The urgent care industry has grown significantly over the last 10 years, with lots of smart money flowing into the sector from private equity, publicly traded health insurance companies and large health systems. That growth is a tribute to a lot of hard work and entrepreneurial spirit on the part of many of the industry’s pioneers. But despite all of this growth, investment and participation from large companies, the industry is still a far cry from the level of sophistication that it should be, at least compared to other industries.
That may sound a little harsh. But I say it in the spirit that there’s a lot more success ahead if we strive to find ways to improve, both in the way we deliver service to our customers and the way we run the back office. And one key characteristic of a sophisticated industry is a method for its participants to benchmark against each other. Business decisions in our industry tend to get made in an information vacuum. Many urgent care operators lack data on what constitutes a “healthy” urgent care center even on the most basic measures such as provider productivity, revenue cycle performance, operating margin, and other key factors.
Benchmarking helps you make informed strategic decisions; not the little everyday stuff, but the market-facing ones that will affect your longer term results. But the only way to know whether you are making solid strategic improvement is to have a solid benchmarking infrastructure. But that infrastructure has to have two parts: how your current performance compares to your past performance and how your current performance compares to your peers in the industry.
We tend to do a good job benchmarking our own performance against the past. But as an industry, we have a long way to go in benchmarking against our peers. I’ll get to specifics on where we are and where we need to go in the urgent care industry, but first let’s look outside our sector.
A Restaurant Industry Comparative
Self-reporting is a mechanism by which independent third parties collect data about the industry and offer it back to industry participants so they can see how they look compared to their peers. Benchmarking against industry peers is a multi-billion dollar industry in itself. Our economy operates on comparative information. In many industries, the executive suite knows what “average” looks like and incentives are tied to exceeding those targets. In large, sophisticated organizations (even such as large hospital / health system organizations) they buy data tools and use consultants to conduct extensive benchmarking and review of service lines, and index where they stand with respect to competitors and regional market share. But we infrequently find these otherwise sophisticated organizations using sector data to inform decision making.
Looking at other industries is a good way to envision what we could do in urgent care. Retail, hotels and restaurants have models for self-reporting. Restaurants are a particularly good model to look at, not only because the industry self-reporting has evolved significantly, but because that industry, minus the clinical aspect, has many of the same operational characteristics as urgent care. Restaurants look carefully at staffing and scheduling of labor; peak throughput efficiencies; returns on real estate; advertising, brand loyalty and repeat customers; per-visit economics and pricing. These groups have their models to the level where a $1 rise in an average ticket, for instance, translates into a change in volumes, otherwise known as marginal economics.
In the restaurant industry, examples of third parties reporting are publishers such as Nation’s Restaurant News, third-party aggregators such as TD2nK or eMarketer, and trade associations such as the National Restaurant Association. For example, eMarketer mines data from quarterly and annual reports and publishes it on a licensed basis. You can see some of these reports on the eMarketer web site. Nation’s Restaurant News and the National Restaurant Association also have some good examples.
Add it all up and the result is that the restaurant industry very quickly knows how various performance metrics are trending. As an operator, if things are trending up and your chain is trending down, you know immediately that something is wrong, usually within a few weeks. Conversely, if things are trending down and you are trending up, you know you are doing something right and should probably invest more money in whatever that something is. Over time, all of this leads to a more sophisticated and profitable industry. And this enables that industry to do things such as lobbying, community service and overall image building to help lift all industry participants.
As an aside, back in the 1970s the restaurant industry looked a lot like the urgent care industry does today. More than 50 percent of the industry was dominated by smaller independent operators, with the remainder represented by larger, new entrants. Generally speaking, those independent operators were somewhat distrustful of each other, each thinking they knew more than the next guy. And over time, the industry lost most of those smaller independent operators as larger companies took over. Today, the independent restaurant operator is a localized phenomenon at best, or worse, a rare commodity. Most don’t last very long; few make it to a decade or more. Instead, the majority of chain restaurants are owned by private equity or publicly traded companies.
Current Reporting Efforts in Urgent Care
There is an opportunity through efforts by the Urgent Care Association (UCA) and some of the technology vendors to foster more industry self-reporting. On the technology front, DocuTAP produces a quarterly report to its user community, which does a deep dive on certain metrics. The UCA Benchmark Report provides useful performance metrics covering most aspects of operating an urgent care center. The only other way industry participants get a look at industry benchmarks is through consultants like Merchant Medicine.
There are several specific ways we can improve industry reporting and Merchant Medicine and UCA have started working together to build an improved reporting platform. The first is to report more frequently and we’ll start that by moving the Benchmark Report to become an annual index published each calendar year, with the survey period closing at the end of Q3. The vision is to provide the kind of data an operator needs to drive measurable improvement on a more frequent basis.
