Medical Progress Report
No. 12 February 2011
EASY ACCESS, QUALITY CARE:
The Role for Retail Health Clinics in New York
Paul Howard, Senior Fellow, Manhattan Institute for Policy Research
Executive Summary
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Beginning in 2014, the Patient Protection and Affordable Care Act, signed into law in March 2010, is expected to significantly extend health-insurance coverage in New York by increasing Medicaid enrollment and offering federal subsidies for the purchase of private health insurance. However, there is no guarantee that the newly insured will be able to access the health-care system in a timely fashion as new demand for services outstrips physician supply.
After a similar insurance expansion in 2006, Massachusetts patients had to wait longer for physicians' office visits, and hospitals noted a surge in emergency-room use. This suggests that New York policymakers should look for new ways to expand access to health-care services well in advance of full health-reform implementation.
In this study, we examine whether retail health clinics (also called â??convenient care clinicsâ?) have a role in alleviating pressure on overcrowded physicians' offices and reducing inappropriate emergency-room use, thereby lowering overall health-care costs.
Published research and interviews we conducted suggest that retail clinics have the skills and organization to serve as convenient and cost-effective providers of basic health-care services, provided that certain troublesome and unnecessary regulatory barriers are lowered or removed. In particular, research suggests that:
Finally, retail clinics may be able to help reduce Medicaid patients' utilization of emergency rooms for minor ailments, although this would require retail clinics as well as Medicaid officials to create reimbursement and enrollment procedures that encourage appropriate retail-clinic use. Previous reports have suggested that expanding retail-clinic utilization in New York could reduce health-care costs by $350 million between 2011 and 2020.
There are currently fewer than twenty physician-owned health centers operating in New York State in retail stores such as Duane Reade and CVS, and they appear to be expanding slowly. Retail-clinic availability in New York State is also much lower than in other states with retail-clinic access. As of December 2010, New York ranked among the four lowest states in retail-clinic incidence per 100,000 residents, with just 0.1 clinics per 100,000 population, or 75 percent below the median for all states with retail clinics.
Among more affluent urban and suburban areas as well, New York is â??undersuppliedâ? with retail clinics. Although New York's Metropolitan Statistical Area (MSA) is the nation's largest by population, it ranks at the bottom of the thirty largest MSAs in retail-clinic incidence, with just 0.1 retail clinics per 100,000 population, or more than 80 percent below the median.
Several regulatory barriers keep retail clinics from locating or expanding their operations in New York State:
Many states do not require any additional regulation or licensure beyond that required of the providers who treat patients there. New York's regulations go well beyond this, either prohibiting or making it much more difficult for certain types of retail clinics to operate.
Ideally, legislators would repeal costly regulations that inhibit retail-clinic entry and expansion in New York. However, repeal appears unlikely. A second-best, but still effective, option would be to create a specialized licensure process for retail clinics that would streamline regulation of one or more retail-clinic models and allow corporations that operate retail clinics to employ providers directly, as dialysis treatment centers now do. Nurse-practitioners could also be allowed to practice outside of a collaborative-practice agreement, as nurse-midwives may do. Massachusetts enacted a similar set of reforms in 2008.
These reforms could focus on maintaining basic standards of consumer protection while leveling the playing field between physician-owned clinics and clinic operators that employ nurse-practitioners. An open-door policy toward retail clinics of all kinds would help ensure that federally mandated reforms not only expand insurance coverage but also improve patient access to cost-effective care.
About the Authors
Paul Howard is a Manhattan Institute senior fellow and director of the Institute's Center for Medical Progress. He is also the managing editor of Medical Progress Today, a web magazine devoted to chronicling the relationship between private sector investment, biomedical innovation, market-friendly public policies, and improved health.
Howard writes on a wide variety of health policy issues, including medical malpractice, reform of the Food and Drug Administration, and Medicare initiatives. He is often quoted on health-care issues, and his columns have appeared in national publications, including the New York Post, Dallas Morning News, Investor's Business Daily, and WashingtonPost.com. He is also a member of the Manhattan Institute's Project FDA, a committee of physician-scientists, economists, medical ethicists, and policy experts whose purpose is to show how twenty-first century technologies can help improve FDA regulations and accelerate the drug-development and drug-approval process without sacrificing safety.
Howard received a Ph.D. in political science from Fordham University in New York City in 2003, and holds a bachelor's degree from the College of the Holy Cross in Worcester, Massachusetts.
Acknowledgments
The author gratefully acknowledges Mary Kate Scott for serving as project adviser, and Gregory Judd for supplying data on the number and distribution of retail health clinics.
Support for this work was provided by the New York State Health Foundation (NYSHealth). The mission of NYSHealth is to expand health-insurance coverage, increase access to high-quality health-care services, and improve public and community health. The views presented here are those of the author and not necessarily those of the New York State Health Foundation or its directors, officers, or staff.
