Business

Two Trends To Watch: Big Box Hospitals and Retail Medicine

Two Trends Impacting DPC Docs …

By Michael Tetreault, Editor, DPC Journal and Dr. Ellie Campbell, CMT Contributor, Campbell Family Medicine

From Cosa Mesa, CALIF. JULY 26, 2014 – [Concierge Medicine & 2014 Medical Marketing Conference, Westin South Coast Plaza]

Editor-In-Chief, Michael Tetreault, Author, Speaker, Educator, Media Liason

Editor-In-Chief, Michael Tetreault

“Despite weakness in the overall economy, spending in DPC practices, ancillary testing and services, and related healthcare products and prescriptions remains strong and at record levels compared to two or even five years ago according to DPC Journal physician interviews in the DPC space,” says DPC Journal Editor, Michael Tetreault to a large group of physicians in Costa Mesa, Calif. recently (July 2014). “Despite this good news, DPC doctors face a number of new competitors seeking to peel away significant amounts of revenue from areas that had once been the exclusive domain of DPC Clinics. In particular, MRI, CAT Scans and pharmacy sales, the second biggest revenue generators for some larger DPC practices — which are under attack by big box hospitals with well-known names operating under low-cost/high-volume sales models.”

Big-box hospitals and health systems are finding alternative methods to bring convenient care to their patients, renting retail space in Walmarts, opening their own clinic chains, or offering their physician practices at more convenient hours.

These facilities started with runny noses and flu shots. Now retail health clinics are thinking bigger.

Dr. Ellie Campbell is the founder, owner, and sole physician in Campbell Family Medicine in North Metro Atlanta -- Tel: 678-474-4742

Dr. Ellie Campbell is the founder, owner, and sole physician in Campbell Family Medicine in North Metro Atlanta — Tel: 678-474-4742

“Our health care system has created a monster,” says Ellie Campbell, D.O. of Campbell Family Medicine who operates a DPC practice in Cumming, GA, a northern metropolitan suburb of Atlanta, GA. “We have trained patients to request a drug for every bug and a pill for every ill, and that if they want it they should be able to get it NOW. We have irrevocably devalued the education, expertise, and experience of primary care physicians, and permanently  diluted the relationship that patients used to have with their family doctor.  This is evident in the growth of some of the urgent/family care centers and “minute clinics” that are sprouting up everywhere.”

1) Retail Medicine’s Impact On Hospitals Is Already Effecting Local Physician Markets.

What happens to the smaller health systems or community hospitals that can’t compete with larger hospital networks with big financial backing? They find a local outlet, like a physician or healthcare retailer to add access points, spread their reach out of their core market, and relieve any primary care shortage they might be facing.

In an arcticle recently by H&HN, Accenture’s Kaveh Safavi, M.D., a health industry lead for Accenture, says nothing precludes those organizations from tailoring their services to match what makes retail clinics appealing to consumers — mainly convenience and price transparency.

In the early days insurance providers feared “doc in a box” stores would drive up prices. Without strong support from the third-party payer system, many would-be urgent care chains fizzled out. American Family Care survived the initial bust by bootstrapping only one or two new clinics a year, slowly proving to patients and payers that its model was actually significantly cheaper than other options. While a trip to a hospital or stand-alone emergency room can easily top $1,000, the average urgent care visit costs under $200.

In the early days insurance providers feared “doc in a box” stores would drive up prices. Without strong support from the third-party payer system, many would-be urgent care chains fizzled out. American Family Care survived the initial bust by bootstrapping only one or two new clinics a year, slowly proving to patients and payers that its model was actually significantly cheaper than other options. While a trip to a hospital or stand-alone emergency room can easily top $1,000, the average urgent care visit costs under $200.

“The markets are going to demand more convenient care at a lower, more predictable price,” Safavi says. “And if you accept the fact that that is a market challenge and you should respond with an alternative, there’s no reason to feel threatened by it.”

Walgreens turned hospital executives’ heads in April 2013 when it announced that its clinics would begin diagnosing and treating chronic conditions such as diabetes and hypertension. The chief medical officer of the company’s renamed Healthcare Clinic says it wasn’t a declaration of war against hospitals. Walgreens isn’t acquiring physician practices, doesn’t offer imaging and has no space for inpatient beds. Rather, the retail giant wants to be the American health system’s primary care front door, and a key piece of the population health puzzle.

