Wal-Mart’s medical-clinic fever waning

— Wal-Mart Stores Inc. in 2007 outlined an ambitious effort to open as many as 2,000 in-store, walk-in medical clinics over the next five years.

At the end of 2012, the retailer was home to 128 clinics, 26 fewer than a year earlier.

Retail clinics are dominated instead by pharmacy chainsCVS, with its 627 MinuteClinic locations, and Walgreens, with 364 locations, as tracked by Tom Charland, who runs research and consulting firm Merchant Medicine based in Shoreview, Minn.

Wal-Mart and its various health-system partners in the retail-clinic business placed a distant third. Wal-Mart partners with 62 medical systems to run the clinics.

In response to questions about the company’s performance with the clinics, John Agwunobi, senior vice president and president of health and wellness at Wal-Mart, said last week that the company is always working with its healthcare providers in their local communities.

“We’re constantly tryingnew things,” he said. These providers, he said, advise Wal-Mart store by store where medical services should be located. And some medical providers, he said, have chosen to close their retail clinics because of a shift in their own business priorities.

“We have a very flexible relationship with medical providers in local communities,”he said.

Charland said that, in general, expansion of walk-in clinics is likely to be boosted by the federal Affordable Care Act as different provisions of the law take effect.

He projected that Wal-Mart will close an additional 48 clinics this year, leaving it with 80.

“At a high level, it justdoesn’t fit the Wal-Mart model, which is to figure out how to do it once, then copy that elsewhere,” he said. “Wal-Mart is a very smart organization, but the way revenue flows in health care is unlike any other industry in the country.”

For its retail clinics, Charland said, all lease agreements had to clear the company’slegal department, and a lot of time was spent in negotiations. From a marketing and sign standpoint, he said, the hospital systems it partnered with were disappointed with the company’s support.

“Wal-Mart realized the hospital systems were their customers and needed a lot of attention. That’s just not their model,” he said.

Agwunobi said the clinics are part of the company’s overall commitment to provide customers with quality and affordable health-care solutions. The company, for example, pioneered $4 prescriptions for generic drugs.

Wal-Mart’s medical-field partners have, in some cases, chosen to shut down clinics to meet their own business priorities, he said.

Charland noted in his most recent report that “hospitals as a group will continue to view retail clinics with lukewarm interest.”

“With many of their peers having mixed or poor results, and with a limited number of retailer options available, this group will no longer be the growth engine it was from 2008-11,” he said.

Typically, retail clinics are staffed by nurse practitioners who have video links to physicians. They generally deal with common ailments such as sore throats and earaches, and provide flu shots, and blood-pressure and other screenings.

Charland’s report showed a net gain of 62 retail-based clinics for 2012 and forecast a net gain of 89 for this year.

Tine Hansen-Turton, executive director of the Convenient Care Association based in Philadelphia, said the group expects additional growth in the retail-clinic business. Clinics, she said, are adding preventive services such asweight management to their offerings.

About half of patients who visit walk-in clinics do not have primary-care physicians and use the clinics as their health-care “home,” she said. About 65 percent have health insurance, she said. Some patients carry only high-deductible, catastrophic insurance coverage and pay for services out-of-pocket.

Under the Affordable Care Act, the Convenient Care Association anticipates that more people will use the clinics.

“Our members can easily partner with hospitals, care organizations and with medical home providers,” Hansen-Turton said.

Bellin Health FastCare, which operates in Michigan, closed six clinics in 2012, ending the year with 31.

Target Corp. added nine clinic stores in 2012. Charland forecasts that an additional 17 clinics will be added at Target stores this year.

The Little Clinic, which is owned by The Kroger Co., added 11 clinics in 2012 for a total of 53. An additional 17 are projected to open this year, according to Charland’s forecast.

Web Golinkin, chief executive officer of Houston-based RediClinic, which operates clinics in HEB supermarkets, said the company’s clinics are growing not only in locations but in utilization.

“Consumers are embracing them more than ever before,” he said. “Retailers are wanting clinics in their store, so there’s no question they will continue to grow.”

He noted that the Affordable Care Act is “extremely positive” for retail clinics because millions more people will be insured and looking for medical homes at a time of a shortage of primary-care physicians.

Retail clinics, he said, are well-positioned to fill that need.

Business, Pages 67 on 02/24/2013

Upcoming Events