The American Health Care System Should Be Terrified Of The Rise Of The Pharmacy Clinic


Nurse and patient



In a country that's getting fatter, older, and needs more medical care, there's a huge opportunity for companies to really disrupt the American health care system. Rattle the dust off those old bones if you will.

The opportunity waits in plain sight at your local pharmacy, and some companies like Walgreens and CVS have taken notice and hope that you will too.

Walgreens, the largest pharmacy chain in America, made an aggressive move in April to expand its Take Care retail clinic's services to include diagnosing and treating chronic conditions like asthma, diabetes and high cholesterol.

It's not the only — or the largest — of these types of clinics (CVS has some 650 Minute Clinics versus Walgreens' 370 plus) but it's become the most comprehensive.


Demand is ratcheting up. More people have chronic illnesses, some 30 million new people will get access to health insurance due to the Affordable Care Act, and we're likely to see a large physician shortage, especially in primary care. The ACA also places lots of emphasis on preventative care, also part of the clinics' expanded services.

These clinics provide the sort of basic care that most people need at a fraction of the cost. And more and cheaper preventative care means less ER visits.

The current American health care system should be nervous.

Patients pay too much in current system

"There was a recent RAND study that highlighted the fact that costs at a retail clinic are as much as 80% less than at an emergency room and 30-40% less than a primary care physician's office," Heather Helle, a divisional vice president at Walgreens responsible for the Take Care clinics told Business Insider in a recent interview.

The study found that clinics provide comparable care, despite significantly lower costs:


According to Cleveland Clinic CEO Dr. Toby Cosgrove, the growth of these clinics is the thing most likely to disrupt the American healthcare business. As for the physician shortage, "I don't think there's a question that there aren't going to be enough doctors," Cosgrove told us in an earlier interview.

"Everything that we've added is clearly within our nurse practitioners' and physician assistants' scope of practice ... and are not things that require significant equipment additions," Helle told us.

On the business side, the clinics provide a revenue stream on their own, drive people to stores, and may convince customers to shift prescriptions from other places for greater convenience.

The challenge is convincing people who have spent their entire lives going to the doctor or emergency room. Once they actually try it, they tend to be extremely satisfied.


"We utilize Gallup to measure patient engagement, and our patient engagement scores are within the top 10% of Gallup's entire consumer database," Helle says.

"The rate-limiting factor is oftentimes just awareness," she adds.

The company has a strategy in mind for getting in front of more people than ever.

Getting eyes on the clinic prize

Simply being there 7 days a week, weeknights, weekends, taking walk-ins, having a pharmacy on site, and having online appointment scheduling helps more people discover the clinics.

"I'm a mom and it could be an evening and a child has an ear infection, and my primary care physician, my pediatrician, may not be open. The retail clinics can provide a great option," Helle said.


The idea is to be dramatically cheaper and more convenient than the emergency room or the doctor's office.

Along with that comes expansion. It's aiming for double-digit growth throughout the next year, on top of the 370 plus clinics in 20 states that already exist.


The second part, something that really distinguishes the clinics from hospitals in particular, is an aggressive effort to be as transparent as possible.

As Steven Brill exposed in his massive piece for Time, hospital bills are unconscionably high, frequently incomprehensible, and inconsistent.

Walgreens' clinics post all of their pricing both on their website and in the clinics themselves. They also stream patient engagement scores, quality scores, and wait times on their websites.


"We're also bringing a new level of transparency to health care," Helle said.

Primary care concerns

One of the biggest criticisms of these clinics is that this will fragment care, and make it more difficult for doctors to give patients the care they need, and that they won't be able to form the sorts of relationships that might, for example, help a diabetic change their lifestyle.

That's a reasonable concern, as is the issue of someone going to a clinic with a more serious problem than what's anticipated and being unable to get the appropriate care.

Helle's adamant that the clinics serve as a supplement to, not a replacement for, primary care physicians.

"We absolutely believe that every patient should have a primary care physician," she says.


And since some 40% of the patients it sees don't even have a primary care physician, clinics can provide a service in helping connect them to one, acting as a buffer in between visits at a much lower cost.

In addition to setting clear guidelines on what sorts of care it can and will provide, the company takes steps to make sure that care is as continuous and easy as possible. With patients' consent, it shares their visit record with their primary care physician to ensure that care is coordinated and communication is possible.

Hospitals need the competition

Hospitals are already in trouble, being forced to consolidate by a weak economy, low margins, pressure to reduce costs, and the specter of reduced compensation from the government.

There's a reason they've historically marked up basic services so much.

As these clinics grow in reach and popularity, hospitals are going to have to change to emulate the clinics to dramatically reduce costs, or they won't be able to compete.