Retailers in healthcare: A catalyst for provider evolution

Discover opportunity

Retailers in

healthcare:

A catalyst for

provider evolution

Exploring the emerging role of

retailers in healthcare—and how

traditional healthcare providers

should respond.

A Denitive Healthcare report

Written by:

Nicole Witowski, Senior Content Writer

Contributions by:

Todd Bellemare, Senior VP of Strategic Solutions

Rachel Kolbin-Gupp, Senior Data Analyst

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

If you step into a drugstore in a major

U.S. city, chances are you might spot a

retail health clinic.

Retail health clinics began popping up in the healthcare landscape in the

early 2000s as a convenient, low-cost alternative to physician’s ofces, urgent

care centers, and emergency rooms (ERs). It seemed like an odd pairing:

shampoo and a throat swab. But two decades later, these retail health clinics

are no longer an experiment of a few grocery stores, convenience stores, or

superstores — they’re becoming a major force in the U.S. healthcare system.

From drugstore chains like CVS to big-box stores like Walmart, well-resourced

retailers are building a healthcare delivery model focused on the needs of

the patient as a consumer — and they’re using retail clinics as a vehicle to

reach patients at a time when many traditional healthcare providers lack the

resources to do the same.

With their customer-centric

focus, deep pockets, and

extensive reach, retailers are

well-positioned to disrupt the

healthcare landscape and

compete with health systems

and physician practices for a piece of the medical pie. And new data shows

their efforts are paying off: Over the last ve years, the use of retail clinics has

grown 200% — considerably more than urgent care centers, which grew 70%.

Meanwhile, emergency room usage declined by 1% over the same time period,

and claims led by primary care ofces declined 13%.

In this report, we use healthcare commercial intelligence from the Denitive

Healthcare platform and research from external sources to understand the

rising role of retailers in healthcare, explore the impact of retail clinics on

patients and traditional healthcare providers, and consider how traditional

providers should respond to these new entrants.

Over the last ve years,

the use of retail clinics

has grown 200%.

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

This report is divided into three parts:

Part I: Retailers in healthcare today

Part II: What are the implications for patients and providers?

Part II: How traditional healthcare providers should respond

With this report, healthcare organizations can gain greater insight into the role of

retail clinics in the broader healthcare landscape as well as the challenges and

opportunities these new market entrants present. In addition, healthcare providers

can use this report as a tool to inform their strategic planning and position their

organizations for success in a changing landscape.

Part I: Retailers in healthcare today

Retailers have been testing out care delivery models with in-store health clinics

for two decades. These medical clinics, located in drugstores, supermarkets, and

other retail settings, got their start providing convenient access to affordable,

nonemergency care for a limited range of health conditions, including minor illnesses

like ear infections. Care is delivered by a nurse practitioner or a physician assistant.

With extended weekend and evening hours and walk-in appointments, retail clinics

offer a level of convenience that traditional doctor’s ofces usually can’t match.

As the healthcare industry shifts toward more consumer-centered care, retailers

are increasing their investments in these clinics, turning them into hubs for more

comprehensive care delivery. The last few years have seen retailers make billion-

dollar moves to expand their services beyond acute care and dive deeper into

primary care and chronic disease management. A Bain & Company report predicts

new primary care models from nontraditional players, such as retailers, could

capture as much as a third of the U.S. primary care market by 2030.

In this part of the report, we’ll paint a picture of the national retail clinic landscape,

including the proliferation and scope of retail clinics, and highlight recent trends in

use, covering:

Æ Why big retailers are jumping into healthcare

Æ The retailers leading the charge

Æ Most clinics operate in large metropolitan areas

Æ Retail clinic claims are on the rise

Æ Retail clinics’ role in acute care and chronic conditions

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

Why big retailers are jumping into healthcare

Rising out-of-pocket healthcare costs, combined with increasing demand from

patients for convenient healthcare options, have created a demand for alternative

sites of care. According to Kaiser Family Foundation, out-of-pocket spending

increased 35% since 2010, averaging $1,315 per person in 2021. Out-of-pocket

spending refers to direct spending by consumers for healthcare, including

copayments, deductibles, and coinsurance, but excluding the amount paid toward

health insurance premiums.

