Drive-Thru Healthcare
By Christine Kern, contributing writer
How McDonald's inspired an urgent care gold rush.
According to Forbes, one of the latest healthcare trends is the emergence of hundreds of franchisees who, along with some of the biggest private equity and venture capital firms, are betting that they can use the retail lessons of McDonalds to give customers access to doctors wielding stethoscopes as easily as ordering their next Big Mac.
Urgent care is the first retail health play. The 10,000 urgent care clinics across the country – handling 160 million visits annually – are an appealing medical model wrapped up in a proven consumer-driven business plan. The growing $16 billion industry depends on location, customer service, and brand, just like a restaurant or grocer.
Placed in highly visible, highly trafficked locations minutes from patients’ work and home, off a busy highway or next to a Wal-Mart or other big-box store, these clinics are designed to be easily accessible with no appointment necessary, open 12 hours a day, including weekends. See a doctor on average within 20 minutes, get an X-ray or prescription, and get back to your life – all at perhaps a fifth of the cost of an ER visit.
It is a Golden Arches-style model that puts a branded urgent care shop on every corner, which is what recent deals have been pursuing over the last few years. Publicly traded insurer Humana snatched up Concentra, the nation’s largest urgent care company with 300 locations, for $805 million cash in 2010. Concentra’s former owner, Welsh, Carson, Anderson & Stowe, turned around a year later and bought Solantic (now CareSpot, with 56 centers), a chain founded by Florida Governor Rick Scott. These are just a few examples of the new drive-thru business trend.
While chest pains mean a trip to the ER for immediate attention, there are a host of minor ailments that have cheaper and friendlier alternatives provided by the likes of these “drive-thru” clinics. American Family Care was designed to deliver medicine like hamburgers: customer-friendly and efficiently, eliminating appointments and reducing on wait times, and providing in-house pharmacies, digital X-ray machines and drug test facilities for patients. Doctors focus only on medicine, in standard ten-hour shifts and with no on-call duty and are rewarded with bonuses based on metrics like the rate of day-later follow-up calls.
Interestingly, most franchisees are entrepreneurs, not doctors. The franchise model fits urgent care well. In April 2013 AFC bought Doctors Express, a fledgling chain that now counts 73 urgent care franchises. AFC provides a recipe for new franchisees to follow, along with marketing support and purchasing power. Upfront costs run up to $1.1 million, plus there’s a 6 percent recurring royalty.
Understanding the immense potential in providing branded health care, CVS Caremark, the country’s largest drugstore by sales, announced in February that it will drop cigarettes and other tobacco products from its stores, forgoing a $2 billion revenue stream in the name of healthy living. Meanwhile, it already offers a stripped-down version of urgent care with in-store MinuteClinics at more than 800 locations, where nurse-practitioners dispense flu shots and other basic remedies.
Even Wal-Mart, already in the pharmacy and vision care businesses, is now experimenting with “Walmart Care Clinics”: low-cost, walk-in healthcare clinics that focus on minor medical needs, preventive treatments, and management for chronic illnesses. These clinics will offer $40 walk-ins. Until this year, all of the clinics operating inside Walmart stores have been owned and operated by outside contractors who lease the space. This new experiment, on the other hand, is all Walmart.
Staffed by nurse practitioners, the range of services they provide is similar to that offered by a general practitioner physician’s office: lab work, shots, hypertension and diabetes management, and referrals to outside specialists.
“We have a nickname for these things. We call them docs in a box,” Columbia, SC-based Medical consultant Lynn Bailey told WIS-TV News. “They’re actually quite good at managing diabetics and hypertension and high cholesterol.”
The first Walmart Care Clinic opened in Copperas Cove, TX in April, and has since opened a few more in Texas, and it plans clinics at a pair of Walmart stores in South Carolina. According to The Dallas Morning News, Walmart’s goal is to have a dozen clinics operating by the end of 2014.
About 20 percent of American Family Care’s business is now chronic care management for people who either can’t wait to see their physicians or don’t have one at all. Moreover, 75 percent of AFC’s clients are repeat visitors. “Why can’t you get good health care as easily as you get fast food?” asks Bruce Irwin, founder and CEO of American Family Care.