SAN DIEGO – Kaiser Permanente is the latest health care organization to enter the retail clinic market through its partnership with Target Corp. The HMO giant opened four retail clinics in Southern California at the end of 2014, two of which are based in San Diego.
The move is part of Kaiser’s broader response to a changing health care market where patients are increasingly seen as consumers who want convenient and cost-effective health care services for common ailments.
“The real strategic driver here is something we call Care Anywhere, which is an aspiration we have to make our high quality, integrated, coordinated care more accessible and more convenient to more people,” said Chris Stenzel, senior vice president of Business Development and Innovation with Kaiser Permanente.
Once seen as rivals, health systems now view retail clinics as potential partners that can help extend the care continuum and manage patient volume.
These sites are expanding nationwide, in part as a response to concerns over primary care doctor shortages as the Affordable Care Act spreads health insurance to millions of new patients.
Competitive and predictable prices for a wide range of primary care services are also a big draw for patients who have higher out-of-pocket medical costs, which have grown by more than 150% over the past decade, according to the Commonwealth Fund.
“We’re moving into a world where the expectations of the consumer around low acuity illness and injuries are much higher these days,” said Thomas Charland, CEO of Merchant Medicine, a health care consulting firm based in Minnesota.
The average price for a visit to a Target/Kaiser Permanente clinic is $75. The clinics are open almost 70 hours per week.
Convenience seems to be the primary draw.
According to research conducted by the Center for Studying Health System Change in 2013, nearly three in five patients using these services cited convenient hours as a major factor in choosing to get care at a retail clinic over another outlet. Nearly six in 10 people chose to use retail clinics because they were able to get care without an appointment. Almost half said the convenient location of clinics was a big selling point.
San Diego Retail Clinics
Kaiser Permanente is not the first health system in recent years to offer retail clinic services in the San Diego area.
Sharp HealthCare and MinuteClinic, the retail health care division of pharmacy chain CVS Caremark, teamed up to expand primary care access around San Diego in April 2013. Sharp HealthCare is currently affiliated with 13 CVS Minute Clinics in the San Diego area.
Like Kaiser, Sharp sees increased access to primary care services as a major benefit of the clinics.
“Access to cost-effective care will become an increasingly important issue, and services offered by retail clinics are one way to address this concern,” said Donna Serpico-Thompson, vice president of business development with Sharp HealthCare
Serpico-Thompson said in the nearly two years of operation, feedback has been positive.
“We are pleased that Minute Clinic has shown very high patient satisfaction numbers that align with our Sharp Experience goals,” she said.
Though both Kaiser and Sharp see retail clinics as a way of extending access to care and responding to the growth of health care consumerism, they have taken very different approaches.
While Sharp-affiliated physicians serve as the clinics’ medical directors, Sharp HealthCare does not own or manage the clinics. That falls under the purview of CVS.
The Kaiser Permanente Target clinics, by comparison, are co-branded. Clinic signs inform patients they are entering a Target clinic with care provided by Kaiser Permanente.
They are staffed entirely with Kaiser’s nurses and nurse practitioners, overseen by Kaiser-employed physicians.
Through the partnership, Kaiser, with an exclusive contact with the Permanente Medical Group and its own network of clinics and hospitals, will treat people covered by rival health plans for the first time.
“It’s a first in that we have proactively gone out and signed insurance contracts with other providers in this marketplace,” Stenzel said.
So far, Kaiser has signed contracts with Blue Shield and United Healthcare, with more likely to come, Stenzel said. The clinics also accept patients covered by Medicare and Medicaid.
“Kaiser is an insurance company and does business with employers as a staff HMO, so for them to have patients come in with another insurance card is unusual,” Charland said.
Retail Clinics’ Path to Growth
Retail clinics made their way into the health care market in the early 2000s, and have since grown exponentially, though in fits and starts. Since 2006, the number of retail clinics nationwide has expanded from roughly 200 to more than 1,900.
California has 76 retail clinics, 54 of which are based in CVS pharmacy retail outlets. CVS is dominant in this space and is expected to pass the 1,000 clinic threshold nationwide within the next month. Walgreen is the second largest retail clinic operator with 431 clinics.
Despite their proliferation and popularity with consumers, Charland, who follows the retail clinic market closely, still isn’t convinced of their continued growth — at least not at the rate seen in previous years.
“I’m still not sure. It’s a tough business,” he said. “You won’t see private equity or venture capital getting behind it, which is usually a measure of growth.”
Still, there is an upside to expanding these stores for health systems like Kaiser and Sharp, as they seek ways to expand their consumer-focused offerings to remain competitive in a changing health care landscape.
Stores like Target and CVS have much to gain with retail clinics, too.
“The most strategic alliance [for retail clinics], bar none, is with the stand- alone drugstore,” Charland said.
As much as 70% of a drugstore’s profits come from the pharmacy. Any ancillary businesses — like retail clinics — that drive traffic to the pharmacy, therefore, are likely to be worth the investment.
Stenzel of Kaiser Permanente is optimistic but cautious about growth as well. He said there is clearly a trend under way, but it’s hard to say at this point just how much business they’ll attract.
Regardless, he said, “We’re poised to be ready as consumers adopt this modality.”