The second area of improvement is to simplify data collection for operators. Collection has been changed to enable operators to capture data from all locations on one-spreadsheet instead of center-level data going on multiple forms. Reporting summary data across your centers should only take a few hours exercise if you do any sort of recurring operating reviews on your mature centers versus having to produce individual center level detail. Not every field of every survey section is required (some may in fact not apply).
Finally, we are jointly working to increase participation across the urgent care community. Many urgent care organizations and vendors are speakers and contributors to the UCA and related endeavors, but historically haven’t contributed to the data analytics underpinning the sector. More participations results in greater data integrity. If you operate urgent care centers we are seeking your support to help drive this to a new level.
But could it be that participation is held back by other factors. Does our industry suffer from what the restaurant industry had back in the 1970s: a little bit of an insecurity complex? Do industry participants fear that their proprietary performance data won’t be handled securely and their “secret sauce” will end up in the public domain, ruining all their hard work over the years? That’s a legitimate concern. In fact, at the mention of industry self-reporting I often hear, “That is strictly confidential.” But in reality, it is not. If you see Medicare or Medicaid patients, CMS is collecting your data all the time and that government data is semi-public. There are also private payer databases constructed from claims that are also available for purchase. Payers are evaluating your organization’s performance all the time against what they consider to be benchmark performance (think E&M coding, volumes, gross charges billed, percentage to Medicare, member satisfaction measures, and others).
And as far as “secret sauce,” a competent health system or private equity buyer in urgent care can quickly figure out your business model through due diligence and secret shopping. Merchant Medicine works in these types of transactions, and we see the same things over and over. So it really isn’t secret. Instead it is quite simple, but simple is hard. It is hard to lock in outstanding real estate. It is hard to build a strong operations team. It is hard to develop patient loyalty. So the secret sauce may be overblown. And in many ways, it turns out, it was this fear around losing the secret sauce that doomed or stifled the restaurant industry’s very healthy distribution of small, medium and large operators.
Please Join Us
The UCA survey period is now open. If you operate one or more urgent care centers, you should have received an email inviting you to participate. If you did not receive that email, or you still have questions, simply go to the UCA's Benchmarking Survey FAQs page and fill out the contact form. You can also contact Jami Kral directly at the UCA at (331) 472-3742 or by email at email@example.com. Or feel free to connect with us at Merchant Medicine. Those who participate get a copy of the report at no charge (roughly a $1500 value for non-members). In the restaurant industry some of these ongoing industry reporting platforms run into six figures.
We encourage you to spend a few hours’ time to report your metrics to the UCA. The deadline is September 30, so you have about six weeks left. With your participation, the benchmark report will have more reliability and thus will be more useful to all participants.
Where This Needs to Go
One fundamental question I wrestle with is whether the current urgent care industry structure – that is the distribution of small, medium and large operators -- is a good thing or a bad thing. Clearly the restaurant industry is now highly sophisticated. But has it lost something by making it difficult for startup operators to function and thus losing a feeder for innovation by those startup operators. Though it fosters sophistication, industry consolidation can be a bad thing and eventually can lead to major changes and perhaps even consumer rejection.
In urgent care, the top 50 or so organizations make up roughly 10 percent of the market (about 1,200 units to an estimated 12,000 total.
I would argue that the urgent care industry needs small operators. Not only does the local entrepreneur feed innovation, but it also feeds industry growth because small operators are the ones who find areas of un-met needs, such as underserved geographies and new specialty areas for on-demand medicine. We need a healthy mix of small and large operators, across several ownership types: private investors, health systems, private equity and health insurance.
So if you buy into the notion that a broad mix of operator sizes and ownership is important element of the urgent care industry structure AND you buy into the need for industry self-reporting, then it’s time we come together and find a way to self-reporting on a broader scale. The UCA has invested in a “gold standard” market research platform, and the new system is able to do blinded analysis on benchmark data for a variety of analytical purposes. We are poised to take this to a new level. The reason for having these assets as an industry is two-fold. Just like banking or insurance, we collectively benefit from a more informed industry voice via the UCA to government and private payers, as well as regulatory bodies (such as the recent work in Massachusetts). For individual operators, it provides a measure or gauge of how your organization compares against your peer set. Like any measure – MGMA, AHA, CMS’ reference sets, private (Truven, Sg2, Optum), etc., it is not perfect and informed interpretation is still required. But having an industry benchmark enables you to make strategic decisions around growth and investment.
Personally, I think we overestimate how much better our secret sauce is compared to the next guy. Customers are very perceptive. And they can tell when things improve from one visit to the next.
In the end, the best secret sauce is a team commitment to getting better every day, every month, every quarter and every year. John Wooden said it best: “The most effective leaders understand the importance of making sure that no member of the team hoards data, information and ideas.” To the extent that we want our industry to grow and prosper, we need to think and act like a team.