“I don’t think we compete,” says CMO Alan London, M.D., a family physician with more than 30 years’ experience in care delivery, health care strategy and business development,including at Cleveland Clinic. “I like to tell hospital executives that our Walgreens stores are already built. They’re located on some of the most popular and well-traveled intersections in the country. The lights are on; the air conditioning is on. It’s very simple for us to expand our model to locations that help expand the hospital’s reach, and not cost them a lot of capital to expand it on their own.”

2) Retail Medicine’s Impact on DPC Pricing: Competing For The Same Dollars & Demographics.

H&HN continues to add that the rapid growth of retail clinics presents both challenges and opportunities for hospitals and health systems, and I would also add DPC clinics as well, especially as you build out your own primary care stable of services inside your local DPC practice. It’s estimated that 50 million low-acuity visits a year at $100 apiece represent a $5 billion market. That’s good news for DPC physician practice which on average across the country have a monthly price point between $85-$125 per patient, per month, according to The DPC Journal’s research and data collection arm, The Collective. Physician practices and emergency departments — and the health systems that own and operate them — could feel the pinch from lost visits. Retail clinic operators are competing to partner with health systems and serve as referral sources for patients who need more complex care.

“Retail medicine is the next great threat on the horizon to Direct Primary Care’s (DPCs) scalability and sustainability,” says Michael Tetreault, Editor of Concierge Medicine Today and its sister publication, The Direct Primary Care Journal to a group of physicians in Costa Mesa, California in July of 2014. “The same demographic using DPC right now in rural markets are the same people spending dollars in the retail medicine space in metropolitan markets. DPC physicians will soon need to adapt to these pricing models and offer value well beyond the simple price transparency offering and convenience factor — and I have no doubt they will.”

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ellie campbell

Dr. Ellie Campbell is the founder, owner, and sole physician in Campbell Family Medicine in North Metro Atlanta — Tel: 678-474-4742

“Our third party payor system has lost its transparency,” adds Campbell. “and patients are no longer sure what a visit is going to cost. Calling ahead to ask provides no further  details other than “it depends on what the doctor orders in the exam room, what insurance you  have, and what your deductible and co-payment percentage are.”  Furthermore, there is no discernible difference (or available data) between Doctor A or Doctor B in prescribing habits, outcomes or cost of care. So patients gravitate to the known.  They choose a minute clinic in a drugstore because they want care now. They don’t understand the level of training difference between a mid-level and physician. For the usual complaints, four years of medical school and 3 to 5 years of residency are probably not required. Most of the time, their preconceived notion that their minor URI will get better faster with an antibiotic is validated, (even if erroneously)  so they got what they wanted, and at a pre-determined price.”

Walgreens also has made several other maneuvers aiming to free itself from the drugstore mold in recent years. For example, it partnered with DeKalb Medical in Decatur, Ga., to deliver medications to the bedside from the on-site pharmacy. It formed accountable care organizations with physician groups in New Jersey, Florida and Texas to strengthen collaboration between physicians and pharmacists. And it launched a care transitions program last year called WellTransitions, to help bolster medication adherence and reduce readmission rates and costs.

Campbell continues to state “if an urgent care center has a $150 visit fee regardless of the level of care provided, and it is more convenient than their primary doctor, patients will choose an unknown “luck of the draw” provider. There was a time when patients valued their family doctor, trusted our opinion and called us after hours to help decide if symptoms needed urgent attention or could wait. Now our phone trees, answering services, and after hours call-sharing doctors make it unlikely that any  given patient will actually speak to their own doctor. So they don’t bother, and they seek care wherever it is most convenient. Patients value speed and low cost most of all for most minor complaints. The open accessibility of drug stores makes the “while I’m here, I might as well be sure I don’t have strep throat” too convenient to decline. Many patients say, “I just did not want to bother you on the weekend, and I was near there anyhow.”  Instant care, instant prescription. Even the time to wait for me to phone in a prescription can be insufferably long for some hurried or anxious patients  .  As long as we live in a world of drive-though windows, ATMs, and garage door openers, patients are going to  value and pay for any service that gets them in and out quickly, on their time schedule, with their desired objective. Primary care doctors need to learn to adapt, as this  model of care delivery seems here to stay. Unless we offer on site dispensaries, extended hours, and no appointment needed delivery, we will be deferring more urgent issues to these models. Perhaps then we will have more time to devote to preventing disease and reversing the burden of chronic conditions, if only we can convince third party payors that there is value in that.”

Cited Sources/References:

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