Retail Clinics; the Players and Their Performance

By Tony Barber

A significant amount of capital has been invested in the past 10 years in the Retail Clinic sector. The major players account for 1,023 sites. Those operators are:

• Minute Clinic, operated by CVS Pharmacy, 429 sites
• Take Care Clinic, operated by WalGreens Pharmacy, 325 sites
• The Clinic at WalMart, 122 sites
• The Little Clinic, operated by Kroger, 119 sites
• RediClinic, 28 sites

The projections for growth made between 2004 and 2010 have simply not materialized. Some operators, like WalMart, have shifted models to affiliate with regional health systems, hospitals and large medical groups to be the operator of sites within their stores. Several of those centers have since closed. So what is about the retail space that made it so attractive but impractical (as the performance has suggested)? As in most businesses, it’s important to understand what you are selling and who the likely buyer is. The apparent mistake in this space is that there are severe limits to what can be offered in the space being allocated to the service. Nearly all are less than 1,000 square feet in size and most are under 600 square feet. This size severely limits what services can be offered. The second reason is that patients don't necessarily seek their care in a totally retail environment. In the case of WalMart, it is likely that the last place that a sick person would want to be is in one of these stores with so many other people. In the case of retail clinics, sick patients simply don't want to navigate other people in order to get care. The convenience factor in these venues accrues entirely to the retail operator in the form of potential customers and most consumers see through the product to the basis for its existence. There are those that will and do seek care in this setting but it is likely that the retail space will never be as prolific as the operators once professed that they would be.

Feedback.com projected that there will be between 2,078,811 and 2,321,436 visits to retail clinics in 2011; a modest 1% increase from 2010 which was nearly flat for 3 years running (2009 was actually down from 2008).

Retail clinics are almost exclusively located in metropolitan areas that have the highest primary care to population ratios and thus the least issue with medical access. Based on extrapolation of public information, UCA and Feedback.com estimate that the average retail clinic sees .25 patients per hour or roughly 3 patients per 12-hour day. These volumes would generate staggering losses if you consider only the staffing costs for a single clinician and nothing else.

The subject was so interesting that I have published a white paper that goes into further observations and analysis of retail clinics.

Click here to download this white paper or please contact us for your free copy. 

More white papers coming soon...