By Mark Thill
Maybe it was inevitable that operators of retail clinics would one day be forced to choose between expanding their healthcare offerings or scaling back their commitment to in-store clinics. Judging from developments in the latter half of 2019, that day may be at hand.
In October, Walgreens announced it would close all (157) of its company-managed Walgreens Healthcare Clinics, but continue to work with its network of local health system operators who own and operate approximately 220 clinic locations inside Walgreens today. (Of the 157 clinics that are closing, seven will transition to TriHealth, a Cincinnati, Ohio-based health system.)
In their stead, Walgreens and Jenny Craig will open 100 Jenny Craig weight-loss locations at Walgreens stores nationwide in January 2020. The locations will offer Jenny Craig’s program featuring one-on-one consultations, a customized menu plan and meal delivery.
Meanwhile, CVS Health announced plans last summer to bring its new HealthHUB store format to more U.S. markets in the first half of 2020 as part of its goal to operate up to 1,500 of the locations by the end of 2021.
On its website, CVS describes HealthHUB as “a first-of-its-kind community-based store concept focused on helping customers get well – and stay well – by offering a broader range of healthcare services, wellness products and services, trusted advice and personalized care, all with the ease of walking right into a local CVS Pharmacy.”
Diverging paths
Walgreens is “clearly signaling an exit from providing traditional healthcare services that get billed through insurance networks,” Tom Charland, founder and CEO of Merchant Medicine, told Repertoire in an email. “CVS, however, is expanding into primary care more broadly, beyond the limited-scope retail clinic.”
Based in Roseville, Minnesota, Merchant Medicine is a management consulting firm in urgent care, retail clinics, telehealth solutions and consumer-driven healthcare.
“Until now, these retail clinics have avoided competing with primary care physicians in that they never took on a patient and followed them through a chronic condition,” he says. “That’s why we referred to them as acute episodic or limited-scope clinics.
“The HealthHUB concept from CVS goes all-in on primary care and is being tested in a number of markets. So clearly there is a fork in the road between Walgreens and CVS, where one is no longer following the other.”
The fact is, operators of limited-scope clinics have always had a tough time achieving profitability, says Charland.
“Health systems don’t make money at these clinics either,” he says. Rather, “they view these clinics as a funnel to get new patients into their system; a way to create greater access in markets where primary care providers are in short supply; and a way to get their brand out into the community.”
Charland dismisses news reports that have suggested telemedicine may be delivering a knock-out blow to retail clinics. The market forces at work are much broader than that, he says.
“These clinics struggled long before telemedicine became the topic of the day. The fact is, telemedicine platforms that are aimed at acute episodic illnesses are struggling even more than retail clinics.
“That being said, this whole acute episodic space suffers from too much capacity chasing a limited number of visits. The reason urgent care clinics continue to grow is they have an expanded scope of service, including suturing lacerations, X-ray for broken bones and the ability to handle more complex acute conditions.”