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Making Sense of the Clinic Landscape

JUN 2

The clinics landscape is rapidly evolving into a key segment of healthcare delivery. Clinics are top of mind for many healthcare constituents because they have the ability to speed our transition to value-based care while supporting a lower cost of care in a more convenient setting.  In fact, a study by RAND concluded that 17% of ER visits for minor infections, strains, and lacerations could be handled by retail clinics or urgent care centers, saving an $4.4 billion a year in healthcare costs.  Clinics serve as an important alternative to long waits at the hospital or the local primary care physician’s office.  In short, clinics have a significant near-term opportunity to help transform the healthcare system.  With that said, not all clinics have the same economic model or set of services.  There are a variety of models in the market, including some innovative and emerging models with interesting risk arrangements.  As a result, we are publishing our framework to help make sense of the clinics landscape and provide our view of the market drivers with high-level commentary on what is impacting each segment. We broadly define clinics as walk-in facilities that provide physician- or nurse-led care, generally for more basic care needs at lower cost.

The clinic landscape is driven primarily by convenience, access, cost, geography, specific needs of a population, and clinical services that are provided. Below is our high-level view of the clinics market organized into discrete segments:

TripleTree’s Clinic Segmentation

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Retail and Consumer Clinics (Retail)

These are consumer-focused clinics, typically within a drugstore, a grocery store, or another retail setting. The core rationale for retail clinics is typically to drive traffic for additional prescriptions volume.  Over time, retail clinics have sought to innovate to build higher-touch models to manage chronic illness. This is one reason retail can serve as an attractive channel partner for payers and providers that struggle with consumer experience. Retail clinics are pervasive with over 10.5 million visits occurring annually at more than 1,800 locations across the U.S. according to an April 2015 report commissioned by the Robert Wood Johnson Foundation.  We believe retail clinics will continue to have growing consumer appeal over a traditional care setting given their convenience, transparent pricing, and generally lower costs for high deductible plan members.

Examples: Minute Clinic (CVS Health), RediClinicRite AidTargetWalgreens, and Walmart


Dedicated Employer Clinics (Onsite)

Typically funded by self-insured employers, this segment is becoming somewhat saturated, particularly within companies serving the Fortune 500 where market consolidation is underway. These clinics seek to deliver benefits such as reduced absenteeism and higher productivity. However, historically, the majority of these clinics have been managed using a cost-plus model and have been slow to shift to alternative risk models or economic arrangements.

Examples: ConcentraHealthstatMedcorPremise Health (fka Walgreens / CHS), and QuadMed    


Near-Site and Co-Op (Onsite)

These are clinics near to employers, often under a time-share model for multiple employers. This is a greenfield market for small and mid-sized employers (SMB), some of which are shifting to self-insured models. These clinics provide an affordable alternative to SMBs that achieve the same benefits mentioned for dedicated employer clinics (e.g., reduced absenteeism and higher productivity).

Examples: Activate HealthcareNovia CareClinics, and QuadMed


Population-Based / Medical Management Model (Onsite)

This is an emerging clinical model that is gaining traction and providing competition across the clinic landscape. Characterized by capitated population-based care or medical management, where PCPs manage patients more holistically for a set fee, many view this segment as a bridge to value-based care.  Defining this model is tricky as this segment is rapidly evolving and is often distinct by geography. This model appears flexible and well-suited to take risk with clinics often leading with technology and consumer-focused approaches to care.  With all the buzz surrounding this segment, look for these clinics to quantify the true value of their preventative care and how much risk of medical dollars they will manage under this arrangement.

Examples: MedLionPaladina Health (DaVita), Privia HealthQlianceVillageMD, and We Care TLC 


Community Model (Stand-Alone / Community)

Clinically integrated with the provider community, the community model is a growing segment that varies by region and health system. These clinics serve as a key alternative to busy hospital systems and PCPs.  Interestingly, we have seen some hospitals over-utilize these partnerships as a referral channel and actually add costs into the equation (e.g., more lab tests).  As a result, a satellite clinic model has emerged where providers manage their own remote clinics as an extension of their systems, allowing for more coordinated care and seamless sharing of patient data.

Examples: Cleveland Clinic (with CVS Health), Community Health Network (with Walgreens), and North Memorial Health Care (satellite)


Urgent Care (Stand-Alone / Community)

We define this as stand-alone ambulatory care outside of the ER. While some geographies are reaching saturation, others have significant opportunity for growth. This segment is evolving quickly.  These clinics are still evaluating how to develop strategic partnerships with health systems and stronger payer relationships. Given the strain that high cost ER visits have on our current healthcare system, the urgent care segment is well-positioned to grow in the coming years.  In fact, several platforms have recently been bought or started in the last few quarters.

Examples: CareSpotConcentraFastMedMedExpress (Optum), and NextCare  


Summary

In conclusion, we’re excited by the growth potential of the clinic market. Some models have the potential to play a crucial role advancing value-based care and we believe all clinics play a role in providing lower cost, more convenient access to care.  We hope we brought to life some of the distinct nuance of the various clinical models we’re seeing in the market.  We are intently watching this market to see how it evolves over the coming years.

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Michael Boardman