Yesterday, I posted about an Indian hospital that has dramatically lowered the cost of heart surgery by operating at very high volume. A related story from NPR discusses how walk-in clinics are likely to benefit from health care reform (Insurance Mandate Could Spur Walk-In Clinic Boom, Nov 20). Walk-in clinics are those practices often within pharmacies or grocery stores that deal with minor ailments like strep throats or ear infections on a walk-in basis. Got a scratchy throat that won’t go away? There’s no need to wait days for an appointment with your physician. You can walk-in at your neighborhood CVS or Walgreens and be seen today.
Why is there a market opportunity here? Because it is way harder than it should be to see a doctor.
The Massachusetts Medical Society recently found that 40 percent of primary care practices are closed to new patients. Meanwhile, hospital emergency rooms are seeing more patients for routine, non-emergency problems.
It should be noted that Massachusetts has been out in front on health care reform and has mandated that everyone buy insurance. If everyone has insurance but not everyone can get easily into a practice, there is an opportunity for businesses that handle basic care efficiently. Walk-in clinics are much more cost effective for ear aches than the emergency room will ever be.
“If there aren’t enough physicians to see those folks, they’re going to have to go somewhere else,” Horwitz says. And unlike primary care offices, she says urgent care clinics — which tend to refer out the most complicated cases — are ready for an onslaught. “We’re set up to take walk-ins. It’s not as if our panel of patients would become full, and we can’t take any more patients anymore. Urgent care doesn’t work that way,” Horwitz says. In fact, as a business model, urgent care clinics rely on high volume. They are paid per patient at a rate much lower than emergency rooms, which is why Horwitz thinks urgent care centers offer one solution to rising health care costs. “The difference between the cost of coming to us and the ER is tremendous. You multiply that over the number of visits we see per year [that] possibly would be seen in [the] ER, and you’re in multiple billions of dollars pretty quickly,” Horwitz says.
This is an example of process innovation that can reduce health care costs. Clay Christensen, the Harvard Business School professor who introduced the idea of disruptive innovation, has touted walk-in clinics as an important innovation. (See this interview in the New York Times, For Better Care, Work Across Lines, Dec 31, 2006). Now there is an obvious complaint to relying on such clinics: They threaten the continuity of care. There is a belief that it’s best to see your own doctor. If you have your strep throat treated at CVS, how does that information get included in your medical records back with your physician? One answer to that is that such “one off” conditions do not impact your long term health. An exception might be if you have some long term issue. For example, if you are on immunosuppressive drugs because of some ongoing conditions, you may be warned away from such clinics. Clinics then take the low hanging fruit of the generally well who can worry more about convenience then the whole picture of their health. I think for these people that the desire to have an ongoing relationship with their physician is a bit of a red herring. I have read several articles on how physicians should set their panel size (i.e., the number of patients they serve). ( Here’s an example Panel Size: How Many Patients Can One Doctor Manage? Family Practice Management, Apr 2007) These articles inevitably mention panel sizes in the thousands. This only seems feasible if you have a significant numbers of patients that are very light users of the systems. It is not clear that these patients need — or want — a relationship with any physician.