Will retail medicine alter R.I.’s health care landscape?

A NEW MODEL: Dr. Nicole Alexander-Scott, Rhode Island's newly appointed health director, meets with acting Chief of Staff Steven Boudreau. Alexander-Scott said she is working to find
A NEW MODEL: Dr. Nicole Alexander-Scott, Rhode Island's newly appointed health director, meets with acting Chief of Staff Steven Boudreau. Alexander-Scott said she is working to find "that balance of where the retail-medicine model can be helpful." / PBN FILE PHOTO/ MICHAEL SALERNO

A woman walks into a CVS/pharmacy to get a prescription filled. While she waits, her child sees a nurse practitioner at an in-house clinic to get a lingering cough checked out. While the child is examined and treated, the woman picks up her prescription, along with some medicine for the child and perhaps some toiletries and a few snacks, and they are on their way.

No long wait in a hospital emergency room or a doctor’s office. No disruption of busy work or family schedules trying to get an appointment just to be seen for routine care.

This is the essence of retail medicine. It’s the latest iteration of easy-access care that’s forcing doctors, hospitals and insurers in Rhode Island and across the country to take notice, as they brace for federally mandated changes designed to stem the ever-rising costs of health care delivery.

Seven CVS/pharmacy MinuteClinics have opened in Rhode Island since October, and the company has more than 900 nationwide. Its clinics also will be coming to department stores across the country, once a deal to acquire Target Corp.’s pharmacies and clinics for $1.9 billion closes. They’ll be competing with other corporate giants – such as Walgreens Boots Alliance Inc., Walmart Stores Inc. and Rite Aid Corp. – that have also adopted the retail-medicine model.

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Between 2006 and 2014 the number of retail clinics nationwide increased from 200 to 1,800, according to a study by Manatt Health, a business advisory health care practice, and the Robert Wood Johnson Foundation.

“Basically, what’s happening in the entire industry – and Rhode Island isn’t exceptional – is a push toward a noncostly alternative for primary care,” said Sam Mirmirani, chairman of the economics department at Bryant University.

Woonsocket-based CVS Health Corp. says there’s no immediate plan to expand MinuteClinics in Rhode Island, but Dr. Nancy Gagliano, senior vice president, chief medical officer of MinuteClinic, says the company is offering a solution to an unmet demand in Rhode Island and elsewhere in the nation.

“There’s a primary care shortage,” Gagliano said pointedly. “There is not enough to cover the access needs.”

HOW DID WE GET HERE?

Thirty to 35 years ago a patient’s health care options – for the most part – existed at the hospital.

Doctors took care of patients at hospitals. Hospitals housed doctors.

“That’s gradually changed,” said Dr. Michael Fine, former Rhode Island director of health.

Fine points to the 1975 industry-changing U.S. Supreme Court decision, Goldfarb vs. Virginia State Bar, which effectively ended the legal profession’s exemption from antitrust laws, as a pinnacle moment for the health care industry, because primary care physicians and other specialists began stepping out on the hospitals. The nationwide trend of doctors setting up their own practices and hiring their own professionals in the industry put competitive pressure on the hospitals.

Then came standalone clinics.

Philemon Marvell in the late 1970s practiced medicine at a hospital before deciding to branch out and open several urgent-care centers around southeastern Massachusetts and Rhode Island. He opened 10 separate facilities over the next two decades, offering a wide variety of urgent and ambulatory care, also putting competitive pressure on hospitals.

Marvell was forced to sell off or close all of his clinics in the early 2000s, after his medical license was suspended for personally failing to adhere to the minimal standard of care and failing to adhere to regulatory requirements of recordkeeping, according to the R.I. Department of Health. The clinics operated under his license, so he could no longer run them after he lost it, Marvell said.

“We were not a rip off and our cost was one-third the cost of the hospitals,” Marvell said. “A lot cheaper than the emergency room.”

Other urgent-care centers further expanded the market, though a large void still existed for the indigent in underserved areas. That led to growth in community health centers and free clinics.