Retailers are stepping in to ll the demand for more cost-

effective care, offering self-pay options with transparent and

xed pricing, and are well positioned to meet the preference

for convenience with their existing physical locations, thanks

to their thousands of stores. These efforts to bring more

affordable healthcare to the communities they serve also

align with retailers’ existing efforts as discount superstores,

enhancing their brand value.

Retailers also recognize the potential to leverage their brand

recognition and immense customer base to expand into

healthcare, which is a massive and growing market. In 2021,

the U.S. spent $4.3 trillion on healthcare, or about $13,000

for every American. By entering this industry, retailers can tap into a new source of

revenue, reducing their reliance on traditional retail sales and shifting their strategy

from products to services as more brick-and-mortar retail transactions move online.

For pharmacy giants like CVS and Walgreens, investing in clinics is also a way to

boost prescription drug sales. Recent expansions into new services, like chronic

disease care, could also help diversify patient mix and offset declines that might

come from competitors in an increasingly crowded market, such as urgent care

centers and direct-to-consumer telemedicine.

Retailers also recognize

the potential to leverage

their brand recognition and

immense customer base to

expand into healthcare...

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

The retailers leading the charge

Most retail clinics (85%) are owned by large retail chains such as CVS, Walgreens,

and Walmart. However, there has been a trend in recent years toward hospitals and

health systems entering the retail clinic landscape by partnering with chains to

support the growing demand for consumer-centric healthcare. Kaiser Permanente’s

partnership with Target is an example of this model. The chart below shows the key

players in the retail clinic space based on share of clinics.

Ninety percent of retail clinics are owned by six organizations. Pharmacy giant

CVS is the biggest player in the nation, with more than half of all retail clinic

sites. The company, which also owns a payor (Aetna) and pharmacy-benets

manager (Caremark), entered the retail clinic market when it acquired MinuteClinic,

founded as QuickMedx, in 2006. Today, CVS also operates enhanced retail clinics

called HealthHUBs that focus on chronic disease management. The company is

doubling down on primary care with the acquisition of Oak Street Health, which

has a network of clinics for seniors on Medicare, and has also acquired in-home

assessment company Signify Health.

Supermarket giant Kroger Health is the second-largest operator through its Little

Clinic business, which it acquired in 2010. The grocery giant has more than 220

retail clinics in 35 states. Kroger has laid out a vision of keeping customers healthy

through “food as medicine” offerings, like telenutrition, food prescriptions, and

nutritional scoring with the goal of preventing disease.

RETAIL CLINIC MARKET SHARE BY NUMBER OF LOCATIONS

Fig. 1 Data from Denitive Healthcare’s Atlas All-Payor Claims for ClinicView product. Based on the

number of retail clinics tracked as of March 31, 2023. Numbers may not add up to 100% due to rounding.

Village Medical

(majority-owned by Walgreens) 8%

Others 11%

CVS Health

(MinuteClinic) 63%

Walmart 2%

Advocate Health Care 3%

Kroger Health (The Little Clinic) 12%

Kaiser Permanente Southern California

(joint venture with Target) 2%

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

Third-largest retail clinic player Walgreens is shifting its strategy from partnering

with healthcare providers to owning them, increasing its stake in primary care

clinic chain VillageMD. The company plans to open 1,000 co-located primary care

practices by 2027, with more than half in underserved communities. Unlike many

retail clinics, this venture focuses primarily on the use of physician providers who

are integrated with pharmacists, nurse practitioners, and social workers.

Walmart is another big player in the retail clinic space. Walmart Health is the

company’s latest iteration of the retail clinic model over the past 15 years. Marketing

itself as a primary care clinic, Walmart is making a push to double its footprint of

in-store clinics. It also offers a co-branded health plan in a handful of counties in

Georgia with Walmart Health clinics.

Other prominent retailers making meaningful moves in healthcare include Amazon,

Best Buy, and Dollar General. While Amazon lacks brick-and-mortar retail clinics,

the company is pushing a consumer experience driven with digital health products,

and it recently acquired One Medical, a membership-based primary care group with

about 125 primary care ofces nationwide. Meanwhile, Dollar General is partnering

with DocGO to pilot mobile clinics, and Best Buy is providing technology to support

in-home hospital care.

