Retail Clinics Growing in Popularity
Retail clinics, particularly those in drugstores, are catching
on with American consumers. That’s the conclusion of Kalorama Information,
a research firm specializing in the healthcare market.
According to Kalorama
estimates, sales from U.S. retail clinics hit $733.4 million in 2010 with the
majority coming from those in CVS, Walgreens and other drugstores. Clinics
in pharmacies currently represent 81 percent of the 1,344 operating in retail
stores today.
"Clinics have worked in a variety of situations, but over the past few
years we’ve seen more clinics open in drug store locations than in mass merchandise
or food stores," said Bruce Carlson, publisher of Kalorama, in a press
release. "It’s
logical in terms of one stop-shopping, because the drug store visitor is already
a consumer with healthcare on his or her mind."
While the channel has grown
in popularity with consumers, opposition from physician groups and their allies
in various state legislatures has slowed the pace of new clinic openings. Even
with opposition, most of the more restrictive measures, such as requiring clinics
to notify a patient’s doctor after a visit,
have failed to pass.
CVS and Walgreens have been the most aggressive in pursuing
new clinics in stores. Kalorama’s Carlson believes that the growth in
the drug channel also may be due to the two largest players having skin in
the game.
"We still expect the concept to continue to be attempted in all locales,
particularly by Walmart and other mass merchandisers," said Mr. Carlson. "But
in these stores, the clinics are often third-parties and one of many attractions
in the store, while in drugstores they are critical to the operation."
Discussion Questions
Discussion Questions: Do you see continued growth ahead for retail clinics? Will drugstores continue to dominate in this area or do you see others entering the game in such a way as to shift the balance of power?Â
With the first Baby Boomers turning 65 years of age, this trend should enjoy continued growth. While the drugstores have the advantage and natural connection with clinics, other food retailers should seize this as a point of positive differentiation. Supermarkets could use clinics and other related activities (nutritionists, exercise classes, healthy cooking classes, etc) to earn the “wellness” positioning.
Retail clinics provide fast, easy access to medical assistance. True, they are not places you should go for more severe or complex issues, but they are great places to get flu shots, etc. In fact, we have gotten ours at a local Walgreens for the past several years. Much faster than going to the doctor or even one of the larger walk-in, immediate care clinics.
I would expect to continue to see these small format clinics grow in number. I have no information regarding what makes a successful location but would expect that in the inner city or rural areas where access to medical treatment is limited, that the clinics should do well.
I would expect that drugstores would dominate for several reasons. First as mentioned in the article, people in a store are likely to be in a healthcare frame of mind (although as drugstores attempt to become convenience stores that may change somewhat). Second, sheer numbers–there are so many drugstores and access to them is relatively easy.
First of all, if they do continue, drugstores will always have the lead. People trust pharmacists more than they trust retail clerks and by extension they trust the places the pharmacists work more than the places clerks do. Of course that means some supermarkets will also benefit from the pharmacists’ halo as well, depending on the brand image and store conditions.
But I think we have to ask ourselves why people go to these clinics in the first place. For some, it’s a simple matter of convenience, an easy way to get your flu shot or your blood pressure checked.
For others it is a transportation issue, it may simply be easier to get to the “pop up” clinic than to a physician.
And for others it’s a symptom of what’s wrong with our national healthcare delivery system–a visit to the clinic may be cheaper than a visit to a doctor.
Will the trend continue and even expand? It really depends on three variables: the ability of traditional medical service providers to lobby against the idea of clinics; the real world impact of healthcare reform; and the general health–or lack of it–of the economy.
Ryan’s got it right. Just as an aside, my last routine physical of about 20 minutes’ duration cost about $250, not counting lab tests. If I go in for a sinus infection, it’s about the same by the time I’m done, usually after a hassle to get an appointment, and then a long wait. These clinics often didn’t work in supers, but I can see them continuing to grow in drugstores, if the medical lobby doesn’t get the best of them by pointing out how perfectly well the system works now.
There seems to be an irony here. People are encouraged to go to all kinds of stores to buy food and vitamins that help keep them healthy. Conversely, clinics are arising in stores to attend to folks when they are temporarily sick.
