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If you want to know why retail clinic momentum slowed after a fast start, one industry veteran says, look no further than Minneapolis, the city where they were born 10 years ago.

The initial appeal of retail clinics in Minneapolis had little to do with the concept itself, but instead with the area's high concentration of insured and affluent working parents, said Chris Endres, senior director of ConvenientCare Strategies Group, a consulting group created by Memorial Hospital & Health System in South Bend, Ind. So once retail clinics opened outside of areas with Minneapolis demographics, they struggled.

"One reason this industry has had massive closures is because Minneapolis was the Garden of Eden for research in this industry," Endres said.

Endres' theory was one of many presented in January in Minneapolis at the ConvUrgentCare Strategy Symposium, where retail clinic operators and those interested in entering the market met to share stories and advice on where the industry might be headed.

One place it's not headed is the stratosphere. From October 2006 to September 2008, the number of retail clinics -- quick-care centers in pharmacies, grocery stores or big-box stores -- grew from 200 to more than 1,000. CVS Corp., which bought retail clinic pioneer MinuteClinic, and Walgreen Corp., which bought Take Care Health Systems, were expected to expand even more. Wal-Mart Stores Inc. said it would open hundreds nationwide.

As of February, there were 1,197 retail clinics, an all-time high. But that was only eight more than in March 2009. CVS and Walgreen not only did not expand, they closed clinics. Wal-Mart became more circumspect on where and when to open clinics. Some hospitals and retail clinic chains dumped plans to open clinics in favor of stand-alone urgent care centers.

Attendees discussed theories about why the model wasn't working as well as they'd hoped: the seasonality of the business, oversaturation and the difficulty attracting patients outside of those who shopped at the host stores.

They also talked about what would define a successful retail clinic. While most venture capital-based operators pulled out of the market due to lack of profit, many hospital groups remain or are entering the market. Some groups see the clinics not as profit centers but as entry points into the health care system or as necessary expenses to ensure patient satisfaction.

"In the beginning, there was a lot of hoopla," said Tom Charland, CEO of Merchant Medicine, the retail clinic consultancy group that hosted the two-day symposium. "But the hoopla didn't reflect the reality of running a retail clinic. It's not as easy as it sounds."

By his own calculation, a retail clinic -- normally a small operation staffed by a nurse practitioner -- that is open 4,000 hours per year can break even with 8,000 patients. Most primary care physicians would find that pace, two patients an hour, financially unsustainable. "Ten thousand patients will get you squarely in the black," he said.

Charland used the example of MinuteClinic, where he started his career in the retail clinic business, to show how hard it is to get two patients per hour. In nearly every news release, MinuteClinic will state the number of patients served, which is topping 4 million, Charland said. Drilling that number down by the number of clinics and the number of hours they are in business, the typical MinuteClinic is treating only 1.1 patients per hour on average, he said.

On Feb. 8, MinuteClinic said it has served 6.2 million patients since its inception. It did not break down traffic per hour.

Avera St. Luke's in Aberdeen, S.D., opened its first FastCare clinic in July 2009 at a local ShopKo. For the remainder of 2009, the only month it passed two patients per hour was in October -- flu shot season -- when it reached 2.3. It reported being down to 1.4 patients/hour by December.

In Springfield, Mo., CoxHealth, which opened clinics in five Wal-Mart stores in 2009, had one store reaching 1.9 patients per hour, while most others hadn't reached even one patient per hour.

Clinics have struggled with fluctuations in traffic based on seasons. In March 2009, CVS announced that it was closing 90 MinuteClinic locations for the spring and summer and said they would reopen once the busier fall season arrived. But many of those locations have not reopened.

The hope of retail clinics was that shoppers would become patients, and patients would become shoppers. There is little evidence that is happening. "Store traffic does not equal patient traffic -- no ifs, ands or buts," Charland said.

Some operators have been especially frustrated with Wal-Mart. In 2007, America's No. 1 retailer announced a goal of 400 retail clinics by 2010. But Wal-Mart had only 58 clinics as of Feb. 1.

Memorial Hospital & Health System in South Bend opened its first Wal-Mart retail clinic in 2006, and expanded to six locations. Endres said Memorial hoped that would lead to a national expansion with Wal-Mart. He said the clinics' financial performance didn't justify such a move.

After Endres spent six months researching cities with retail clinics, he said he decided the clinics needed to be operated by local hospitals in the markets they serve, with a flexibility in clinic size. Wal-Mart's model, which requires clinics to fit in a certain size and include standardization between locations, didn't allow for that, he said.

Today, Memorial operates one clinic inside Wal-Mart, but under its own brand, rather than under Wal-Mart's "Clinic at Walmart." Memorial also has two clinics inside regional grocery store chains.

Karen Bowling, CEO and co-founder of Solantic, a physician-run urgent care center chain in Florida that expanded to include three clinic sites inside Wal-Mart stores, said that, although the standalone Solantic locations are breaking even, "we're finding it much harder to turn a profit in Wal-Mart."

Attracting patients outside Wal-Mart shoppers is made difficult by the fact that the store does not allow outside signage, and Bowling recently learned how important outside signage can be. In a survey at Solantic's other sites, customers cited signs as the No. 1 method of finding Solantic, Bowling said.

Wal-Mart did not have a spokesperson available to comment before deadline. But the retailer is moving ahead with opening in-store clinics. In January, it announced a deal with Wuesthoff Health Systems, a Rockledge, Fla.-based hospital group, to open five clinics inside its stores.

Making it work

Despite its less-than-profitable numbers, CoxHealth is happy with retail clinics and its locations in Wal-Mart stores. The hospital system does not expect its clinics to turn a profit.

The clinics are filling a void in areas with a primary care physician shortage while providing a convenient option for existing CoxHealth patients and those looking for a primary care physician, said David P. Taylor, vice president of regional services for CoxHealth.

"We're set up to lose money," Taylor said. "But we're set up to feed the system."

Hospital systems also see retail clinics as potential money-savers for themselves and patients by keeping minor cases out of emergency departments. In a statement announcing its Wal-Mart deal, Wuesthoff noted that although a typical emergency visit costs between $1,500 to $2,000, a retail clinic visit runs $55 to $65.

Other hospital systems are taking another look at urgent care centers, a model that pre-dates retail clinic models, as a precursor to opening in retail outlets.

Darin Jordan, MD, medical and operations director of Convenience Care for Central DuPage Hospital in Winfield, Ill., said although the urgent care model is working for Central DuPage, the hospital is considering retail clinics, too.

The retail clinic model has a much faster build-out time, which would let the system get a jump on its competition, he said.

Other clinics are betting that expanding their scope will have some impact. Many are expanding to include wellness services as well as chronic disease management to help spread the business year-round.

It's too soon to tell how much of an impact that will have on break-even points.

Through all of the stories, tips and lessons shared by symposium attendees, one thing was apparent: The retail clinic model is evolving, and what works for one could be the thing that destroys another.

The print version of this content appeared in the March 8, 2010 issue of American Medical News.

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