The migration of patient point-of-care off the traditional medical campus represents a growing trend in the United States. Over the next few years, off-campus healthcare delivery points will experience a steep upward curve as clinics move into retail locations, corporate office locations, schools, community centers and so forth in increasing numbers. One fast-growing trend that brings both great opportunity as well as significant risk is the retail-based clinic (RBC). Compared to traditional clinics, RBCs will require a greater diversity of business intelligence applications.
Forces Driving Retail-Based Clinic Growth
The driving forces behind this migration spring from changes in patients themselves. In the past, patients viewed healthcare not so much as a product or service that was shopped for, but one that was received from large institutions (hospitals, medical practice groups), paid for by another large institution (insurance company) and purchased on our behalf by yet another large institution (employer).
Patients have had to become savvier consumers of healthcare services. With higher deductibles, more complex health plans and increased responsibility for costs, we are all becoming better managers of both the cost and the quality of the healthcare services we receive. In addition, competition among healthcare providers is forcing organizations to provide healthcare delivery points where the patients are, instead of requiring patients to come to them. In response to these pressures, retail-based clinics are emerging as a powerful force.
Retail-based clinics are clinics hosted in retail stores, as the name implies. Currently, there are roughly 150 RBCs doing business across the United States, with another 800 to 900 in the planning stages. By 2008, the number of running RBCs is projected to be more than 1,800.
MinuteClinic, which was bought by CVS in July 2006, is currently the largest operator of RBCs. Others include SmartCare, MedPoint Express and RediClinic (which is backed by AOL founder Steve Case’s Revolution Health Group). Most of these are independent businesses, but some are owned and operated by provider organizations. For instance, near my home are QuickCare (operated by Aurora Health Care) and FastCare (operated by Bellin Health Systems). Aurora and Bellin are two large, highly respected integrated delivery networks in my state.
Host stores include many of the largest retailers of pharmacy, grocery and general merchandise, such as CVS, Target, Wal-Mart, Kroger, Walgreens, Kerr Drug, Fred Meyer, ShopKo and Winn-Dixie. This makes sense because these and other retailers have set a strong precedent by operating and/or hosting other service businesses including pharmacies, optical centers, banks and a host of other service businesses. The motivation for the host store is pretty clear – to generate additional foot traffic in high-margin product lines associated with the hosted business.
The primary motivation for starting an RBC is financial as well. As consumerism grows in healthcare, RBCs know that they can tap into two of the three key drivers for patients and their families. In healthcare, consumers focus on three C’s: care, convenience and cost.
As mentioned earlier, in the past, care was the primary factor in this mix, without as much regard for convenience or cost as there is today. You went to the doctor you trusted most. He or she was physically located among other doctors on some sort of medical campus (clinic, hospital, university medical complex, etc.). This kept the economies of scale high and allowed medical professionals to work and learn together as colleagues.
Cost was much less visible to consumers because we had health plans that just took care of the bill for us. The premiums came out of our paychecks, which made the cost less visible. So, to a consumer, a $400 procedure with a $25 deductible felt like a $25 bill.
This mix of consumer factors is shifting. Care quality is demanded and assumed by consumers. Cost is more visible. Convenience is now a much stronger consideration. With the proliferation of health reimbursement accounts, health savings accounts, high-deductible plans and a higher potential denial rate for covered services, a $400 procedure now feels like a $400 bill. Plus, if you are single mom hauling around three kids, convenience has to be a major concern.
RBCs know this mix is shifting and are responding to it. These types of clinics are typically staffed with nurse practitioners, nurses and certified medical assistants, with a physician on call. Plus, the scope of services is generally narrower than a traditional clinic, primarily testing for and treating common illnesses, performing health screenings, and school or employment physicals. This keeps the operational costs lower than the traditional clinic. Also, by virtue of being in a retail location, the RBC is theoretically already where the consumer would be to shop for other products and services. This keeps the convenience factor high.
All of these factors make retail-based clinics a wonderful opportunity from a business viewpoint to bring healthcare delivery closer to patient populations and do it more cost-effectively. There are, however, several challenges that must be addressed if this type of operation is to succeed. Business intelligence is one tool that can help the RBC address these challenges and achieve its goals.
Business Intelligence Applications Needed for RBC Success
Retail-based clinics share many of the same analytical information needs of traditional clinics. Both require clinical decision support and clinical guidelines at the point of care, and clinical quality measurement to ensure they are in compliance with regulatory and accreditation requirements. Both need patient information in the form of registries to keep track of their patient populations and the clinical activities performed to help them get well and stay well. Of course, both types of organizations require administrative management information to make sure they are getting revenue from claims and patient payments, as well as being able to pay the bills.
