Retail Reckons with Primary Care
Are you surprised by the recent announcements from Walgreens, Walmart, and even Dollar General to scale back or end their primary care positions? Honestly, I can say yes and no. I was interested in the Dollar General and DocGo partnership as it targeted locations where health care access can be very difficult and used an innovative model (mobile clinics) to bring care to patients. I’m not totally surprised others, like Walgreens and Walmart, needed to adjust or end their primary care programs.
What contributed to difficulties for retail health care?
COVID-19 pandemic
Massive changes experienced during the pandemic could have overinflated retail expectations for gaining health care market share — particularly with spiking virtual and telehealth use. The market for technology innovations was on fire.
Though, as the years went on, tech failed to solve health care’s problems, telehealth and virtual health use receded (and those reimbursements will return to pre-COVID rates unless Congress acts), inflation rose dramatically, and consumers retained stickiness with their original health care providers.
By this point, retail had already invested billions, and when in a lower margin business model, closures or rightsizing became a necessity.
Labor issues
Much of health care has been struggling with employment since the COVID-19 pandemic — not enough workers and heightened labor costs. The pandemic led to massive disruptions and inflation, both of which led to skyrocketing labor costs for employers and new expectations from employees (more wages, more flexibility, work-life balance).
Further, for retail health care to succeed, those new locations also need workers. There weren’t enough workers before the pandemic and there simply aren’t enough physicians (including psychiatrists), advanced practice providers, or pharmacists to support all the new primary care outlets now.
Reimbursement difficulty
Primary care reimbursements can be tough. Hospitals and physicians have worked decades to establish care processes and services that efficiently deploy primary care. For hospitals and health systems, primary care is also a patient’s front door to the larger enterprise.
Retail’s play is not the same — the approach is to decouple aspects of primary care from existing systems. The way to do so is through convenience, new access points, and more affordable consumer options.
However, for retail’s primary care financials to work, the model needs scale because the underlying reimbursement model is difficult.
Consumerism vs. patient stickiness
We talk about consumerism a lot in health care. There is a place for it, but there are also complicating factors that make health care different than other goods and services. One major factor is the role of insurance coverage. Another is how that plays into already established patient-provider relationships (i.e., stickiness).
For example, health insurance coverage is varied and complicated. Copays. Deductibles. In or out of network status. When a consumer has insurance and an established primary care provider — and knows their insurance covers that care — what then is the impetus to move to a retail setting? Convenience and cost potentially, but retail will still need to explain why switching is valuable.
For those without insurance, who are underinsured, who lack local access points or are looking for convenience, retail can certainly fill important gaps.
Where does retail health care go next?
Retail will pivot and adjust its approach. We’re already seeing it. In the meantime, some short-term aspects retail may focus on include:
- Items and services that are largely self-pay and not covered by insurance. I’m thinking wellness and nutrition services and GLP-1 weight loss and vision services.
- Simple services like a flu or shingles vaccine, in-person or telehealth to address uncomplicated situations.
- Items (and perhaps services) that support primary care. For example, remote monitoring or other tech-enabled products that support primary care and/or chronic care management.
- Pharmacy-related. Clearly retail settings are a go-to for pharmacy needs already, so leveraging that connection point is essential.
- Focused approaches targeting specific geographies or populations. This could be where value-based care models or care management services could come into play.
- Affiliations with existing health care incumbent organizations and providers.
How we can help
Convenience and affordability are important and will draw some consumers to retail. For others, new access points can help. Yet for still other consumers, retail has not cracked the code on why shifting care makes sense.
To respond, incumbents should capitalize on strategies that keep patients satisfied, such as:
- Providing exceptional care
- Frictionless financial processes
- Convenient and flexible access points where possible
- Leveraging technology innovations
- Considering new retail partnerships, if warranted
CLA can help through strategic planning, financial modeling, market research, and our deep industry knowledge. Reach out today.
Jennifer Boese is the Director of Health Care Policy at CLA. She is a highly successful public policy, legislative, advocacy and political affairs leader, including working in both the state and federal government as well as the private sector. She brings over 20 years of government relations and public policy knowledge with her to CLA. Well over half of her career has been spent dedicated to health care policy and the health care industry, affording her a deep understanding of the health care market and environment, health care organizations and health care stakeholders. Her role at CLA is to provide thought leadership, policy analysis and strategic insights to health care providers across the continuum related to the industry's ongoing transformation towards value. A key focus of that work is on market innovations and emerging payment models. Her goal is to help CLA clients navigate and thrive in an increasingly dynamic health care environment.