CVS takes big strides into walk-in clinics

CVS Caremark provides more than just cough drops for that sore throat that will not go away. A growing number of the US retail chain’s pharmacies are being equipped with clinicians who can treat common infections and immunise against flu.

CVS, which announced on Wednesday it would stub out tobacco sales as it focuses efforts on healthcare, believes its walk-in clinics are a convenient alternative to long waits at the doctor’s surgery.

With more than 7,600 locations across the US, CVS is seeking to expand the number of its in-store MinuteClinic facilities from 800 to 1,500 by 2017, leading the charge by pharmacy groups into medical treatment and preventive care.

These so-called convenient care facilities, staffed by nurse practitioners in addition to pharmacists, diagnose and treat common illnesses from eye infections to minor wounds.

As tens of millions of patients enter into the healthcare system under President Barack Obama’s signature healthcare reform and the country’s elderly population rises, the number of retail clinics are expected to surge even amid a backlash from some traditional healthcare providers.

Their popularity, alongside walk-in “urgent care” centres that carry out minor procedures, reflects rising demand for well-located medical treatment options that sidestep long waiting lists and avoid the heavy costs of emergency room care.

The trend also corresponds with a broader shift by cost-conscious healthcare providers to move more procedures from hospitals to cheaper outpatient care facilities.

“Former Blockbuster video stores and other vacant retail spaces are increasingly being transformed into retail clinics or urgent care facilities. Non-acute care is moving out of hospitals,” said Jeff Piehl, director of the healthcare practice group at property broker Cushman & Wakefield.

The number of retail clinics in the US is expected to more than double from 1,418 in 2013 to 2,868 in 2015, according to a report by Accenture, the consultancy.

More than 90 per cent of about $1tn healthcare properties in the US – from assisted living facilities to medical offices – are in the hands of hospitals and medical systems, but the number of non-traditional owners are rising.

CVS, rival Walgreens and others that operate in the convenient care space have battled criticism that they are taking the place of doctors. But those championing these facilities say walk-in clinics may relieve pressure on the system amid a shortage of primary care physicians that is only set to worsen as more people demand healthcare.

Analysts such as Frank Morgan at RBC Capital Markets said retail clinics may carry out more complex procedures in the future. With the right clinicians and technology they will over time “gradually add more intensive service lines”, he said.

Ross Muken, analyst at ISI Group, said that while it was “very possible” MinuteClinic could provide treatments in the future such as stitching up a bad cut or mending a broken arm, expansion in the near term is more likely to tilt towards preventive healthcare for illnesses such as diabetes and obesity.

Michael Kulczycki, executive director of the Joint Commission on Accreditation of Healthcare Organizations, which has approved CVS’s medical services since it acquired MinuteClinic in 2006, said that although the sector is poised for growth, it is unlikely that MinuteClinic will expand its healthcare offerings past chronic disease care.

“There is a lot of scope for expansion in this space alone,” he said. “Even though CVS and others have the real estate footprint, it would add a level of complexity that doesn’t make sense economically.”

Retail clinics are also reluctant to tread on the toes of traditional healthcare practitioners. “They have been striking alliances with healthcare systems and hospitals, so any further steps would fracture these relationships. Convenient care is politically marred.”