To round out the picture of the current retail clinic landscape, let’s look at

geographic trends and clinic usage.

Most retail clinics operate in large metropolitan areas

In 2023, there were more than 1,800 active retail clinics in 44 states. These clinics

were more likely to be located in major metropolitan areas. Only about 2% of

clinics were in rural areas, half of which were owned by CVS. For the same reasons

healthcare providers often don’t locate in these communities, such as workforce

challenges due to low populations, retailers are likewise reluctant to open clinics in

rural areas.

As Fig. 2 shows, most retail clinics are in the Southeast and the Midwest, which

account for 62% of locations. Nearly half (49.1%) of all retail clinics are concentrated

in seven states: Texas, Florida, Ohio, California, Georgia, Illinois, and Tennessee. One

reason for this is population density. These states are some of the most populous

in the country. This makes sense from a business perspective as retailers want to

reach as many customers as possible. Metropolitan areas with the highest numbers

of retail clinics include Chicago, Illinois; Atlanta, Georgia; Dallas, Texas; Phoenix,

Arizona; and Houston, Texas.

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

Retail clinic claims are on the rise

As retailers race to build out their medical clinics across the country, consumers

are ocking in. According to all-payor claims data, retail clinics saw the largest

percentage increase in utilization among traditional and alternative care sites —

including urgent care centers, primary care practices, and emergency rooms (ERs)

— since 2017.

RETAIL CLINICS BY U.S. REGION

Fig. 2 Data from Denitive Healthcare’s ClinicView product. Based on the number of active retail clinics

tracked as of March 31, 2023.

TOP MARKETS BASED ON NUMBER OF ACTIVE RETAIL CLINICS

Rank CBSA # of locations



1 Chicago-Naperville-Elgin IL-IN-WI 113



2 Atlanta-Sandy Springs-Alpharetta GA 83



3 Dallas-Fort Worth-Arlington TX 68



4 Phoenix-Mesa-Chandler AZ 66



5 Houston-The Woodlands-Sugar Land TX 59

34.1%

13.9%

14.8%

9.5%

27.7%

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

Retail clinic claims volumes grew 200% from 2017 through

2022, mainly due to high usage during the pandemic. For

comparison, over the same 5-year period, urgent care claims

volumes climbed 70% while hospital ER claims volumes

decreased 1% and primary care physician claims volumes

dropped 13%.

Retail clinics outpaced other sites of care in large part because

the federal government made national retail pharmacies,

including stores like CVS and Walgreens, a key part of its

COVID-19 vaccination strategy, and more people became

comfortable with receiving vaccinations and getting tested

for COVID-19 at these clinics. Federally purchased COVID-19

vaccines, including boosters, were free to everyone in the U.S.,

regardless of insurance coverage.

As vaccination coverage increased across the U.S., overall retail

clinic use declined from 2021 to 2022. However, by excluding

COVID-19-related procedures, such as SARS-CoV-2 antigen testing, we can see

retail clinic claims volumes were still up by 21% from 2021-2022.

Claims volume growth only reveals so much. To understand what’s driving this

growth, we need to understand what retail clinics are treating.

RETAIL CLINIC CLAIMS VOLUMES OVER TIME

Fig. 3 Analysis of data from Denitive Healthcare’s Atlas All-Payor Claims product from 2017 – 2022.

Retail clinic claims volumes

grew 200% from 2017

through 2022. Over the

same period, urgent

care claims climbed 70%

while hospital ER claims

decreased 1% and primary

care physician claims

dropped 13%.

103% YoY

-6% YoY

12% YoY

-1% YoY

74% YoY

-23% YoY

200%

increase

2017

2022

2017 2018 2019 2020 2021 2022

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

Retail clinics role in acute care and chronic conditions

Retail clinics got their start providing convenient access to basic, nonemergent

care for a limited range of health conditions, from minor illnesses and injuries to

preventive care like vaccinations and physical exams. Increasingly, retailers are

expanding their scope of services beyond acute care to differentiate themselves in

a crowded market. Many are investing in primary care, chronic disease management,

and even behavioral health. By using all-payor claims data, we can gain a better

understanding of the types of conditions retail clinics are treating.

