The dirty little secret is coming out.  Most retail clinics aren’t seeing anywhere near the patient visits their operators thought they would by this time.  There’s a lot of bad news lately for an industry that could do no wrong a very short time ago.  But does all this mean the retail clinic business is a bust?  Does it mean retail clinics can’t make money?  The answer is no.  There are many retail clinics making money.  The ones that don’t were probably built with very little attention paid to the fundamentals.
 This month we take a closer look at revenue drivers.  More specifically, we look at how employers, insurance companies and the retail store itself can become important sources of new patients at very low patient acquisition costs. 

Where Do Your Patients Come From?
 The first must-have to driving patient traffic is data.  If you aren’t asking every new patient how they heard about you, you can’t possibly begin to implement and measure a program that drives patients to your clinic.  “Heard About Us” data typically falls into six categories: word of mouth, consumer marketing, employers, insurance companies, visibility within the retail store, and referrals from other medical offices.

In virtually all cases, word of mouth will be the driver for most of your visits.  And for people to talk about you in a positive light, you’d better deliver on the promise of no appointment, short wait times and quality care.
 

Consumer marketing is critical at the beginning of a new clinic’s life cycle.  It’s how you drive your first visits, which then cause new visits by word of mouth.  But if consumer marketing, such as print ads, direct mail, radio or billboards, is the be-all and end-all of your patient acquisition activities, you will quickly realize that you can’t afford the amount of consumer marketing that’s required to account for the balance of your patient visits.  The day you decide to cut back on consumer marketing will be the day you see patient visits drop.  And the drop will be even more dramatic if you rely on cash paying customers for more than 30 percent of your visits.  There must be other drivers besides word of mouth and consumer marketing.  And many operators have turned to insurance companies and employers.

Insurance and Employers
 These two go hand in hand.  Without provider agreements that cover visits for the majority of covered lives in your market you won’t get traction with employers.  Employers simply won’t promote a medical option that isn’t a participating provider with the health insurance programs they offer.

So the first question to ask before even thinking about launching a retail clinic operation is what is the health insurance environment in your target market.  Is the HMO market penetration more than 50 percent?  Is it predominantly capitated?  If not, are the primary care physician (PCP) referral rules strictly enforced in order for the visit to be covered?  If you answered yes to any the above questions you need to think long and hard about whether a retail clinic makes sense in your market.  Or at the very least think of other ways to drive visits to your clinic.  If a patient has an HMO for their insurance, they typically require a PCP referral for the visit to be covered.  If it’s a capitated HMO, it means their PCP has already been paid to take care of this patient.  And HMOs don’t like paying twice.

If HMOs do not have a dominant position in your market, then you should decide on how best to begin dialogue with the dominant preferred provider organizations (PPOs).  The best way to go about this is to develop a relationship with one or two large employers in your market who offer one or all of those dominant PPO plans as part of their employee health insurance.  At this point you will need to be far enough along with your retail partnership and base pricing strategy before meeting with large employers.

Most likely your first conversations will be with self-insured employers for whom the insurance company is providing administrative services only (ASO).  Pricing will be critical to winning the hearts and minds of large employers.  When you are far enough along with your story, present your case for why your retail clinic operation will save them money, e.g. reduced office visit costs and reduced time away from work.  If they are sold on the concept they will help you with an introduction to their insurance company account representative.   When you are introduced to a PPO by one of its key customers vs. contacting them directly, your chances of having a positive first meeting go up dramatically.

These early discussions are critical to establishing your base office visit rate for insurance and employers. Once you have one or two employers and insurance companies on board with you, it is much easier to build
momentum with others.  And with these relationships in place you can begin to explore ways to convert these relationships into visits:  letters to employees’ homes, newsletter articles, and lower co-pays.

The Retail Platform
Choosing the wrong retail platform or making serious mistakes on implementation can be the greatest and most unforgiving mistakes a retail clinic operator can make.   Once you’ve built a clinic in a specific retail store, there’s no turning back. 

It starts with the retailer itself.  The pros and cons in the accompanying table pretty much tell the base story.  The next step is to identify the right stores with the right retailer.  Every retailer has good stores and bad stores.  There are three primary factors:  surrounding demographics, physical location and store management.  Don’t let the retailer push you into a bad store because they think you can help turn it around.  That is death.  Make sure the store has strong surrounding demographics, with lots of young kids, middle to upper incomes and high college education rates.  With few exceptions, those are the slam-dunk demographics for a retail clinic.

