The retail health clinic model: economically viable?

In early 2008, the Massachusetts Public Health Council voted to allow walk‐in healthcare clinics to operate in the state. The charged public debate leading up to the decision pointed to the need for an objective examination of retail health care delivery – the concept, historical evolution, and relative pros and cons – as well as an assessment of its long‐term prognosis. This paper aims to assess the situation.

An online literature review identified several useful background resources, including a business school case, a medical journal article, and a cost study. The internet also provided access to the web sites of major clinic operators, the positions of various physician groups, news releases, and investor conference calls of the industry leader. The research was further informed by the findings of a third‐party interactive survey of clinic users and a small onsite sampling by the author.

Less than a decade old, the retail health care clinic business is in the midst of significant consolidation, with CVS Caremark and Walgreens emerging as the key players. Still a loss‐leader, the business stands to gain from several structural changes underway in the American health care industry, discussed in the paper. Benefiting from those changes, however, will require a significant increase in foot traffic into the host stores, i.e. to the clinics themselves and also for ancillary shopping. Until then, the economic viability of the clinics remains unclear.

The paper provides a concise assessment of the status of a business with significant potential to help contain health care costs.