WSJ: Wal-Mart’s business strategy is costing it the clinic race.
SOURCE: The Advisory Board
Some superstores are rapidly opening hundreds of new retail clinics across the country as more Americans turn to them for routine care, while other stores—including retail giant Wal-Mart—have fallen behind on the trend.
Clinics grow across decade
The nation’s first retail clinics were launched in 2000, and nearly 1,200 were in operation by 2010, according to a RAND study. That fast growth may reflect the clinics’ appeal to payers and patients alike—and highlight an opportunity for out-of-industry competitors to capture a slice of the health care market.
According to a recent American Journal of Managed Care study, the clinics:
- Provide care that is 30% to 40% less expensive than care at a physician’s office and 80% less expensive than ED care;
- Saw a tenfold increase in insured patients’ use from 2007 and 2009; and
- Accounted for about 7% of U.S. medical visits for 11 common acute ailments.
Meanwhile, consumers say that retail clinics offer fixed, predictable prices, which can be hard to find from other health providers. The clinics also can improve patient access to care, given a general shortage of primary care physicians.
Retail clinic breakdown in the United States
According to the Wall Street Journal, there are currently:
660 CVS Caremark retail clinics;
350 Walgreen retail clinics;
149 Wal-Mart retail clinics;
80 Kroger retail clinics; and
44 Target retail clinics.
Why Wal-Mart is falling behind
Wal-Mart is about 1,850 clinics short of its 2007 promise to open 2,000 clinics by 2012 and has closed 33 clinics so far this year. According to the Journal, experts attribute the weak performance to the company’s strategy to outsource the clinics to third-party operators.
Specifically, experts say using third-party operators can create strained, competitive relationships. For example, clinic operator NuPhysicia Inc. says it closed six clinics at Texas Wal-Marts in 2009, partly due to what they perceived as “excessive meddling” by the company. “We stepped away when we saw a change in Wal-Mart’s business plan from a simple leaser of space to wanting a much deeper engagement in the clinics,” says Glenn Hammack, the company’s president.
- From the Marketing and Planning Leadership Council: Outlook for urgent care and retail services.
Moreover, experts say third-party providers—often regional hospitals or providers—tend to focus on drawing customers to their own facilities rather than attracting return Wal-Mart customers.
CVS, Walgreen find successful model
Meanwhile, drugstore chains like Walgreen and CVS Caremark have found a successful retail clinic model. “The retailers that operate the clinics themselves are pulling ahead,” says Tom Charland, CEO of consulting firm Merchant Medicine LLC.
For example, CVS Caremark purchases clinic operators and takes control of pricing. Although many other clinics still struggle to turn a profit, CVS Caremark says its clinic subsidiary, MinuteClinic, last year broke even for the first time since 2006. CVS plans to reach 1,000 clinics by 2016 (Banjo, Journal, 6/26; Andrews, Kaiser Health News/NPR, 6/26).