When retail clinics promised to be the next big thing in medical care, everyone from start-ups to national retailers opened their own versions of the walk-in clinics.
Often little more than a kiosk in a pharmacy, the clinics are staffed by a nurse practitioner treating simple ailments such as strep throat.
Now the building boom is leveling off, with several high-profile players closing outlets around the country. Those in the industry say it was simply supply outstripping demand, with too many clinics opening too quickly.
The industry, started eight years ago in Minnesota with a MinuteClinic precursor, is going through a mini shakeout.
Among the recent closings were 44 outlets in Wal-Mart stores in various states under the brands SmartCare, My Healthy Access and CheckUps. In addition, seven MedBasics Family Health Centers closed in Texas and Arkansas.
In Minnesota, MinuteClinic closed three older outlets -- in Eden Prairie Mall, the University of Minnesota's Coffman Memorial Union and in a Minneapolis skyway -- to focus on its outlets in CVS pharmacies.
MinuteClinic and Walgreens' Take Care still plan to open dozens of outlets nationally in coming months, but more selectively. Target Corp. plans four new clinics this year, but only in Minnesota and Maryland where there are already Target Clinics.
"The previous two years have been a land grab," said Tom Charland, president of Merchant Medicine, a consultancy in Shoreview. "We've come pretty close to saturation and people are going to be much more thoughtful about where they expand."
Early critics sign on
Last year, the number of retail clinics exploded from 200 to 800.
"[That much] growth in one year is exciting, but you can't continue to grow at that rate," said Tine Hansen-Turton, executive director of the Convenient Care Association, a trade group based in Philadelphia.
That number is expected to reach 1,000 this month and 1,500 by the end of the year.
Many of the early entrants were start-ups backed by venture capital. But they were soon joined by hospital and clinic groups as well as physician groups. Doctors initially critical of care quality at the clinics began to see them as a way to funnel new business into their practices.
National retail chains jumped in. CVS Caremark Corp. now owns Minneapolis-based MinuteClinic, while Walgreen Co. bought Take Care and the Kroger Co. invested in the Little Clinic. Target Corp. started its own Target Clinic.
A recent report by the Deloitte Center for Health Solutions said 16 percent of consumers have used a retail clinic and 34 percent said they might do so in the future.
Insurers liked them because they cost much less than doctor's visits. This year, Blue Cross and Blue Shield of Minnesota became the first in the country to waive copays for visits to retail clinics for some of its members. Its members made 47,000 visits to retail clinics last year, saving the health plan $1.5 million, said Shawn Patterson, vice president of marketing.
Slower returns than planned
Still, clinic operators expecting quick returns have been disappointed.
Typically small, bare-bones operations, the clinics are much cheaper to set up. It takes an investment of $150,000 to $200,000 -- about one-tenth the cost of a traditional clinic.
"The belief in the early days was you could get to the break-even point in a year," Hansen-Turton said. But she said it's taking two years. Some are better positioned than others to do that.
"For our industry, you need to anticipate an investment period before reaching profitability," said Peter Miller, president and chief executive of Take Care Health Systems, which Walgreen bought last year. "Unfortunately, this has contributed to some of the initial industry shakeout."
Take Care has 197 clinics in 14 states and expects to have as many as 400 stores by year's end.
Winning over new customers is taking more time and effort than some expected.
Some patients want to see a physician and not a nurse practitioner. Traditional clinics are offering same-day appointments and extended hours to keep patients from defecting.
Retail clinics "had to learn the hard way that you can't grow faster than the country can understand what they're for," said Patrick Dunleavy, chief executive of NOW Medical.
NOW Medical -- which has 10 NOW Express Care clinics in Twin Cities Cub Foods stores -- was recently bought by a hospital and clinic group, North Memorial Health Care in Robbinsdale. It plans to open three more retail clinics this year and three each in 2009, 2010 and 2011.
A pioneer bows out
Perhaps the most potent sign that the gold rush era is fading came earlier this summer.
In June, MinuteClinic Chief Executive Michael Howe stepped down, he said, to consult and pursue other ventures. A former Arby's executive, Howe was both lauded and derided for bringing the style of fast food to the rarefied world of medical care.
In three years, he cemented MinuteClinic's position as the leader in retail care. He took the company from 19 to 525 clinics nationally -- more than all its competitors put together -- and became a sort of industry evangelist. When entering a new market, Howe typically opened multiple locations on a single day.
In 2006, he saw through the company's purchase by Woonsocket, R.I.-based CVS Caremark, a parent with deep pockets and clear synergies with its drugstore and pharmacy benefits businesses.
MinuteClinic currently has 523 clinics and expects to have between 550 and 600 by the end of the year.
Howe said the decision to leave was "mutual," adding, "I'm much better at building than providing maintenance."
He was replaced by Chip Phillips, who formerly ran CVS' specialty pharmacy business. Now CVS is slowing the growth of new MinuteClinics to focus on expanding services at existing ones.
MinuteClinic nurse practitioners already can do cholesterol and blood sugar screenings, and may start to do health coaching or other medical education, Phillips said.
The idea is to package these with CVS Caremark's pharmacy benefits business and market them to health plans and employers.
"My goal is to continue to develop the business model," he said.
Chen May Yee • 612-673-7434