February 2017: Dialing Back Growth? 2017 Forecast Issue

Five years ago a senior partner at a large private equity (PE) firm told me, "The urgent care market is a good market, but not a great market."

This made an impression on me for two reasons. First, this firm was then and still is actively invested in the urgent care market, although compared to its other holdings urgent care is a tiny fraction. Second, I used to work for a company owned by this firm and know firsthand that their predictions and observations tended to be on target.

His statement comes to mind again as we look to provide guidance on what might happen to the on-demand market in 2017. Are PE investors starting to view urgent care as a good market, not a great market? That is a fundamental question in this 2017 forecast issue. In this article, we will also rely on statements from some of our presenters a few weeks ago at our annual symposium in Scottsdale, as well as how clinic growth ended up in 2016
compared 2015.

The bottom line can be summed up as follows: The urgent care market will continue to grow in 2017, probably at a similar pace as in 2016, but that growth will not come as much from the PE-backed players. Instead, it will come from new entrants, like health insurance companies, and hospital systems. Retail clinic growth, which has been led by CVS Health's MinuteClinic subsidiary, continues to be a mixed bag and is entering another period of uncertainty. We expect net retail clinic growth to be flat or slightly positive in 2017. Telehealth will grow, but not as strongly in the acute episodic space as many investors had hoped.