TOP DIAGNOSES REPORTED BY RETAIL CLINICS

Rank Diagnosis description/category % of claims with diagnoses

1 Encounter for immunization 38.8%

2 Contact with and (suspected) exposure to COVID-19 31.2%

3 Type 2 diabetes mellitus without complications 4.1%

Encounter for observation for suspected exposure to other

biological agents ruled out

3.7%

5 Type 2 diabetes mellitus with hyperglycemia 1.8%

6 Chronic kidney disease 1.2%

7 Encounter for screening for respiratory tuberculosis 1.2%

8 COVID-19 1.0%

9 Chronic obstructive pulmonary disease, unspecied 1.0%

10 Acute pharyngitis, unspecied 0.9%

11 Cough, unspecied 0.4%

12 Acute upper respiratory infection, unspecied 0.4%

13 Type 2 diabetes mellitus with diabetic chronic kidney disease 0.3%

14 Dietary counseling and surveillance 0.3%

15 Essential (primary) hypertension 0.3%

Fig. 4 Analysis of data from Denitive Healthcare’s Atlas All-Payor Claims product. Based on claims

reported by retail clinics in calendar year 2022.

Understandably, encounter for immunization (38.8%) was the most common

diagnosis in retail clinics in 2022. Last year, public health ofcials continued to

encourage vaccination and emphasize the importance of booster shots to help

prevent serious illness and death from COVID-19. Prior to the pandemic, an

estimated 50,000 U.S. adults died annually from diseases that could be prevented

by vaccines, highlighting the value of the kind of care retail clinics provide.

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

Encounter for immunization was followed by contact with and exposure to COVID-19

(31.2%) and type 2 diabetes without complications (4.1%). Together, these three clinical

issues comprised nearly three-quarters of diagnoses reported by retail clinics. Other

common diagnoses included sore throat, cough, and upper respiratory infection.

About one in 10 diagnoses at retail clinics were related to chronic conditions,

including diabetes, chronic obstructive pulmonary disease, kidney disease, and

hypertension, showing that people are turning to retail clinics for more than just the

common cold and vaccines. With more than six in 10 adults in the U.S. living with a

chronic condition, the opportunity for retail clinics to become meaningful players

in chronic disease care is vast, especially as retailers evolve clinic offerings from

episodic treatment to primary care.

Many retail clinics treating chronic diseases were physician-led, like Walgreens-

backed Village Medical, or health system-owned, such as Advocate Health at

Walgreens. Given the expertise of health systems and physicians in managing

complex patients and conditions, as well as the trust in traditional healthcare

providers for chronic and specialty care, it’s not surprising that retail clinics managing

these diseases have strong collaborations with traditional healthcare providers.

As free COVID-19 tests and vaccinations are phased out, we expect the growth

rate of retail clinic use to slow down. However, retail clinics will continue to play an

important role in healthcare delivery, especially as retailers branch out to offer a

wider range of services, from chronic disease management and primary care to

mental health and wellness programs.

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

Part II: What are the implications for

patients and providers?

The explosive growth of retail clinics presents a host of both opportunities and

potential challenges. For patients, retail clinics offer a cost-effective and convenient

alternative to conventional healthcare settings such as physician ofces. Retail

clinics are also promoted as a solution to low-income areas that lack access

to medical resources. At the same time, provider groups have raised concerns

about quality-of-care issues and the disruption of established patient-physician

relationships. In this section, we’ll explore the potential impact of these new market

entrants on patients and traditional healthcare providers, such as:

Æ More affordable care at lower costs

Æ Breaking down barriers to access

Æ Fewer trips to the ER

Æ More fragmented care but high quality

More affordable care at lower costs

About half of U.S. adults say they have difculty affording healthcare costs,

according to Kaiser Family Foundation. Uninsured adults are more likely to report

this, although those with health insurance are not immune to high healthcare costs,

which can prevent people from seeking needed

care. For example, the recent growth in the

prevalence of high-deductible health plans

(HDHPs) has created more sensitivity to out-of-

pocket costs for many insured people.

Retail clinics have long been viewed as an

antidote to more expensive care settings,

such as physician ofces and emergency

departments. Using all-payor claims data from

our Atlas Dataset, we can see how much retailers

are billing for certain diagnoses relative to

other care settings. The table below summarizes the average charge per claim for

common diagnoses across outpatient care settings.

