Retail clinics seeing utilization soar, popularity grow
Retail clinic claims volumes grew 200% from 2017 through 2022, mainly due to high usage during the pandemic.
Photo: filadendron/Getty Images
Retailers are well-positioned to disrupt healthcare, with a new Definitive Healthcare report showing that retail clinics have seen a 200% increase in utilization over the past five years – higher than primary care, urgent care and hospital emergency rooms.
Rising out-of-pocket healthcare costs, combined with increasing demand from patients for convenient healthcare options, have created a demand for alternative sites of care, with one recent KFF analysis showing out-of-pocket spending increased 35% since 2010, averaging $1,315 per person in 2021.
Retailers are stepping in to fill the demand for more cost-effective care, offering self-pay options with transparent and fixed pricing, and are well positioned to meet the preference for convenience with their existing physical locations, the report found.
For pharmacy giants like CVS and Walgreens, investing in clinics is also a way to boost prescription drug sales. Recent expansions into new services such as chronic disease care could also help diversify patient mix and offset declines that might come from competitors in an increasingly crowded market, such as urgent care centers and direct-to-consumer telehealth.
WHAT'S THE IMPACT?
Retail clinic claims volumes grew 200% from 2017 through 2022, mainly due to high usage during the pandemic. For comparison, over the same five-year period, urgent care claims volumes climbed 70% while hospital ER claims volumes decreased 1% and primary care physician claims volumes dropped 13%.
Retail clinics outpaced other sites of care in large part because the federal government made national retail pharmacies, including stores like CVS and Walgreens, a key part of its COVID-19 vaccination strategy. More people became comfortable with receiving vaccinations and getting tested for COVID-19 at these clinics. Federally purchased COVID-19 vaccines, including boosters, were free to everyone in the U.S., regardless of insurance coverage.
Most retail clinics, 85%, are owned by large retail chains such as CVS, Walgreens and Walmart. But there's been a trend in recent years toward hospitals and health systems entering the retail clinic landscape by partnering with chains to support the growing demand. Kaiser Permanente's partnership with Target is an example of this model.
Ninety percent of retail clinics are owned by six organizations. Pharmacy giant CVS is the biggest player in the nation, with more than half of all retail clinic sites. The company, which also owns a payer (Aetna) and pharmacy-benefits manager (Caremark), entered the retail clinic market when it acquired MinuteClinic, founded as QuickMedx, in 2006.
Today, CVS also operates enhanced retail clinics called HealthHUBs that focus on chronic disease management. The company is doubling down on primary care with the acquisition of Oak Street Health, which has a network of clinics for seniors on Medicare. It also acquired in-home assessment company Signify Health.
Supermarket giant Kroger Health is the second-largest operator through its Little Clinic business, which it acquired in 2010. The grocery giant has more than 220 retail clinics in 35 states.
In 2023, there were more than 1,800 active retail clinics in 44 states. These clinics were more likely to be located in major metropolitan areas; only about 2% of clinics were in rural areas, half of which were owned by CVS.
Most retail clinics are in the Southeast and the Midwest, which account for 62% of locations. Nearly half (49.1%) of all retail clinics are concentrated in seven states: Texas, Florida, Ohio, California, Georgia, Illinois and Tennessee, which the report attributes largely to population density.
THE LARGER TREND
Based on an analysis of the most common diagnoses reported by retail clinics, retailers deliver care at a significantly lower cost than other sites of care. For the 10 most common diagnoses, the average charge per claim on aggregate was $38 less than claims submitted by urgent care centers, $471 less than claims submitted by physician offices, and $746 less than claims submitted by hospitals.
About two-thirds of retail clinic visits are paid for with health insurance, so these findings suggest considerable savings for payers.
The report suggests that healthcare providers should respond to these trends by being open to partnerships with retail care, considering health system ownership models and adopting retail-like strategies in order to compete.
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
