Are Food/Drug Retailers Hiding their Retail Clinic “Failures?”

Urgent message: Over the past 15 years, the nation’s largest food, drug, and mass retailers have announced clinic initiatives with great fanfare. However, we’ve heard little as these initiatives have quietly retreated and re-trenched, coincidently during the same period that urgent care has boomed.

Alan Ayers, MBA, MAcc is Senior Editor, Practice Management of The Journal of Urgent Care Medicine

Retail clinics—does anyone care anymore? Given there’s not been an “industry” update tallying the number of clinics operating in food/drug/mass retailers for a couple of years, I tried to construct a number myself. Here’s what I found…

Some major chains are no longer reporting legacy clinic numbers—at least anywhere that’s easy to find. You’d think investors in Walgreens and Walmart would want to know how many health systems are still operating clinics in their stores. Both companies had significant press in the past, Walgreens acquiring and scaling Take Care Health to nearly 400 clinics and Walmart in three previous iterations including over 100 clinics with health systems like Holzer Clinic  in Appalachian Ohio.

Pictured is a Walgreens clinic in Cincinnati, sold to TriHealth System. While other local urgent cares were serving hundreds of patients in pandemic queues…“Hello???” “Anyone back there?” “Y’all open?”

In 2017, Walgreens announced it would be adding 15 full-service MedExpress Urgent Care centers, starting with four in Las Vegas. This could have been a major disruptor to the urgent care industry, accelerating the growth of urgent care centers by reducing capital expenditures required for new buildings while leveraging high-visibility, high-traffic retail sites. All four locations in Las Vegas closed within 2 years, and while 11 locations appear to remain open, the partnership has not expanded beyond the original sites.¹

Today Walgreens is promising a big “future” with VillageMD—a risk-based primary care medical home with a proprietary tech stack serving Medicare Advantage and other ACO members. Both are investor-favored themes right now—just look at the success of ChenMed and Oak Street Health’s dual-eligible model. The shift is from acute episodic to longitudinal primary care for aging comorbid patients. There are currently more than 80 VillageMD sites in Walgreens, with 1,000 announced by 2027. Walgreens has invested $5.2 billion in VillageMD.

In regards to Walmart, my predictions in the January, 2020 JUCM article Is Four Times a Charm for Walmart? seem to have proven true as Walmart Health has stalled at about 23 centers—a penetration of only 0.4% of their 4,800 US store footprint. A far cry from the 4,000 health centers ballyhooed by their board in 2018. Of the 19 Walmart-operated “Care Clinics” launched in 2014, I could find only two that remain open (with some of the others now counted as Walmart Health). While their retail health development team vanished² the company was saying to investors, “Don’t look there, look here…” pointing to their investment in MeMD, a telemed platform. Indeed, the stalling of Walmart Health was repositioned as a technology play. I’ve heard Walmart Health was a success from a volume and outcomes standpoint, but Walmart could not scale financial profitability in a service operation. That’s because Walmart is a procurement, supply chain, and merchandising company and not a services provider. 

Then there’s CVS Health, the largest and most sustaining operator of 1,100 MinuteClinics still representing ~10% of their 9,900 stores (900 of which are closing). MinuteClinic has been expanded into HealthHub, which creates greater visibility to all healthcare services offered in the CVS store (though I’ve never seen the “concierge” staffed or anyone else in the area any time I’ve visited).

Following the Amazon Effect (ie, all U.S. retail is overbuilt) makes me wonder if HealthHub wasn’t a mechanism for reducing selling space and thus boosting the “retail” KPI of sales per square foot) for CVS. After all, chain drugstores in the United States are convenience stores generating their greatest margins in front-of-house goods including greeting cards, cosmetics, snack foods, and (in many states)  beer and liquor.³ With family members in Aetna HMOs, personally I’ve seen no meaningful integration between HealthHub and managed care.

Last is the Ohio-based Kroger Company, which has been a model for combining all health initiatives under one umbrella: Kroger Health which includes the pharmacy’s role in providing >10,000,000 COVID-19 vaccines, a retail focus on dietary nutrition and healthy food alternatives, and the wellbeing of its 465,000 employees. Kroger just announced a rapid lab partnership for a three-in-one test for common upper respiratory conditions as COVID becomes endemic.⁴  The company still operates 225 Little Clinics, some in partnership with health systems like the Ohio State University in Columbus but, again, retail clinics have attained a market share of <10% of the company’s 2,700 stores (>80% of stores have a pharmacy).

Other supermarket operators, like Texas’ H-E-B partnership with Memorial Hermann Health System that included 36 RediClinics in Greater Houston have quietly vanished since the start of the pandemic…coincidently at the same time urgent care has been booming.⁵

A friend working in retail once mocked the CEO of a struggling national department store who confessed, “We don’t do a good job admitting our failures.” Of course you do—they’re displayed on the clearance rack every week! Is this failure to make visible the full number of operating clinics in investor presentations and on your websites some kind of “hiding?” 

My assertion is, and has always been, that consumers don’t want to shop where sick people gather but instead prefer the greater depth of services and standalone locations of urgent care, which during this same time period has continued robust growth to ~15,000 centers (depending upon which list you look at).

REFERENCES

1. Bryant M. Optum’s MedExpress and Walgreens team up on urgent care. Healthcare Dive. December 8, 2017. Available at: https://www.healthcaredive.com/news/optums-medexpress-and-walgreens-team-up-on-urgent-care/512572/. Accessed February 20, 2022.
2. Livingston L, Dodge B. Walmart’s healthcare leaders are exiting the company as it taps the brakes on an ambitious clinic rollout. Business Insider. April 19, 2021. Available at: https://www.businessinsider.com/walmarts-health-clinics-are-stalling-as-leaders-depart-2021-4. Accessed February 19. 2022.
3. Las Vegas Review-Journal. The liquor aisle at CVS Pharmacy at Russell and Fort Apache roads is well stocked. Available at: https://www.reviewjournal.com/entertainment/food/alcohol-restrictions-frustrate-restaurants-trying-to-survive-pandemic-1990241/attachment/the-liquor-aisle-at-cvs-pharmacy-at-russell-and-fort-apache-roads-is-well-stocked-on-tuesday-m-20/. Accessed February 19. 2022.
4. Yahoo! Finance. Kroger Health and Gravity Diagnostics partner to offer 3-in-1 multiplex testing at all Kroger Little Clinics. Available at: https://finance.yahoo.com/news/kroger-health-gravity-diagnostics-partner-181700729.html. Accessed February 19. 2022.
5. Brown W. RediClinic closes 36 Texas clinics, including Kyle H-E-B location. Community Impact Newspaper. Available at: https://communityimpact.com/austin/san-marcos-buda-kyle/impacts/2020/09/08/rediclinic-closes-36-texas-clinics-including-kyle-h-e-b-location/. Accessed February 19. 2022.