Based on an analysis of the most common diagnoses reported by retail clinics,

retailers deliver care at a signicantly lower cost than other sites of care. For the

10 most common diagnoses, the average charge per claim on aggregate was $38

less than claims submitted by urgent care centers, $471 less than claims submitted

For the 10 most common

diagnoses, the average charge

per claim on aggregate was

$38 less than claims submitted by urgent

care centers, $471 less than claims

submitted by physician ofces, and $746

less than claims submitted by hospitals.

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

by physician ofces, and $746 less than claims submitted by hospitals. About

two-thirds of retail clinic visits are paid for with health insurance, so these ndings

suggest considerable savings for payors.

For uninsured patients, retail clinics offer a menu of services with transparent and

xed pricing, and services typically cost less than the same services offered in

urgent care centers, physician ofces, and emergency rooms. For example, prices

for most services at the largest retail clinic operator (MinuteClinic), from illnesses

and infections to tests, screening, and physicals, ranged from $99-$139 in 2022.

These clinics can provide more cost-effective care because they use less expensive

providers such as nurse practitioners and physician assistants, deliver care in

smaller settings, and generally focus on low-acuity conditions.

While retail clinics provide care that costs less than other settings, some studies

suggest retail clinics could drive up overall healthcare spending by complementing

physician care instead of replacing it, generating new medical visits that patients might

not have otherwise pursued. While these added visits could have long-term health

benets, the ability of retail clinics to impact overall healthcare spending is unclear.

AVERAGE CHARGE PER CLAIM FOR COMMON RETAIL CLINIC DIAGNOSES

ICD-10 description

Retail

clinic

Urgent

care center

Physician

ofce

Hospital

outpatient

Encounter for immunization $104 $154 $241 $379

Contact with and (suspected) exposure to

COVID-19

$86 $326 $467 $891

Type 2 diabetes mellitus without complications $160 $239 $367 $505

Encounter for observation for suspected exposure

to other biological agents ruled out

$209 $296 $296 $442

Type 2 diabetes mellitus with hyperglycemia $255 $263 $639 $1,325

Chronic kidney disease $607 $424 $1,500 $1,967

Encounter for screening for respiratory

tuberculosis

$52 $154 $149 $388

COVID-19 $205 $348 $2,135 $2,072

Chronic obstructive pulmonary disease,

unspecied

$491 $287 $883 $978

Acute pharyngitis, unspecied $251 $308 $456 $929

Fig. 5 Analysis of data from Denitive Healthcare’s Atlas All-Payor Claims product. Based on the most

common diagnoses reported by retail clinics in 2022. Note that while charges may not reect actual

payments received by providers, they can be useful in understanding the relative cost of services in

different settings.

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

As more consumers adopt alternative care sites, it will be important to educate

consumers on the appropriate use of retail clinics to prevent the overuse of services.

Breaking down barriers to access

Although demand for healthcare services is expanding with the growth and aging of

the U.S. populace, the country’s access to primary care physicians does not appear

to be keeping pace with service needs. According to federal data, the U.S. could see

a shortage of about 14,000 primary care physicians by 2035. Moreover, the typical

wait time for a primary care provider was 26 days last year.

Quick-access clinics like retail clinics, which are typically staffed by advanced

practitioners, can be one part of the solution to improving access to basic healthcare,

providing a stop-gap measure for the growing

physician shortage. About one-third of the

U.S. urban population already lives within a

10-minute driving distance from a retail clinic.

Supporters of the retail clinic model have

long touted their ability to improve access to

healthcare, particularly among certain disadvantaged groups, including low-income

populations and those with little access to primary care physicians. However, the

unequal distribution of retail clinics across neighborhoods presents a challenge.

As described earlier, few retail clinics operate in rural areas. Yet rural areas tend to

have fewer healthcare providers, including physicians, advanced practice providers,

and other healthcare workers. The population is generally older and sicker and

fewer people have health insurance compared to urban communities, meaning rural

areas could benet the most from retail clinics.