Today, the Rhode Island Health Center Association, established in 1972, reports nine organizational members with 30 community health locations across the state. There are two free health clinics in Providence, according to the CVS Health Corp.’s website. And there are 18 urgent-care clinics in Rhode Island, according to urgentcarelocations.com, an online directory of urgent-care centers in the United States.

George Vafidis and his brother, Dr. Constantine Vafidis, opened Primary Medical Center & Walk-In LLC in East Providence last November. Vafidis, now chief financial officer, says they chose the Warren Street location because research showed the area to be underserved.

Shortly after opening up the clinic, Vafidis said they took on about 15-20 patients a day, which has grown to now be more than 40 patients a day. The demand for easy-access care is so great, Vafidis says, that if you have the right doctor and a good business plan the opportunity is there.

“Anyone could open right next to us and we’ll still be busy,” Vafidis said. “We didn’t do any advertisement, other than some direct mail at the beginning, but we’re just getting busier and busier.”

CVS and its competitors have taken consumer convenience a step further, establishing or buying retail clinics and putting them inside pharmacies.

“The retail clinics are filling a market void, and they will continue to be relatively successful until the primary care physicians are able to fill that void,” said Dr. Augustine “Gus” Manocchia, chief medical officer of Blue Cross & Blue Shield of Rhode Island.

COMPETITION FOR DOCS?

In 2010 Rhode Island’s population to primary care physician ratio was 1,345 people to every one physician, according to a 2013 study conducted by the Robert Graham Center.

The ratio was slightly less than the national average of 1,463 people to every one physician, but in order to maintain the status quo, Rhode Island would require an additional 99 primary care physicians by 2030, representing a 12 percent increase from the 830 registered in 2010, according to the study.

The Washington, D.C.-based Graham center’s projections are based on increased volumes of health care utilization via a graying populace, population growth and a greater amount of insured Rhode Islanders coming online largely because of the federal Affordable Care Act.

“Right now we don’t have enough primary care physicians, so that means that they are basically overwhelmed with the number of patients,” Mirmirani said. “So we have CVS, Walmart, Walgreens, etc., getting into the market.”

From a business perspective, Fine says, the easy-access care model is tapping into the primary care physicians’ idiomatic “bread and butter.”

“[Physicians’] economic survival depends on their ability to treat the sore throats and rashes. The more complicated conditions – they’re not well-paid for,” Fine said. “The danger is that from a business-model perspective, we’re peeling away their margins.”

Physician advocate Steven R. DeToy, director of government and public affairs at the Rhode Island Medical Society, says MinuteClinics could be a “great help” to providers if they stick with the basic services offered currently. But he’s wary issues might arise down the road, especially if clinics try to become something more. He says that could further fragment an already disjointed system of care.

“Unfortunately, we see many of these [retail clinics] trying to replace the physician’s office and trying to make more and more [services] available,” DeToy said. “Clearly, it’s a business for CVS. By bringing someone into their pharmacy they have an opportunity to sell them things.”

Manocchia says Blue Cross has signed a contract to cover some of the services offered at MinuteClinics, but hasn’t analyzed yet how many customers are using the clinics.

“I know there’s a lot of primary care physicians who don’t like them for a number of reasons, but the fact is that patients want that kind of convenience,” Manocchia said. “If primary care physicians were providing that kind of access and availability after hours and weekends, there would be no need whatsoever for MinuteClinics.

“CVS is really filling a void that exists because primary care physicians have not been providing that service for years,” he said.

Manocchia believes primary care physicians should be in charge of patients’ care. He hopes that a group of doctors will end up coming together on a rotating basis to expand hours and provide more urgent care to patients.

Walmart and Walgreens have no immediate plans to enter the Rhode Island market, but Walgreens spokesman Jim Cohn didn’t rule it out, writing in an email that the company is “continually evaluating new markets.” There are 43 Rite Aids, 24 Walgreens and nine Walmarts in Rhode Island. The state also has 60 CVS/pharmacies and four Target stores.