Introduction And Overview
On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act into law. Beginning in 2014, the legislation is expected to extend health-insurance coverage to approximately 32 million previously uninsured Americans through a combination of Medicaid program expansion and federal subsidies for the purchase of private health insurance[1] on newly created state health-insurance exchanges.[2] In New York, one report projects that nearly half (1.2 million) of the state's 2.6 million uninsured residents will acquire coverage.[3] Hundreds of thousands of New Yorkers eligible but not enrolled in the state's Medicaid program will also be able to obtain automatic coverage on the exchange.
Even before reform was enacted, policymakers and medical groups recognized that an increasing shortage of primary-care physicians was threatening patients' ability to access primary care in a timely manner.[4] The complex and varied reasons for the shortage include: stagnation or decline in the size of reimbursements by private and public insurers; much more generous reimbursements for specialists, which medical school graduates therefore seek to become; and the rising demands of an aging population for care.
The shortage of primary-care physicians may threaten the ability of the Affordable Care Act to achieve some of its central goals, such as reducing overall health-care costs by relying on primary-care providers to promote disease prevention and manage chronic disease through the medical home concept.[5] The lack of access to primary care may also force newly insured patients to delay care or seek it in more expensive places, such as hospital emergency rooms.
The collateral effects of similar reforms enacted by Massachusetts in 2006 suggest that these concerns are not unfounded.[6] The expansion of insurance there seems to have exacerbated existing physician shortages and increased patients' wait times to see primary-care physicians and certain specialists.[7] In July 2010, Massachusetts released data showing that use of emergency rooms in the state increased by nearly 10 percent from 2004 to 2008, disappointing hopes that broader insurance coverage would reduce it. The same report noted that â??expanded coverage may have contributed to the rise in emergency-room visits, as newly insured residents entered the health-care system and could not find a primary-care doctor or get a last-minute appointment with their physician.â?[8] Although the Affordable Care Act contains a number of provisions designed to encourage physicians to enter primary care, experts continue to predict a national shortage of physicians in coming years.[9]
The BlueCross/BlueShield Perspective in Minnesota
BlueCross and BlueShield (BCBS) of Minnesota contracted with MinuteClinic, a retail-clinic chain, in 2003 to provide in-network services to its members, the first partnership of its kind in the nation. Since then, tens of thousands of Minnesotans have visited retail clinics, enjoying very high levels of satisfaction with the range of services, quality of care, and cost savings that they provide. BCBS continues to reimburse MinuteClinic, as well as Target Clinics and several other operators.
Having discovered that costs are lower when patients choose clinics for treatment of minor ailments, BCBS has waived clinic co-payments, making the cost to the patient of a clinic visit cheaper than a visit to a primary-care physician. Indeed, clinics have become so popular that BCBS frequently receives requests, either directly from members or through their agents, to add retail clinics. As for the quality of care, it is equal to that offered by traditional medical offices.[10]
Before admitting a clinic to its network, the plan determines whether its members have a need for the service in the clinicâ??s area. If there is in fact a need, the plan reviews the applicantâ??s license and board certification, including its Drug Enforcement Administration registration and the status of its medical malpractice insurance. The plan also checks to see whether any sanctions have been lodged against the provider. After all these requirements have been met, a standard contract can be offered. (Full details of the credentialing process are available at www.bluecrossmn.com.)
The clinics are particularly useful for filling gaps in care, especially on nights and weekends. Before the advent of retail clinics, members had only a couple of choices: delay care; or utilize an emergency room (ER) or urgent-care center.
As long as the member shares his primary-care providerâ??s contact information with the retail-clinic operator, the retail clinic will forward to the provider information obtained during the memberâ??s visit, minimizing possible disruptions in care continuity. Increasingly, traditional providers have been recognizing the value of retail clinics; some, such as the Mayo Clinic, have even opened their own. The Minnesota market seems to recognize the ability of both models to serve a particular niche.
Among the scholars, retail-clinic operators, and policymakers with whom we spoke for this study, there was broad agreement about the importance of developing additional venues where patients could access primary-care services. Access problems are probably going to worsen over the next several years as a result of the federal health-reform law. Without convenient alternatives,[10] more people will seek nonemergency, even routine, treatment at emergency rooms, the most expensive venue for such care. Retail clinics could become just such a convenient alternative, at least for treatment of certain common health problems.
The benefits that health clinics offer may not be limited to what goes on inside them. They may also have a salutary impact on other types of providers.[12] Their emphasis on convenience and customer satisfaction could encourage other providers to be more flexible in scheduling appointments. These providers might also develop more intensive ways of using nonphysicians on staff. And by following evidence-based protocols, which have proved to produce superior medical outcomes, they would be establishing a benchmark that other providers might feel obliged to meet. Finally, by assuming the treatment of minor illnesses, they could increase the efficiency of the overall health-care system by allowing more highly trained providers to devote their skills to treating patients with complex ailments.