Most retail clinics operate in geographic areas with higher median incomes, in part

to attract — or respond to demand from — a more afuent-patient mix. Additionally,

areas with retail clinics tend to have higher concentrations of white residents, fewer

Black and Hispanic residents, and fewer people living in poverty compared to the

national average.

While retail clinics are indeed widespread and easily accessible to large swaths of

the population, these clinics do not currently appear to be improving access to care

for underserved populations, since most retail clinics are not preferentially located

in underserved communities. If retail clinics are to be part of the solution to provider

shortages in underserved communities, they will need to open their doors in these

communities.

...the unequal distribution of retail

clinics across neighborhoods

presents a challenge.

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

Fewer trips to the ER

Due to barriers to access, like long wait times and limited after-hours care at

physician ofces, U.S. patients seek a signicant amount of non-emergent care

at emergency departments (ED), which can lead to overcrowding and excessive

healthcare spending. One study estimates between 13.7% and 27.1% of all ED visits,

or up to 1 in 4 visits, could be treated at alternative care sites, freeing up hospital

resources for more urgent medical conditions and reducing ED wait times.

At least one study found retail clinics reduce emergency room use by 3-13% for

preventable conditions and 6-12% for minor acute conditions among local residents

— a promising nding for health systems and hospitals, given the increasing demand

for healthcare services and the growing physician shortage. By diverting patients to

retail clinics for non-emergency care, providers at health systems and hospitals can

direct resources toward patients most in need.

PERCENTAGE OF RETAIL CLINICS BY MEDIAN INCOME

Fig. 6 Data is from Denitive Healthcare’s ClinicView product. Based on the number of active retail

clinics tracked as of March 31, 2023.

40%

35.4%

<$15,000 $15,000 to

$34,999

$35,000 to

$49,999

$50,000 to

$74,999

$75,000 to

$149,999

$>150,000

33.2%

0.8%

0.3%

8.6%

21.7%

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

More fragmented care but high quality

Despite their apparent value to many patients, retail clinics have also generated

controversy. A major criticism of retail clinics by traditional providers is that they lead

to fragmentation of care and erode relationships between patients and primary care

physicians, once considered central to care coordination. Some physicians worry

that by displacing primary care visits, retail clinics could harm continuity of care.

Studies have found most retail clinic customers do not have

a primary care physician, meaning there is typically no care

continuity or patient-physician relationship to disrupt. Retail clinics

seem to serve a population that does not seek care in physician

ofces but might instead seek care at urgent care centers or

hospital emergency rooms (ERs). In one survey, 26% of retail clinic

patients said they would have sought care in an ER if a retail clinic

was unavailable and 18% said they would have visited an urgent

care center. Uninsured patients were signicantly more likely to

say they would visit an ER.

But for those who did visit a retail clinic and had a primary care

physician, patients were not being referred back to their primary

care physician following a clinic visit, indicating a lack of care

continuity between retail clinics and primary care. Minimal primary

care physician follow-up could also impact referral patterns,

reducing downstream revenue opportunities for health systems and physician

groups. To remedy this, stronger relationships between retail clinics and primary

care physicians are needed.

Provider groups, such as the American Medical Association and the American

Academy of Family Physicians, have also raised concerns about sub-standard care

and overprescribing of antibiotics. However, the evidence suggests otherwise. A

RAND study of 12 quality-of-care measures found retail clinics, physician ofces,

and urgent care centers had similar quality ratings. Researchers also found antibiotic

prescribing is more guideline-concordant at retail clinics than in primary care ofces

or emergency departments.

In one survey, 26% of

retail clinic patients said

they would have sought

care in an ER if a retail

clinic was unavailable

and 18% said they

would have visited an

urgent care center.

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

Part III: How should traditional

healthcare providers respond?

In the nal part of this report, we’ll consider how traditional healthcare players

should respond to the emerging role of retailers in the healthcare industry and

explore different strategies that incumbent healthcare organizations can pursue to

stay competitive. They are:

Æ Be open to partnerships with retail care

Æ Consider health system ownership models

Æ Adopt retail-like strategies to compete

The section will also discuss the importance of the customer experience.

