Target inches into medical clinic business

Target Corp. was one of the first retailers to experiment with putting a medical clinic in its stores. But while chains such as CVS and Walgreen's expanded rapidly into so-called retail medicine, Target is still tiptoeing into the field.

"Surgical," is how spokesman Joshua Thomas described Target's growth strategy to date.

Last week, the Minneapolis-based retailer opened eight new Target Clinics -- five in Chicago and three in Palm Beach, Fla. -- marking its biggest expansion in retail medicine since 2007. Until now, the company has operated 28 clinics in just two states: Minnesota and Maryland.

"It's a very deliberate, slow-moving strategy for them," said Tom Charland, CEO of Merchant Medicine, a retail clinic research and consulting firm in Shoreview. "And it shows that they're still not quite sure that they want to do this."

While the retailer known for its cheap chic products touts to Wall Street new designers it's working with or the pace of its grocery expansion, Target rarely volunteers information on its medical clinics.

It declined to give details on the pace of future growth, but said it sees medical clinics as an important strategy to build customer loyalty and to complement existing pharmacy services.

"This is smart, strategic, well-thought-out growth," said Dr. Joshua Riff, Target Corp.'s medical director. "If we had done this five years ago, I don't think the consumer, the guest, was ready for it yet. Five years from now, if I have a sore throat, I'm going to go to my Target. Everybody's going to be doing it."

Staffed by nurse practitioners or physician assistants, patients can get vaccinations, basic lab work and treatment for minor ailments without an appointment.

With health care reform on the horizon, Target and the industry's two biggest players, CVS/Caremark's MinuteClinic and Walgreens' Take Care Clinics, are getting in position to gain market share.

About 10 percent to 20 percent of the patients who already visit retail clinics are uninsured. And even among those who are, low-cost flu shots, convenient hours and quick access to medical care make the clinics a popular choice.

"The ideal platform for retail clinics is busy, dual-income parents with kids, well-educated, middle- to upper-income," Charland said. "And that's Target."

It's not hard to imagine a busy mother dashing into the Target to pick up groceries, diapers, home office supplies and a new yoga outfit after bringing in a child for a flu shot.

"This is one facet or pillar," Riff said. "We have 1,700 pharmacies. The strongest asset we have is the pharmacists themselves. ... that's the bulk of our retail medicine. Clinics are just another addition to it. It's another way to diagnose and treat people."

Diagnosing a strategy

Target was among the pioneers in bringing medical clinics to the retail setting in 2003. It opened a handful of MinuteClinics in Twin Cities Targets, and entered the Baltimore area a year later.

MinuteClinic, founded by a privately owned company in Minneapolis, was also located in Cub Foods and Best Buy corporate headquarters at the time, and wanted to expand rapidly.

Target and MinuteClinic parted ways in 2006, and MinuteClinic was snapped up by CVS Corp., which added the clinics in quick succession to its drugstores.

Wal-Mart, by contrast, doesn't operate its in-store clinics. It recruits hospital systems and large medical groups to come in and sign leases inside its stores. Hennepin County Medical Center, Minnesota's biggest public hospital, opened its first retail clinic at a Wal-Mart in Bloomington in February.

Riff said Target's medical evolution has been a learning experience. "Target knows we can do businesses, but this is our first foray into an independent medical venture," he said. "We went into this thinking we'd take the best of medicine and put it into retail. What we learned is that you can take the best of retail and put it into medicine."

That includes taking lessons from in-stock inventory systems, quality control measures and other scorecards that are tools of the retail trade.

Target is expanding at a time when established players have slowed down new store openings and closed unprofitable ones. The recession has played a role, as has the seasonality. Clinics are busiest in the winter cold and flu season, with patient traffic dropping drastically between April and November.

In-store clinics cost about $60,000 to $100,000 to build and outfit, Charland said, and managing the slow months can be a challenge.

Hospital emergency departments are looking for ways to use retail clinics to offset their peak season, and physicians are beginning to refer patients to retail outlets for routine tests so that they can use their time for more complex care. Riff used the example of a diabetic patient who comes to a Target clinic to get routine blood work done.

Friday morning, the Target Clinic at the Edina store was "steady, but not too busy," said the staff. That came as great relief to Scott Grossbauer, who had stopped in at the clinic on his way into work to get his sore throat checked out.

Within a half hour, Grossbauer's throat culture had come back negative for strep, and a physician's assistant had sent him on his way.

Grossbauer, 35, a sales manager at Donaldson Filtration Solutions in Bloomington, had never been to a retail clinic before. His only question was how insurance would handle it.

"I'd use it again for these kind of problems," he said. "Quick and easy."