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Wal-Mart's newest effort to make a play in the booming health clinic space comes after the big-box retailer has fallen far behind its rivals. And this time, Wal-Mart is shaking up its approach with a new model that's getting some attention in the health-care world.
Wal-Mart this year has opened six clinic locations across South Carolina and Texas in which the retailer is providing a broad range of primary care services, as described in a recent New York Times story. The company plans to have a dozen of these clinics open by the end of this fiscal year, executives said on a Thursday earnings call.
This new approach marks a major change from Wal-Mart's attempts to crack the retail clinic market in the past decade. For starters, retail clinics have generally been a place to get a vaccination or get your cold checked out — not a replacement for your primary care physician. And this time, Wal-Mart appears to be working with a single entity to run the clinics. That's different from its past lackluster efforts in which the retailer leased out space to hospital systems or venture capital-backed operators "who had virtually no experience in health care," said industry expert Tom Charland of Merchant Medicine.
Since Wal-Mart started in the clinic space, it's opened 260 locations but has closed 166 of those, according to Charland, whose company tracks retail clinics. Meanwhile, Walgreens, which has more than 400 clinics across 23 states, announced plans Wednesday to open an additional 27 location across the Dallas-Forth Worth and Houston areas. CVS, which has more than 850 Minute Clinics in 29 states and the District of Columbia, is also expanding.
Wal-Mart's decision to have these clinics act as a primary care provider is notable because of the company's footprint in rural areas, where access to care can be a major challenge. It's also an area that retail clinics historically haven't been in. Just one-third of retail clinics were in medically undeserved areas as of 2008, according to a study in JAMA Internal Medicine. "Retail clinics are currently located in more advantaged neighborhoods, which may make them less accessible for those most in need," the researchers concluded.
But we just don't know yet where Wal-Mart plans to expand, Charland cautioned. "The first clinics they opened in Texas, they're in fairly densely populated areas," he noted. For now, it seems like Wal-Mart's clinics also will have a somewhat limited reach. Any customer can pay $40 per visit (no insurance accepted), but Wal-Mart employees only have to pay $4, according to the Times story.
As millions more low- and middle-income people gain insurance under the Affordable Care Act, retail clinics can appeal to especially cost-conscious consumers looking for basic health-care services. They also offer a convenience factor — about 44 percent of retail clinic visits occurred in the evening or on the weekend, when doctors' offices are typically closed, according to a 2012 Health Affairs study analyzing 2007-2009 usage patterns.
Some doctors groups have warned that these retail clinics can't effectively manage patients' more serious health-care conditions. "While retail clinics may provide a limited scope of health-care services for patients, this can ultimately lead to fragmentation of the patient’s health care unless it is coordinated with the patient’s primary care physician’s office," the American Academy of Family Physicians said in February 2014 policy statement.
The CVS and Walgreens clinics have been careful not to represent themselves as a primary care provider, in part to avoid angering doctors, Charland said. But the industry dynamics have been changing, starting with Walgreens announcement last year that it will diagnose and treat patients for chronic conditions, such as diabetes.
"You see that they're first looking at are there tests they can provide, but then you see that — more consistent with the Wal-Mart model — they're moving in that direction of providing care for diabetes and high blood pressure," said Ateev Mehrota, a Harvard Medical School health policy professor who authored the Health Affairs study of retail clinics.
Those clinics are also emphasizing partnerships with community providers. CVS' Minute Clinics, for example, tout their affiliations with about three dozen hospitals, clinics and provider groups.
A big question is how much patients are willing to accept the clinics as a stand-in for primary care. "It's not that easy to just open up a store, put out a sign, and say you're doing primary care," Charland said. "It remains to be seen whether [Wal-Mart] will be successful."
Top health policy reads from around the Web:
Last year's Obamacare fix is this year's headache. "The Obama administration’s effort to end one political crisis during the 2014 Obamacare rollout may have sown the seeds of another controversy: potential double-digit rate hikes in 2015. If insurers have their way, some residents in politically key states like Florida, North Carolina and Iowa would face hikes of 11 percent to nearly 18 percent — far beyond the average 7.5 percent increase in proposed rates for much of the country. Major carriers there in part blame such increases on the administration’s response to the furor that erupted when millions of Americans received notice last fall that their health policies would be canceled because they fell short of Obamacare requirements." Brett Norman in Politico.
Employers will continue to offer skimpy plans. "Nearly 1 in 6 companies plans to offer health coverage that doesn't meet the Affordable Care Act's requirements for value and affordability, a national survey of employers finds. Many thought such skimpy coverage would be history once the health law was fully implemented this year. Instead, 16 percent of large employers in a survey released Wednesday by the National Business Group on Health said they will offer in 2015 these so-called skinny plans along with at least one insurance option that does qualify under ACA standards." Jay Hancock for Kaiser Health News.
Nonprofit hospitals are having serious issues. "Small and stand-alone nonprofit hospitals are facing mounting pressure from weak operating margins and lower patient volumes, with more signals of stress on the way, according a report released Wednesday from Standard & Poor's Rating Services. The rating agency warned that the health-care sector was at 'a tipping point where negative forces have started to outweigh many providers' ability to implement sufficient countermeasures.' ... In particular, stand-alone providers are under greater pressure from physician departures, rising bad debt, and higher employee benefit costs." Robin Respaut for Reuters.