Be open to partnerships with retail care

While retailers are disrupting healthcare delivery in the U.S., many healthcare

organizations do not view retail clinics as a threat, but rather as an opportunity. As

retail clinics become an increasingly

popular destination for consumers

seeking healthcare services, it behooves

traditional healthcare organizations to

develop a relationship with them.

As a partner, retailers have several

strengths: ease of access for the

consumer, expertise in consumer

engagement, prociency in protocol-driven processes, robust consumer data

analytics, and experience operating in a high-volume, low-cost environment. Retail

clinics can also provide an important referral stream for primary care physicians and

specialists – by partnering with the MinuteClinics and the Little Clinics of the world,

traditional providers can capture these referral opportunities.

One of the highest-prole collaborations is Kaiser Permanente’s partnership with

Target. Kaiser and Target offer retail clinics located in Target stores in Southern

California, with care provided by Kaiser Permanente-employed clinical staff. These

clinics, named Kaiser Permanente Clinic at Target, offer a broader range of services

than are typically available at a retail clinic. Unlike most other Kaiser facilities,

services at these retail clinics are available to Kaiser members and nonmembers.

For Kaiser, the value of these clinics lies in expanding access to the health system’s

services and attracting new members by creating additional entry points to care

in high-trafc retail locations — without signicantly investing in infrastructure. For

As retail clinics become an

increasingly popular destination

for consumers seeking healthcare

services, it behooves traditional healthcare

organizations to develop a relationship with them.

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

Target, the advantage is a well-established and trusted health system brand that

can draw customers into its stores.

In other states, Target offers retail healthcare through CVS subsidiary MinuteClinic.

CVS has a vast network of health systems and hospital partners, including the

Cleveland Clinic, Dignity Health, and UMass Memorial Health Care, to support

MinuteClinic consultations and referrals. In 2019, CVS MinuteClinics made 4 million

referrals to primary care providers for patients with more complex care needs. And

under the Cleveland Clinic partnership, the retailer and health system developed

joint clinical programs to address high rates of chronic disease. Electronic health

record (EHR) interoperability is a focal point of the partnership.

EHR VENDOR MARKET SHARE IN 2023

Fig 7. EHR market share based on implementation. Data is from Denitive Healthcare’s HospitalView

product and is accurate as of March 31, 2023. Data is proprietary and updated on a continuous basis.

Regardless of how a partnership is structured, a robust information technology

structure that supports care coordination between partners is essential to success.

Health systems and hospitals are already well-resourced on this front—virtually all

have electronic health record systems (EHR) in place. As shown above, nearly 80%

of health systems and hospitals leverage three major EHR platforms: Epic Systems,

Oracle Cerner, and MEDITECH. Retailers are also bolstering EHR infrastructure,

much of which hails from Epic Systems, to advance EHR interoperability. To ensure

consistent care, clinical protocols for conditions cared for at retail clinics should be

embedded in electronic medical systems, alongside established referral processes

to drive referrals to health system-afliated primary care physicians.

Epic Systems 40.3%

Veradigm Inc. 2.7%

athenahealth 1.7%

Others 1.3%

Propriety software 1.8%

Netsmart Technology 2.2%

Altera Digital Health 3.2%

MEDHOST 3.7%

Evident, a CPSI Company 7.6%

MEDITECH 14.1%

Oracle Cerner 23.4%

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

Consider health system ownership models

Consolidation continues to take ight across the healthcare landscape as hospitals

and health systems pursue mergers and acquisitions to strengthen their hold in

certain markets, increase their scale, and expand their service offerings. A health

system could acquire retail clinics to grow its ambulatory footprint and bring new

access points to convenient care in certain markets. Healthcare systems have strong

local brands, nurse practitioners to staff clinics, and physicians for oversight. They

can also generate demand within the communities they serve based on trust. Any

health system pursuing this route should have direct experience operating a retail-

like clinic, such as community primary care clinics or employer worksite clinics.

Retailers that have built their own retail clinic operations but want to divest may

consider selling these operations to a health system in their local market. In 2019,

Walgreens shuttered about 160 in-house retail clinics to focus on health system

partnerships and test new clinic models that target more complex health issues.

The company shifted ownership and operations to several health systems, including

Chicago-based Advocate Health Care and Atlanta-based Piedmont Healthcare.

These health systems benetted from already-established clinic spaces and full

control over clinic operations.

