Retail Clinics: "Disruptive Innovation and Improved Value Proposition," The Magic of the Marketplace

From a new study released today by the Deloitte Center for Health Solutions "Retail Medical Clinics: Update and Implications - 2009 Report" (press release here and full study here):

1. Retail clinic market growth has slowed from an astronomical 350 percent in 2007 to 30 percent in 2008, and it trended negative (-5 percent) in the first five months of 2009. The economic downturn that began in December 2007 had a chilling effect on retailers; conditions also were challenging for private investors backing start-ups in retail medicine.

2. 2009 marks a pause between wave one and wave two of retail clinic growth. Cautious growth is likely to resume from 2010-2011 and then accelerate from 2012-2014. Despite forecasts from a variety of organizations estimating 5,000 clinics by 2010 and perhaps 6,000 by 2012, data suggest those numbers are unattainable in that timeframe. Merchant Medicine, a leading tracker of retail clinic operators, has suggested that the market may, in fact, top out at 4,000 clinics in 2015 (see chart above).

3. Employer sponsorship of onsite retail clinics is a key factor in their potential growth. By hosting and partially underwriting a clinic’s costs, employers have the potential to reduce employee health costs and lost worker time due to long wait times at physicians’ offices. One forecast suggested that 32 percent of large employers (those with greater than 1,000 employees) will have onsite clinics by 2009 – a total of more than 2,400 sites.

Conclusions:

1. Retail clinics represent a new channel to deliver primary care services more conveniently and at lower cost to consumers. Clinic services are safe and effective, due in large measure to medical management programs that are evidence-based and supported by electronic medical records. As a new entrant, retail clinics represent a threat to many traditional health care industry stakeholders; however, to consumers, health plans and employers they offer an important care alternative with a strong value proposition.

2. The growth and evolution of retail clinics reflect opportunities for disruptive innovation and an improved value proposition for the U.S. health care system.

MP: What an amazing success and growth story, from only 200 retail health clinics in 2006 to possibly 4,000 by 2015, a 10-fold increase in less than ten years! At the same time that Congress debates a government takeover of the health care system, we have market-based health care reform taking place right now in the form of convenient, affordable, quality health care at more than 1,000 retail clinics around the country. Read more here.

As Ronald Reagan reminds us:

We who live in free market societies believe that growth, prosperity and, ultimately, human fulfillment are created from the bottom up, not the government down. Trust the people. This is the one irrefutable lesson of the entire post-war period, contradicting the notion that rigid government controls are essential to economic development. The societies that have achieved the most spectacular, broad-based progress are neither the most tightly controlled, nor the biggest in size, nor the wealthiest in natural resources. No, what unites them all is their willingness to believe in the magic of the marketplace.