With the increasing cost of health care and with a majority of the population having to watch their pennies, in-store clinics represent a lower cost for minor illnesses and faster treatment than do visits to MDs and hospitals. Thus clinics also represent both sales and bonding qualities. And savvy retailers will want to capture those phenomena.
Since clubs would seem to have many customers with tight budgets one can assume that clubs will try to increase its share of such business. But drug stores are more experienced in health care matters and they will fight to dominate in-store clinic business. And so the battle begins.
Meanwhile, while clinics are potential opportunities for supermarkets, it seems that healthy food and sickness are in possible conflict even though they offer most convenience and visitor frequency. That’s where irony might pop up.
Upon reflection, I think the drug stores will want–and will fight hardest–to capture future clinic business.
Absolutely, the growth potential is enormous. With the rising cost of health insurance and co-pay, sometimes you just need a little advice or prescription something and don’t want to pay the cost of at least a $100 doctor visit. For instance, a poison ivy break out in the spring. You mowed the grass, you know it’s poison ivy–the in store clinics are perfect for this type of service and will become more and more popular. Service is the key!
The best fit is drug stores and clinics. Supermarkets have tried them with limited or no success. Mass merchants–especially Walmart–are generally outside of town, so they are not convenient for consumers. Convenience stores are too small. Thus drug is the logical match; otherwise they will be standalone. What works best for drug is that they stock products consumers will need, be it over the counter, bandages, or prescriptions.
Drug stores have spent years trying to find their way. When RX had a margin of 50% no one cared about the front end. As RX margins declined they first tried convenience. They were banking on frequent senior visits for add-on sales. Then they tried to take on the convenience stores and get back at supermarkets that put in pharmacies by stocking food. Consumers determined their food prices were too high. Expanding into clinics to become health and wellness retailers will be their best strategy.
Time to dust off my time-worn p.o.v. on this subject once again. Retail clinics have a hidden benefit if the retailers would take advantage of it: Require all employees with company-supplied health benefits to use your clinics for the services provided there. No exceptions. Then, contract with a physicians group for referrals from the clinic and care for those who need to leap-frog the clinic because their needs are greater than the clinics can meet. This would provide extraordinary cost control and savings.
Having consulted in the workers compensation industry here in CA a few years back, I learned that it is one of the most expensive costs associated with company-provided healthcare. This is mostly due to preventable abuses by providers such as physicians, insurance companies, and various middleman services. Nurse Practitioners employed by retailer clinics could be the gatekeepers for workers comp for the retailers’ employees. Less time off for doctor visits, monitoring of excessive visits, etc. It’s cost containment that can result in better overall benefits for employees.
I’ll close with the reminder I always use when discussing this topic: Kaiser Permanente began as in-house clinics for Kaiser Aluminum employees. Clearly it was successful.
Retailers could help themselves a lot if they would quit defining their businesses by the suite of merchandise they carry, and instead defining it by the needs and wishes of the shoppers they serve. So Sam Walton needed to build traffic to the D1 store, and did so by introducing groceries. It’s a can’t lose. People need beverages and food more often than anything else they buy. So drug stores have spent the past few years aggressively moving into the “C-store” business. It builds traffic! But the reality is that maybe 90% of drug store profit comes from writing prescriptions. The whole front of the store, though modestly profitable, serves most effectively as building the drug store brand, and it does this by making the establishment an every day shopping milieu. In-store clinics? But of course–further building the brand.
Walmart is leveraging this principle in the same way. The day may come that no in-store clinic = no prescriptions. This may be OK for a furniture store. But eventually the shrewdest retailer, Amazon, may find a way to support in-store clinics, too. Don’t worry, you’ll probably be retired, and will be able to observe how differently your grandchildren live. 😉 Just remember, the future of retailing is driven by the needs of shoppers, not by legacy retailers wringing the last gasps out of 100 year old thoughts.
I have had to use this service twice this year, both for shots. I am impressed with the process and professional appearance it gives. Why should we have to make and wait for an appointment with our regular doctor, sit in the waiting room and pay, either through insurance or personal, for the same service much faster and less expensive? Seems like a no-brainer to me.