These improvements are likely to result in significant cost savings. Indeed, a 2010 report on reducing health-care costs in New York State found that expanding access to retail clinics could reduce the health-care spending of public and private payers by $350 million in 2011â??20.[13]
New York, like other states, will have to find new ways to meet the surge in demand precipitated by the advent of federally mandated universal insurance coverage. The states must as well contain costs in an expensive health-care system that relies heavily on hospital and emergency-room care. Part of this challenge could be met by expanding access to basic primary-care services in nontraditional settings such as retail health clinics.
Part I: Retail Clinicsâ??The Basics
Structure and Function
Christensen, Grossman, and Hwang (2009) describe retail clinics as a disruptive innovation that gives consumers a â??more convenient and affordable way to access basic health-care services, which are based on evidence-based protocols.â? The model assumes a store setting (although some clinics do operate as â??stand-aloneâ? facilities in malls or other retail areas), most often a pharmacy outlet in which â??mid-levelâ? providers like nurse-practitioners or physicians' assistants provide treatment. No appointments are required, and the vast majority of retail-clinic encounters are concluded in twenty minutes or less.
With lower wages and overhead than physicians' offices, urgent-care[14] clinics, or emergency rooms, retail clinics appear to realize substantial economies by providing a limited menu of basic services, including treatment of basic ear, throat, urinary-tract, and skin infections; physicals (for work and school); and immunizations. Basic wellness or screening services (for chronic conditions such as diabetes and high cholesterol) are also routinely available at retail clinics.
The relatively narrow range of their repertoire of services enables them to provide superior care. Patients who are suffering from more complex, medically challenging problems receive referrals. With those services they do offer, clinics strictly follow treatment protocols, unlike much of American medicine. As a result, they do as well as, or better than, other providers in delivering care.
One scholar with whom we spoke said that she believed that retail clinics can play an important role in two areas of what we might call â??basic health careâ?: immunizations and blood-pressure checks, which should be made more widely available; and acute care for basic health problems such as common infections, which a broad assortment of conveniently located clinics would be in a position to address immediately.
Retail operators and their advocates suggest that the model can also improve access to basic health care for the uninsured, the underserved, and even, perhaps, Medicaid recipients. Diversion of these patients from emergency rooms, to which they frequently turn, could save private insurers and the government considerable sums.[15] Some health-care experts and clinic operators further argue that retail clinics could handle the routine screening and monitoring of patients with basic chronic illness. Doing so would promote compliance with treatment regimens and help prevent diseases from going untreated, which usually results in high-cost health-care encounters.[16]
History and Current Market Structure
Two basic questions regarding any potential health-care innovation are: Is it financially sustainable? And is it replicable? When the first retail clinics opened in 2000, they did not accept insurance, relying entirely on out-of-pocket payments. Today, the vast majority of clinics do accept insurance, and they depend on it financially. Rudavsky et al. (2009) report that almost all retail clinics accept private insurance (97 percent) or Medicare fee-for-service reimbursement (93 percent). Far fewer (60 percent) accept Medicaid, which does not appear to be a significant source of revenue for them. Mehrotra et al. (2008), however, found that out-of-pocket payments remain a significant (30 percent) source of revenue.
Like many promising new business models, retail clinics went through a period of rapid expansion and investor optimism, which was followed by retrenchment and more cautious growth. Rudavsky et al. (2009) report that in its first five years, the industry added only twenty-nine clinics; then growth accelerated rapidly, with the industry increasing its number of outlets more than tenfold between 2006 and 2008. This trend reversed in 2009, with the industry closing about 5 percent of its outlets. However, growth is expected to revive as the overall economy revives.[17] As of July 2010, thirty-eight different operators ran 1,177 retail clinics in the United States. Three large operators (CVS/MinuteClinic, Walgreens/Take Care, and the Little Clinic) comprise about 80 percent of the market.[18] Nationally, through the first six months of the 2010, forty-one clinics opened and fifty-two closed, continuing the downsizing trend. New York currently hosts fifteen total retail clinics, seven hosted by MinuteClinic but owned and operated by Kimberly J. Henderson, MD, and eight hosted by Duane Reade (DR) but owned and operated by DR Walk-In Medical Care.[19]
At the height of the retail-clinic boom, analysts as well as operators predicted the rapid establishment of several thousand retail outlets nationwide. The current rate of growth does not support their optimistic outlook, but there are signs that the industry is poised for a resurgence.[20] One industry consultant noted that the present contraction represents nothing more than the consolidation and restructuring of a maturing industry. A retail-clinic operator we interviewed for this study confirmed that site selection has only recently become sophisticated, giving operators and investors more confidence that newly opened locations will be self-sustaining. Scholars and industry analysts agree that individual clinics require significant daily traffic flow to break even, which is harder to achieve outside the peak winter cold and flu season.[21]
Retail Clinic Industry Overview
Initially operated by small, independent companies, the majority of retail clinics are now â??fully owned subsidiariesâ? of Fortune 50 corporations. CVS (MinuteClinic), Walgreens (Take Care), and Target (Target Clinic) operate 73 percent of all U.S. clinics (Rudavsky et al., 2009).
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