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RETAIL MEDICINE: Big Backers Find Retail Medicine A Big Play.

By Brian Solomon Forbes Staff

JULY 12, 2014 – Put simply, urgent care is the first retail health play. The burgeoning $16 billion industry depends on location, customer service and brand, just like a restaurant or grocer. Because nobody plans to be sick, clinics aren’t squirreled away in an office park or medical building. They are placed in highly visible, highly trafficked locations minutes from patients’ work and home, off a busy highway or next to a Wal-Mart. No appointment necessary–stop by 12 hours a day, including weekends. Walk in with the flu, with a broken bone or sprain, with a cut that needs stitches. See a doctor on average within 20 minutes, get an X-ray or prescription, and get back to your life–all at perhaps 20% of the cost of an ER visit.

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The holy grail is a replicable Golden Arches-style model that puts a branded urgent care shop on every corner–and that’s what smart money has been chasing in a long list of deals over the last few years. Publicly traded insurer Humana HUM +0.53% grabbed Concentra, the nation’s largest urgent care company, with 300 locations, for $805 million cash in 2010. Concentra’s former owner, Welsh, Carson, Anderson & Stowe, turned around a year later and bought Solantic (now CareSpot, with 56 centers), a chain founded by Florida Governor Rick Scott.

Hospital system Dignity Health paid two private equity partners $455 million for 172-clinic U.S. HealthWorks in 2012. Silicon Valley’s brightest at Sequoia Capital teamed up with private equity giant General Atlantic in 2010 to buy MedExpress, an urgent care startup, for $450 million. Based in West Virginia, MedExpress had only 42 centers but an expansion-ready blueprint that has tripled its footprint since, up to 132 centers in 11 states–fueling rumors of a billion-dollar valuation and potential IPO.

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Dr. Bruce Irwin has been in the urgent care business for over 30 years, and he’s never seen anything like the current gold rush. “It’s like we’re in a rock band and all of sudden we have a hit, we’re an overnight sensation. But in reality we’ve been playing in bars and honky-tonks for years,” he says. Irwin is the founder and CEO of American Family Care, the largest independent chain in the country, with 128 clinics, mostly in the Southeast.

Irwin, 64, now has a slight hunch to his back, but he was there before urgent care was even a blip on private equity’s radar. Raised in rural Alabama, he began shining shoes in his father’s cobbler shop at age 6 but dreamed of becoming a doctor. At 14 he accidently sliced an inch off the tip of his right index finger while fixing his motorcycle. While he worried the injury would limit his future, it didn’t stop Irwin from eventually graduating from the University of Alabama medical school.

The idea for creating a new model first occurred to him during a stint in an emergency room as a young doctor. Each day he saw how many people came in with coughs and scrapes and minor fractures–ailments that could be treated better and cheaper elsewhere. With no training at all he scribbled out a business plan in 1982 for four branded clinics in the Birmingham area.

As Irwin and other early adopters conceived it in the early 1980s, urgent care would cut through health care’s biggest hurdles: affordability and accessibility. Our rapidly aging population is woefully bereft of primary care physicians, with over 66 million people underserved, by last count. Good luck getting in the door with a cold; appointment books are filled with chronic conditions like diabetes, hypertension, emphysema. And expensive emergency rooms, the catch-all purgatory of medicine, are already overflowing with patients waiting hours for treatment of non-life-threatening conditions.

“Health care has been treated like a rare commodity in this country,” says Irwin, his index-finger stub fiddling with two seashells on his desk as he speaks. “The dirty little secret is that denying access has long been the best way to keep costs down.”

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Source: http://www.forbes.com/sites/briansolomon/2014/07/02/drive-thru-health-care-how-mcdonalds-inspired-an-urgent-care-gold-rush/

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