If you end up in a retail pharmacy you’ll need to make up for the lower foot traffic by getting a great location that is visible to every person who enters the store.  Keep in mind that there are few retail stores with shelf heights low enough to see across the store.   And you also need to compensate for the lower foot traffic by taking full benefit of the strategic alignment with your retail host.  That means prior to signing a retail agreement get commitments for in-store promotions, ads in the store circular and access to frequent customer lists for direct mail.

For mass merchants and grocery stores, commitments up front are even more important because once the contract is signed, you disappear as a priority.  That means ads in their circulars, exterior and interior signage, in-store promotions, in-store broadcasts and announcements, and any other support services all must be worked out ahead of time.  Also remember that grocery stores and mass merchant settings are visually “noisy,” so your clinic will need to stand out from the other visual competition.  Work through your clinic design and signage issues before you sign a contract.

We recommend positioning the clinic at the front of the store so you are visible as customers check-out.  If that isn’t possible, we recommend being right next to the pharmacy counter.  This is most advantageous as a second choice in a retail pharmacy because of the high percentage of foot traffic that goes to the pharmacy.
 Finally,  use every opportunity to take advantage of other in-store promotion tools, including bag stuffers, shelf talkers, cut outs, floor ads and in-store radio.

Sidebar: Program and Cons of Different Retail Platforms
Retail Pharmacy
Pros: Strategic alignment: you drive prescriptions in a business with 50% or more in revenue at the pharmacy counter;  translates into more cooperation in terms of store signage (interior and exterior) and joint marketing programs. 
Cons: Lower foot traffic compared to grocery stores and mass merchants means not as much visibility; smaller overall store footprint means fewer options for location or clinic square footage; not a strong shopping destination when there are wait times for patients.

Mass Merchants
Pros: Very high foot traffic translates into higher visibility and higher “heard about us” scores for the retail location as a source of new patients; stronger shopping destination when there are wait times for patients. 
Cons: Lower strategic alignment in a store where the pharmacy is a small percentage of the overall business; translates into less cooperation and the clinic as a lower priority to a busy store manager.

Grocery Store
Pros: Statistically the highest available foot traffic translates into higher visibility and higher “heard about us” scores for the retail location as a source of new patients; much stronger shopping destination when there are wait times for patients.
Cons: Lower strategic alignment where pharmacy is a small percentage of the business; translates into less cooperation and the clinic as a lower priority to a busy store manager; some perceive a clinic as a “disconnect” with a grocery store, i.e. sick people coming into a store that sells food.

Standalone In-Line Retail
Pros: Complete independence from a retail partner; lower rent; far greater space available; some benefit from other in-line tenants.
Cons: No pharmacy under the same roof; no foot traffic other than what you generate yourself through marketing or your own storefront.

In case you missed it, in the last two years the start of the flu shot season has moved up considerably. And the implications for retail clinics are mostly positive. In fact, this could be the best news retail clinics have seen in a long time.

We are all familiar with the predictions of a booming retail clinic industry. But if you think those predictions have ceased, think again.  Merchant Medicine estimates 2,050 retail clinics by the end of 2014.

Of any company we have followed in the retail healthcare space, Solantic seems to hit all the strategic buttons:  stand-alone urgent care centers in high-traffic shopping centers, clinics in Wal-Mart, joint ventures with area health systems, a clinic in the Orlando airport, franchises for physicians, outstanding consumer marketing and a relentless pursuit of customer satisfaction.

Over the long term, it could be that seasonality is the least of a retail clinic operator’s worries. As we noted last month in an article about the long road to breakeven for retail clinic operators, traditional medical practices are taking a page out of the retail clinic playbook and focusing more than ever on patient convenience and consumer marketing. The result is a trend that we call “ConvUrgentCare™,” the merging of convenient care, urgent care and any type of walk-in medicine that involves non-emergent acute medical care.  Today you can see retail clinic techniques crossing over not only to urgent care and emergency care, but also pediatrics, family medicine and work-site clinics.   And these techniques appear to be working to change the game in walk-in medicine.

He has lived in the world of corporate travel management and now the world of healthcare.  Oddly enough, the corporate travel world seems to know a lot more about Hal Rosenbluth than the healthcare world.  But that may be about to change.