Urgent care represents a $10 billion market opportunity that is projected to surpass $14 billion by 2016, making it one of the fastest growing segments in healthcare. Earlier this week, HCA Holdings, Inc. (NYSE: HCA) announced its agreement to acquire CareNow, an urgent care provider with two dozen centers in the Dallas-Fort Worth area. This announcement is one of many very interesting strategic moves that both payers and providers have made throughout 2014 to assert their position within the rapidly emerging urgent care market:
Payers
- Optum: Just after the New Year, Optum made its own consumer-centric splash into the urgent care market with the opening of its first “concierge-style” urgent care clinic in Houston. Today its clinics offer physical / wellness exams, on-site, same-day lab work and X-rays, and hearing-aid fittings in addition to cosmetic treatments, pediatric care, and school, camp and sports physicals without appointments. Optum’s clinics include couches, technology-docking stations, WiFi access and colorful art, very unlike the typical ED atmosphere. Today Optum has five locations across Texas (4) and Kansas (1).
- Humana: Just two weeks ago, Reuters reported that Humana is exploring a sale of its urgent care subsidiary, Concentra, which it acquired less than four years ago as an effort to become more consumer-facing and to better manage medical costs. Some news reports are speculating that the sale suggests that Humana has faced challenges in trying to run healthcare centers itself. TripleTree is not convinced of this argument and points to Humana’s continued build-out of care delivery assets in key markets; Concentra’s model may no longer fit with this strategy. In general, we expect payers to continue to show considerable interest in the urgent care market as a lever to improve costs and patient access, experience and satisfaction.
Hospital Systems
- Tenet: In May, Tenet launched a new national brand of urgent care centers called MedPost Urgent Care with 23 locations across Arizona, California, Florida, Georgia, Mississippi, Missouri, Tennessee and Texas. At the time of the announcement, Tenet planned to double the number of its centers by the end of 2014. Various Tenet executives cited improved access, convenience, continuity of care and pursuit of faster-growing, less capital intensive, higher-margin businesses as the rationale for the strategic move.
- HCA: As mentioned above, HCA has reached an agreement to buy CareNow to complement its network of hospital, emergency and outpatient services and to provide a broader, yet more integrated level of care within the Dallas-Fort Worth area. This move will also allow HCA’s EDs to get back to the provision of care for truly emergent needs as opposed to the wrong venue of choice for primary care.
Other Provider Organizations
- Fresenius: On June 27, 2014, dialysis specialist Fresenius announced its entrance into the urgent care market with its acquisition of MedSpring Urgent Care Centers with roughly 20 centers across three states (Texas, Illinois and Massachusetts). On the same day, Fresenius also announced the acquisition of Sound Inpatient Physicians, a hospitalist and post-acute staffing provider, for $600 million, further signaling its drive to offer adjacent, but complementary services to its core business of kidney dialysis.
Much of the growth in this sector will be driven by health reform, as urgent care becomes necessary in managing the additional market demands for care. Said differently, coverage expansion is expected to create enormous capacity issues, as the current facility-based physician supply is unable to support the anticipated demand. This supply / demand imbalance, coupled with focused efforts to deliver cost-effective care, will drive a significant increase in patient volumes towards urgent care as the market demands “just-in-time” care delivery services that lie in the void between the ED and the PCP.
At the same time, consumers are demanding greater transparency and a larger role in managing their own health. As illustrated by the examples above, this shift is driving payers and providers to reevaluate their traditional delivery models including care coordination, cost and quality and a range of customer services.
The healthcare system is now squarely aligned around the consumer, and TripleTree believes urgent care will remain central to enhancing the patient experience as well as the delivery and cost-effectiveness of healthcare services. In our view, the influx of payers and larger delivery systems into the urgent care market will drive the continued integration of urgent care with the rest of the care continuum. We will be publishing an in-depth report on the urgent care market as part of a series on alternate-site / outpatient delivery models in the coming weeks. Contact us if you’re interested in receiving a copy and until then, let us know what you think.