Shopping for the Right Partner in Retail Health
Among the key issues facing hospitals today is how to expand access and increase engagement with patients across the System of CARE. In an era of tight investment and increased consumerism, retail pharmacy clinics are one solution to accelerate access, reduce costs and attract new patients. Having worked several years for Walgreens, I spent time developing new retail and clinical services and building strategic partnerships, including partnerships with health systems on retail clinics. At Sg2, I can bring my retail experience to bear, helping our clients make the best choices when considering retail clinic partnership within their Systems of CARE.
As noted in the Sg2 report, Expanding Access Channels to Drive Growth, Sg2 forecasts 9.5% growth in adult visits to retail clinics and urgent care by 2019. Retail pharmacy clinics have become a convenient access point for patients to obtain immediate care and avoid unnecessary ED visits. But how does a hospital or health system find the right partner? Why partner at all?
Finding the Right Partner—Affiliation vs Full Partnership
If your organization wants a low-risk, low-cost entry into retail health and a public relations boost, a clinic affiliation may be the right choice. These affiliations can help with health system channel strategy by enabling acquisition of new patients from referrals. They also may help prepare your health system for value-based care by ensuring the right care is provided in the most appropriate place, along with improving ED diversion, since lower-acuity patients can be seen in retail clinics instead of the ED.
Among major pharmacy retailers, CVS MinuteClinic had over 50 affiliations across 26 states, while Walgreens had 15 affiliations as of October 2016. However, your organization will get out of such a partnership what you put into it. Sg2 found that at least 65% of retail clinic patients reported not having a primary care physician (PCP). If you think like a consumer, patients often want to go where it is most convenient, regardless of the clinic’s affiliation. A clinic provider may help the patient find the most convenient primary care site, even if it is not through an affiliated partner. Referrals for further care will be impacted by the way the affiliation is structured. If the pharmacy and health system are in a tight affiliation with aligned incentives, retail pharmacy clinic providers will likely refer to in-network PCPs. However, in some markets, these affiliations are not exclusive, leaving the door open for referrals outside the health system network.
To bring patients into your system through retail clinic affiliations, your organization may need stronger ties with the clinic through an integrated EMR or a deeper partnership that includes control over clinic operations and staffing. CVS has integrated its EPIC EMR with some partners, providing a forum to better track, engage and retain patients in their Systems of CARE. Signage is also essential for a successful affiliation. One of the reasons Walmart was not successful in its original affiliation model was that it did not provide adequate signage for partner organizations. Without these types of commitment to each affiliation and investment for integration, your organization may require a deeper level of partnership to truly extend community reach and retail presence.
In recent years, such deeper partnerships have started to develop, particularly with major pharmacy organizations like Rite Aid and Walgreens, who are now merging. Walgreens’ recent partnerships with Advocate Health, Providence Health & Services and SSM Health illustrate the opportunity for health systems to grow their retail footprint using existing space. Typically, the health system will purchase the retail clinic business and operate the clinic within the footprint of the drugstore. The health system gains much more control over clinical protocols, operations, patient outreach and experience.
Such deals also shift perception among system physicians and other providers from viewing the clinic as competition to becoming a new access point within the System of CARE. Partnership could help avoid significant alternative investment in brick-and-mortar satellite offices or urgent care locations. Rite Aid has similar partnerships with systems such as Memorial Hermann and MultiCare Health System, but typically structures the deal as a joint venture rather than 100% system ownership.
Next Steps Include an Organizational and Market Assessment
If you are interested in partnering or forming an affiliation with a retail clinic in your market, you should first assess how a retail strategy fits into your overall System of CARE.
- Assess whether your patient base, payer mix, and current outpatient and community footprint are best enhanced through retail clinic partnership or other channels like telehealth services that compete for the same low-acuity patients.
- Based on this current state assessment, estimate the volume of patients you could potentially gain through a retail pharmacy clinic affiliation or partnership.
- Determine your organization’s viewpoint on the key considerations for partnership above and whether affiliation or a deeper partnership are right for you.
- Reach out to major retailers in your market to understand their current clinic strategy, relationships with your competitors, and other partnership areas you and the retailer may explore.
As the health care industry moves toward value-based care, affiliations and partnerships for retail pharmacy clinics can add significant value as a low-cost way to care for patients. Health systems will be incented to funnel large volumes through these sites, freeing PCPs to manage patients with chronic or severe disease. In a partnership model, health systems will eventually want to increase services provided through these retail pharmacy clinics to expand the scope and convenience for consumers.
Sg2 has resources to help you pursue this model, including a System of CARE Guide that provides practical advice and key considerations for incorporating retail clinics into your overall care continuum, and on-demand webinars highlighting real-world examples. Sg2 Consulting can also assess your current System of CARE’s gaps and opportunities to help you evaluate potential clinic partnerships and work with you to identify the potential impact of partnering with retail pharmacy clinics in your market.
Sg2 Associate Vice President Mark Larson contributed to this post.