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

Adopt retail-like strategies to compete

Patients today, many of whom grew up in the age of the internet, expect their

healthcare experience to reect the same level of convenience and accessibility as

the rest of their digital lives. But many traditional

healthcare providers have been slow to adapt

and remain entrenched in outdated and

inefcient service practices.

In contrast, retail clinics are tapping into the

growing demand for easy access to care and

leading the way towards more consumer-centric

care options — and consumers are swarming in.

By prioritizing the patient experience and offering frictionless care delivery, retailers

are setting a new standard that traditional healthcare providers will need to meet to

compete in today’s changing healthcare landscape. Traditional healthcare providers

should take a cue from these new market entrants and embrace retail strategies to

optimize their services and improve the patient experience.

So, what does this look like in practice? It could mean offering extended hours

and walk-in appointments to provide patients with the care they need, when they

need it. A Robert Wood Johnson analysis found 59% of consumers chose a retail

clinic over another primary care facility because the hours were more convenient,

while 56% chose to use a retail clinic because there was no need to make an

appointment. Fig. 8 below highlights other major reasons for choosing a retail clinic.

MAJOR REASON FOR CHOOSING A RETAIL CLINIC

Fig. 8 Categories are not mutually exclusive; respondents could select multiple categories. Source: HSC 2010 Health Tracking

Household Survey

Hours were more convenient

No usual source of care

Cost was lower

% of respondents

Location was more convenient

No need to make an appointment

0% 20% 40% 60%

58.6%

55.9%

48.1%

38.7%

24.6%

...retail clinics are tapping into

the growing demand for easy

access to care and leading the

way towards more consumer-centric care

options — and consumers are swarming in.

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

Another possible strategy is to employ online scheduling and check-in processes

and offer telemedicine services. A survey by Kyruus found half of consumers said

online booking was extremely or very important when selecting a provider, and 41%

said virtual visit options were extremely or very important. According to the same

survey, younger generations placed higher value on self-service options like online

scheduling and virtual visits. For Gen Z, virtual visits (42%) were more important than

online scheduling (29%) whereas Millennials weighed virtual visits (37%) and digital

self-service scheduling (37%) in equal measure. By providing virtual visits, traditional

providers can offer patients the convenience of retail clinics while maintaining the

long-term, relationship-based care associated with traditional physician ofces.

Finally, healthcare providers working to enhance consumer-centered healthcare to

compete with retailers could implement patient-rst billing strategies and greater cost

transparency. Less than half of healthcare consumers understand their medical bills.

What’s more, 51% of patients have been late on a medical bill, with many citing confusion

as a reason why. Most patients want to understand their nancial responsibility upfront

and receive simpler medical bills. Healthcare providers can leverage technologies like

electronic and text-based billing to deliver a more retail-like payment experience. They

could also offer exible payment options to boost patient loyalty.

Ultimately, the best patient experiences are those that put patients at the center of

their care journey. Retailers know that convenience, affordability, and technology are

all critical components to crafting patient experiences that engage consumers with

their brands. By embracing these components of the retail clinic model, traditional

healthcare organizations can preserve market share while delivering consumer-

friendly healthcare that better serves patients.

Retailers in healthcare: A catalyst for provider evolution

MAY | 2023

Methodology

Information in this report was gathered and analyzed in March 2023. Data is from

a variety of sources, including Denitive Healthcare products. All data points

referenced are cited and linked throughout.

Healthcare provider information in the ClinicView and PhysicianView products are

sourced from the NPI registry, Physician Compare, all-payor claims, and proprietary

research. Our teams incorporate updates monthly and currently track more than 2.5

million healthcare providers.

Data from the Atlas All-Payor Claims product is sourced from multiple medical

claims clearinghouses, revenue cycle management rms, and practice management

software platforms in the U.S. and updated monthly. When possible, full calendar

year 2022 is used.

Denitive Healthcare denes a retail clinic as a facility that provides non-emergency

care to patients in a convenient retail setting (e.g.,grocery store, pharmacy, etc.)

These walk-in clinics are typically staffed by nurse practitioners and physician

assistants and treat a range of minor injuries and illnesses. Physicians may be

afliated with a given retail clinic,butit is not required.

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