For now, CVS could open as many additional MinuteClinics as it wants under the purview of its current license, according to newly appointed R.I. Health Director Dr. Nicole Alexander-Scott, but any other corporation or entity would have to go through the licensure process with the department’s Health Services Council. Licensing is one way Alexander-Scott sees the state playing a role in making sure any new health care providers fit in with the state’s strategic goals in health.

“My perspective is finding that balance of where the retail-medicine model can be helpful,” Alexander-Scott said.

Mirmirani, however, predicts that the retail clinics could really impact the health care market in the next few decades.

“The impact isn’t going to be as much as PCPs might anticipate right now, in terms of financial markets, but … they are going to be facing competition – no doubt,” Mirmirani said.

HOSPITAL IMPACT

Beyond the idea of providing care a few feet from the chip and soda aisle, retail clinics differ from other standalone clinics in other ways too.

Prior to the 2000s, the state mandated that at least one in-house doctor must be a part of all standalone clinic operations. This changed in the last decade when the legislature passed a law allowing organized ambulatory care facilities, of which MinuteClinics are licensed as, to have a physician as a “medical director” that’s accessible during hours of operations, but doesn’t necessarily need to be onsite. The locations can thus be staffed by nurse practitioners and – in some locations – physician assistants, according to the R.I. Department of Health.

Only one urgent-care center in Rhode Island – Garden City Treatment Center Inc. – is licensed through the Department of Health while the others are technically run as physician offices, which can employ nurse practitioners and physician assistants, according to the department.

The strategy has expanded access by allowing more providers, but simultaneously limits the type of service a patient might find at a retail clinic compared with a hospital or health center.

Dr. James Fanale, medical director of Care New England’s Integra Community Care Network, doesn’t think the MinuteClinic model currently represents much competition to hospitals.

“In Massachusetts … emergency-department visits have not declined and there [are] certainly a lot of MinuteClinics there,” Fanale said.

Massachusetts first approved “limited-service medical clinics” in 2008, which cleared the way for CVS to open MinuteClinics, and today there are nearly 60 MinuteClinics throughout the state.

Fanale agrees with others the emergence of retail clinics occurred because the system doesn’t have enough access to care. He added that Care New England over the next six months is going to develop programs that address this very issue, but declined to provide details.

Marvell says hospitals were slow to react to his model of care in the late 1970s, and he suspects the same could be true with the emergence of retail medicine.

“That was the biggest profit years for me when they hadn’t figured it out,” he said.

Marvell said hospitals eventually opened a fast-track option in emergency rooms to treat people with minor issues, but the same overcrowding in hospital emergency rooms that drove Marvell to open the competing clinics in the 70s is still an issue today.

Thirty-one minutes is the average wait time for a Rhode Island patientat the emergency room, according to ProPublica.org. That’s longer than the national average of 24 minutes.

Some institutions, such as Kent County Hospital in Warwick and Memorial Hospital in Pawtucket, have implemented new protocols to keep emergency waiting times down, effectively offering more convenient access while maintaining the breadth of services available at hospitals.

Regardless, Gagliano says, MinuteClinics still beat hospitals when it comes to cost, adding that clinics charges anywhere between 40-80 percent less than what’s charged for an emergency room visit.

So far, however, the Hospital Association of Rhode Island has stayed mum on the emergence of retail medicine, said spokeswoman Amanda Barney.

Fanale, who said he has no gripe with MinuteClinics, does worry – like the physicians – that retail medicine could create more fragmentation in the industry.

“Instead of patients going to see their primary care physicians they [may go] to MinuteClinics because it’s convenient,” Fanale said.

Fine, who stepped down as the state’s top doctor earlier this year, took an initiative with him to develop and implement a collaborative model of care called “neighborhood health stations.” He’s currently in the process of opening a pilot station in Central Falls, which he hopes will prove the model and be the start of a paradigm shift in care, in which specialists within the health care industry come together to focus on providing health care services, but also act as health and wellness advocates within the communities they serve.

“I think hospitals are going to be the most challenged health care organization of the next 20 years,” Fine predicted. “If the rest of us are good at what we’re doing, hospital [visits] should drop by 40-50 percent and their volume will diminish. If it doesn’t diminish than we’re going to be a collaborative failure.” •

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