A long road for retail clinics

Many industry journalists--including myself--have published reports stressing the soon-to-explode growth of the retail clinic market. And given the confluence of factors, including consumer-driven healthcare, strong interest from giant retailers like Wal-Mart and significant health industry momentum, I stand by those predictions.

However, at our retail clinics Webinar this week, it became clear that getting into the business is still something of a slog. Opening clinics is expensive, profits are slow in coming and foot traffic isn't peaking as quickly as predicted, according to our speakers, Mike O'Neil of Memorial Health and Dr. Steve Cooley of SmartCare Family Medical Centers.

On the bright side, getting operational into place with retailers hasn't proven terribly difficult, and typically involves a relatively straightforward lease, O'Neil said. But to set up the clinic, they noted it can cost $600,000 or more, a hefty investment which takes a minimum of 18 months to recoup, Dr. Cooley said. And getting patients to come to the clinics takes time, as it's mostly a word-of-mouth process, O'Neil noted.

In Memorial's case, referrals to the health system are part of the mix, too. So how have Memorial's six clinics done in generating additional revenue for the larger health system? O'Neil didn't sound wildly enthusiastic, though he does see the clinics as a "nice business" with more referral opportunities over the coming years.

Then, if you toss in the ongoing regulatory challenges to the retail clinic model from physicians' groups, which are a distraction if not an outright drain on the business, you've got a taxing situation. At minimum, regulatory issues should play a significant role in the industry's expansion over the next couple of years. Worse, it's impossible to predict just what limits or requirements will emerge, making it harder to plan ahead.

All told, I didn't come away with an impression that retail clinics are a doomed business model, by any means. But it never hurts to take a hard look at what can go wrong.-- Anne