be able to ensure that MinuteClinic's pace of expansion is appropriate for the full opportunity we see for this business," said Erin Pensa, spokeswoman for CVS.

However, in a meeting this month, the American Osteopathic Association, Chicago, raised concerns over the safety of the clinics due to doubts over the continuity of care retail clinics can provide.

Additionally, in response to similar concerns, the American Medical Association, Chicago, last month adopted a set of principles to ensure store-based health clinics provide patients with optimal care.

CVS' interest in MinuteClinic, along with the recent financing received by another retail clinic provider, Take Care Health Systems, Conshohocken, Pa., "shows that there is no doubt about the staying power of retail health clinics," said Tine Hansen-Turton, chief executive officer of the National Nursing Centers Consortium, Philadelphia.

In March, Take Care Health Systems received $77 million in financing from Beeken, Petty O'Keefe & Co., a Chicago-based private equity firm focused on health care investing, its affiliates and Take Care management and founding shareholders.

"The involvement of large investors means we are going to see more retail clinics in more states," Hansen-Turton said. "They present a good business opportunity for investors, and for drug or grocery chains, they can make a connection with old and new customers."

CVS, which currently has MinuteClinics in 66 CVS/pharmacy locations, positions the clinics as a way to make health care easier for customers, Pensa said. "We are also first and foremost a health care provider and MinuteClinic helps us remain top of mind for consumers as a health care destination."

MinuteClinic now has a total of 83 locations in 10 states. It plans to have a total of 250 locations by the end of this year, and said its earlier forecast of 450 to 500 locations by the end of 2007 would be revised upward, according to a report in the Minneapolis-St. Paul Star Tribune.

Meanwhile, Take Care is currently working with Albertsons-owned Osco Drug and Sav-On Drugs, Brooks Eckerd Pharmacy and Rite Aid Corp., to open nearly 200 locations over the next year, the company said in a statement.

MinuteClinic's expansion will include retail locations other than CVS, Pensa said. "MinuteClinic plans to continue to have clinics in CVS/pharmacy and other retail locations including Supervalu-owned Cub Foods, Kroger-owned Quality Food Centers, as well as Bartell Drug," Pensa said. "Clinics are also planned for new retail hosts and corporate and government offices."

Among the many other supermarkets with clinics: Hy-Vee, West Des-Moines, Iowa; Publix Super Markets, Lakeland, Fla.; Bashas', Phoenix; and H.E. Butt Grocery Co., San Antonio.