Will strip mall medicine help or hurt hospital systems?

Doctors Express Urgent Care held a groundbreaking last week for its second location in Indianapolis, which is scheduled to open next month in Lawrence—just seven months after Doctors Express’ first Indy location.

Urgent care centers have been growing rapidly here and around the country. They numbered 9,000 in 2012, according to the most recent figures from the Urgent Care Association of America. There are certainly more today.

On top of that, retail clinics—such as CVS’ MInuteClinics and Walgreens’ Take Care clinics—now number 1,500 nationwide.

The two kinds of clinics are quite different. Urgent Care facilities are run by physicians, while retail clinics are typically staffed by a nurse practitioner. But these varieties of what I’m calling “strip mall medicine” share one big thing in common: they represent what is potentially a huge threat to the businesses of traditional health systems, such as Indiana University Health and Community Health Network.

Privately, executives in both those organizations are quite worried that they could lose control of the primary care physicians that refer patients to their specialists, who then refer patients for high-value surgeries. Local hospital systems have spent through the nose to secure these physicians in recent years and have told them that, unless a patient specifically asks to be referred outside the hospital system, to keep those patients—and their money—inside the fold.

But if patients never come to a particular hospital system in the first place, those patients could end up in any hospital system. Or could be sent to independent providers.

"Walgreens, Wal-Mart, CVS, employer clinics, Target, that’s who our competitors are," said Community Health CEO Bryan Mills during a February presentation to his health system’s executives and clinicians. He said the health care clinics operated by those entities are capturing more and more of the walk-in patient visits that physicians and hospital systems used to own.

"We’ve partnered with Walgreens," Mills added. "We’re far better partnering than we are trying to compete. They’re not going to go away. They’re probably 50,000 times our size."

Hospital executives should be worried, said Spencer Nam, a health care consultant at the Massachusetts-based Clayton Christensen Institute.

"It’s a little early for the providers to say, this is just a fad that will go away," Nam said. "There is a definite case for these services or these models to really proliferate. We think the trajectory is clearly there for the patients that are currently being seen by the existing provider network to look for alternatives.

But publicly, hospital executives sing a different tune. They say that retail and urgent care clinics, by making it easier to get care, will simply expand the market. They expect overall visits to go up—even if their own total stays relatively flat.

Jack Horner, CEO of Major Health Partners in Shelbyville, said "competition from retail medicine is inevitable" because consumers are paying for more of their health care, and they are looking for cheaper options than hospitals can be with their building- and staff-heavy operations. But he said he's not worried because those retail outlets will bring in people who aren't getting health care now and will also identify conditions that need follow-up treatment from traditional providers.

"The new outlets will increase the overall number of visits," Horner said. "My personal belief is that the overall number of visits will increase by over 50 percent."

So which vision is right?

They both are, said Brian Stanton, the president of the Doctors Express urgent care clinics in Indianapolis. His company’s first urgent care clinic, located at 7411 N. Keystone Ave. is drawing more than 20 patients per day.

Those numbers, which continue to grow each month, are generated both by patients who would have gone to more traditional providers, as well as by patients that might not have been receiving care at all.

"I certainly hope it’s both," Stanton said.

Doctors Express can handle a lot of things. Its Keystone Avenue location has two physicians, 11 exam rooms, X-ray equipment, a procedure room, and medicines that can be dispensed on-site. Its prices are about 20 percent the cost of an emergency room visit, Stanton estimated.

He also emphasized that, unlike retail clinics, Doctors Express makes a point of contacting its patients' primary care physicians and sending them notes from each patient visit. That’s supposed to counter one of the knocks on strip mall medicine—that it disrupts the care of patients.

In the future, hospital systems will argue that it’s best for patients to pick a high-quality system and stick with it, because relying on a team of clinicians will yield overall care with the least gaps in it. And it’s the gaps in care that often lead to the most expensive procedures.

But if consumers decide instead to make strip malls the front door to their health care—rather than traditional physician offices—the hospital systems could see their market shares waning.

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