Add “See the Doctor” to your Shopping List! Retail Health Makes a Splash...

2019-10-30
Lea Halloway

Deloitte states that global health care expenditures will continue to rise with spending projected to increase at an annual rate of 5.4 percent between 2017-2022, from $7.724 trillion to $10.059 trillion. This market growth is attracting non-traditional competitors and disrupting the health care delivery market. And, growing pressure to provide value-based care and control rising costs is driving the need for new outlets of receiving health care. Retailers are well-positioned to provide consumers with new and innovative health care delivery options as they provide convenience, upfront pricing transparency, and have a keen awareness of the consumer experience. Traditional retailers are also well-advanced at collecting and mining user data to gain market insights when compared to a traditional health care delivery system who might still be struggling to maximize their electronic health record (EHR) system.

Here are a few examples of three notable leaders in the evolution of retail health care to date:

CVS/Aetna
Starting in 2006 with the partnership between CVS and MinuteClinic (previously QuickMedx centers), CVS began its walk-in health care business. Initially positioned as an alternative to emergency rooms and urgent care facilities, they focused on seven common medical conditions including strep throat, mono, flu, pregnancy testing, and bladder, ear and sinus infections. Currently, CVSHealth operates over 1,100 MinuteClincs within CVS retail locations, as well as approximately 100 clinics in Target locations. With their acquisition of Aetna, they plan to expand the MinuteClinics into over 1,500 HealthHUBs. The new HealthHUBs will include treatment of more chronic conditions, as well as telehealth services that integrate specialists into the clinics virtually. They are also focusing on integrating their electronic health record (EHR) system with outside primary care providers for better coordination of care.

Walmart
Following on the CVS/Aetna merger, Walmart opened a 10,000 square foot health center called “Walmart Health” that offers primary care, dental, optometry, counseling, laboratory tests, X-rays, hearing, wellness education, and behavioral health services under one roof. Walmart had previously operated numerous “Care Clinics” in its stores replicating the MinuteClinic model and will continue to grow that business as well while growing its health “Super Centers” business. With the launch of the first Walmart Health “Super Center” the company’s CEO stated that the new centers are a “serious” strategy and “not a dabble.”

Walgreens
Walgreens has consistently grown its number of Walgreens Healthcare Clinics over the last few years, with 356 clinics in 2016, 376 in 2017, and 402 in 2018. Taking a different approach, Walgreens partners with health systems by providing the space within its retail stores for traditional healthcare providers to own and operate their own retail-based clinics. For example, Advocate Aurora Healthcare operates over 50 clinics in Walgreen’s Chicago area locations.

It would also be remiss not to mention that Amazon owns 19 flagship stores and 500 Whole Foods grocery stores, acquired in 2017. Could this be a starting point for a walk-in health care services offering?

What does this all mean for traditional care delivery systems, such as health systems, hospitals, and primary care practices?

The growing trend of medical services in retail settings will certainly create a competitive threat to traditional healthcare delivery systems. With retailers providing services such as medical professionals on-site, extremely convenient pharmacy options, virtual integration of specialists, and support services such as labs, these entities hope to capitalize on consumers’ demand for convenience. Larger traditional health care providers will be forced to respond – and they are.

HIRC’s study of integrated delivery networks (IDNs) in early 2019 found that 73% of IDNs intend to add additional urgent or immediate care facilities over the next 1-3 years. Traditional healthcare providers are also rapidly expanding access to care by adding telehealth services. HIRC’s study found that two-thirds of IDNs currently offer telehealth, and another 27% are planning to add such services in the next 1-3 years.

The rise of retail-based care also generates opportunities for stakeholders to leverage synergies. There are over 130 health system and retail clinic partnerships known to date, ranging from data sharing between retail and health system and full health system operation of a retail clinic within a retail store (e.g., the Walgreens model).

This leaves me very curious about what healthcare delivery might look like 5, 10, or even 20 years from now and how it will impact pharmaceutical distribution channels. New marketing tactics, contracting approaches, and distribution models may very well be needed to address the evolving landscape of how, when, and where patients receive their care.

 

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