There are, however, a few business intelligence applications that an RBC needs to survive and succeed that stem from being closer to street level. A few of the additional or heightened business intelligence needs include:
•Demand Management Analytical Support. As any seasoned retailer will tell you, on the retail floor, demand can spike or drop in an instant. On a medical campus, a clinic has greater control over the flow of patients. In a retail setting, this could become a real problem in a hurry. For instance, the RBC could easily suffer from insufficient capacity during an epidemic. Even on the best of days, demand could easily overload the waiting area. If, for example, the wait at an RBC becomes 45 minutes versus a 20-minute drive plus a 20-minute wait to see a campus-based doctor, consumers may avoid the non-traditional RBC.
•Growth Strategy Information. Are you seeing the demographic profile you expect? Are your resources aligned with this profile? For instance, there is a tacit assumption that the RBC will see primarily younger people who value convenience, whereas the campus-based clinic will see primarily older people who value the traditional, private atmosphere. What if this is not true, and you begin to see increasing numbers of Medicare-covered patients? Are you Medicare-eligible? Plus, the logistics required to serve older populations might not be in place in a rough-and-tumble retail setting. It is essential to watch your demographics to make sure your growth plans are on track.
•Cross-Sell Metrics. Cross-selling with the main store presents both opportunities as well as risks. The bottom line for the host is that they want lift in their own sales from hosting the clinic, instead of just receiving the space rental revenue. Retailers are ruthless when it comes to getting return on investment from space. Every product and service must compete daily with other products and services for every square foot. This has a potential dark side as well. Clinic staff may be pressured to write or fill prescriptions in the affiliated pharmacy, recommend foods from the host’s grocery aisles or over-the-counter supplies and equipment from the health and beauty department. In some cases, this may hamper their professional clinical judgment to the detriment of their patients and to their careers. Maintaining this balance will require continuous measurement in order to demonstrate value to both the clinic as well as the host and, of course, to the patient.
•Consumer Behavior Information. Consumers are even more ruthless than retailers when it comes to the products and services they buy. Most of the time, the only indication that something is wrong is that you don’t see the consumer again. This presents a problem for the clinic because they don’t know what went wrong with their service, and they may have to play catch-up if the consumer comes back. It also presents a problem for the patient in the form of a loss of continuity in their care. Retail-based clinics are likely to experience greater fragmentation in this continuity due to the way consumers view retail services (episodic) versus professional services (continuous). This episodic buying pattern could have serious effects on people with chronic conditions or special healthcare needs. Furthermore, if consumers find that your RBC is good at diagnosis, but unable to follow up with full treatment, they will abandon your clinic. In the consumers’ view, they might as well go straight to the clinic that can get the whole job done and cut out the middleman. Analysis of data on consumer buying patterns is critical for RBCs.
•Service Development and Service Quality Measurement. As more RBCs open, the competition will keep upping the ante in terms of services offered and the prices charged. This will put pressure on existing RBCs to add staff with greater specialization, to add more equipment and to upgrade facilities to serve a wider variety of patient populations. Ironically, the retail environment could eventually become a healthcare campus. While this could have positive business benefits, it could have detrimental service quality effects. Fragmentation of care can kill a patient as well as a business. Fragmentation of data and process flow can do the same. Information to support reasoned product growth and product change, as well as the effects on product quality, is extremely important if the operation is to accomplish its goals.
•Operational Analysis. The environment that RBCs inhabit is made up of several different organizational cultures, and not all of these are conducive to attracting and keeping clinical staff. On the one hand, the staff comes in contact with a highly diverse group of providers. On the other hand, that same staff may actually feel isolated from their peers who are on campus. RBCs are not expected to be staffed by specialists (e.g., peds, women’s health, geriatric health) because of the general nature of the scope of their services. This could result in abnormally low staff satisfaction and consequently high turnover. Monitoring for staffing patterns and trends in satisfaction rates is necessary.
•Public Health Analysis and Reporting. RBCs need to be concerned about disease and infection control – not only for the clinic, but the main store as well. There is some benefit to having patients go to the medical campus instead of potentially inviting public health problems into commercial retail environments. Campus-based clinics have to be concerned about contagions in their environments and must track these issues for regulatory purposes, and this monitoring need is heightened in the more open world of the RBC.
Retail-based clinics represent a tremendous opportunity for providers as well as independent operators to bring healthcare closer to the market and to do it in a cost-effective manner. There are several potential difficulties that must be proactively addressed if this type of clinic is going to survive and prosper.
Businesses in any industry succeed when they use the data they already own to make smarter, evidence-based decisions. In other words: when they actively use their business intelligence. Healthcare organizations that ignore this fact fail. Whether your organization is in the retail-based clinic business, is hosting a retail-based clinic or has chosen to pursue a campus-based clinic approach, it pays to make the best use of your data for clinical, business and financial success. The applications described in this article should provide your organization with ideas for doing just that.
Thanks for reading!