Retail Clinics Report (Part II): Driving Pharmacy Business Diversification – Four Chronic Conditions at the Core of Retail Clinic Utilization

Establishing clinics within chain pharmacies, where family physicians and general practitioners provide services—a model known as “retail clinics”—is still uncommon in China but has become commonplace in the United States. Particularly since the implementation of the Affordable Care Act (Obamacare), retail clinics have emerged as the fastest-growing segment in the U.S. pharmacy industry and have become an indispensable component of primary care. Due to advantages such as convenience, speed, affordability, and insurance reimbursement eligibility, retail clinics have gained increasing favor among major U.S. retail giants and patients over the past few years.

In October, Deloitte released the “2016 U.S. Health Care Consumer Survey.” VCBeat has excerpted the core content of the report, which is published in two parts. This year’s Deloitte Health Care Consumer Survey provides a comprehensive analysis of the role retail clinics can play in chronic disease management amid the healthcare system’s transition from fee-for-service (FFS) to value-based care, as well as how they should meet the needs of the healthcare system. In Part I, we introduced the respective roles of retail clinics and healthcare systems in their collaborations and the corresponding partnership models, whileOpportunities and Challenges Brought by Cooperation Will Be Introduced in the Next Article, see below for details.

Retail clinics are not suitable for the management of all chronic diseases. To succeed in this field, it is essential to first identify which chronic care services are appropriate for delivery in retail clinic settings. In fact, to ensure the economic viability of chronic care services, retail clinics should meet the following three criteria:

1. Common Conditions. For the treatment of common diseases, professional expertise can be expanded. Retail clinics operating physical locations can develop specialized knowledge in a specific disease market (such as diabetes) and transfer it to others. Furthermore, retail clinics may choose to pursue depth rather than breadth when treating common conditions. Retailers can develop a comprehensive suite of services centered around one or more related conditions, such as testing and monitoring, health coaching, nutritional counseling, and medication therapy management.

2. Conditions with well-established clinical guidelines. Clear clinical guidelines can standardize the treatment process, enabling retail clinics to fully leverage their low-cost staffing model by having nurses and physician assistants provide care under minimal physician supervision. Research indicates that mid-level healthcare practitioners (such as nurses) may be better suited than physicians for delivering routine chronic disease management services.

3. Conditions for which more frequent patient interactions have been proven to improve clinical outcomes. Many of the expected patients/members of retail clinics are likely regular customers of the pharmacy where the clinic is located, thus enabling frequent face-to-face contact. The effectiveness of many disease management interventions is positively correlated with the frequency of patient consultations. For retailers, selecting conditions for which there is existing evidence supporting a link between consultation frequency and treatment outcomes will yield greater efficiency with less effort. The opportunity for face-to-face contact in retail clinics can further strengthen this connection, as numerous studies have shown that interpersonal, in-person communication is more effective than other intervention methods (such as telephone consultations, self-care, and online medical services).

The report identified four chronic conditions—high cholesterol, hypertension, diabetes, and asthma—as meeting the aforementioned criteria. Furthermore, retail clinics are poised to make significant inroads in areas such as chronic heart failure (CHF), chronic obstructive pulmonary disease (COPD), transitional care (post-discharge), obesity, and even HIV/AIDS.

However, if retail clinic operators seek to extend their chronic care expertise to new markets beyond the aforementioned conditions, they may face a dilemma stemming from a lack of specialized knowledge. Therefore, it is recommended that retailers evaluate opportunities in each disease-specific market on a case-by-case basis, taking into account factors such as disease prevalence, physician workforce availability, the structure of local healthcare providers, and potential partners for value-based care services.

Appropriate patient positioning is also crucial to the success of supplier-retailer partnerships. For patients who lack a primary care provider (PCP, i.e., those within the scope of family physicians or general practitioners), it is highly effective for retailers to establish chronic care services. In the United States, one-quarter of the population does not have a PCP; among patients visiting retail clinics, this proportion rises to 60%.

Currently, users of retail clinics are younger and in relatively better health than the general patient population or those who utilize primary care physicians (PCPs). However, even within this relatively low-risk group, early diagnosis, assessment of chronic disease risk, and integration into the healthcare system can benefit all stakeholders involved in healthcare delivery.

Another target demographic for retail clinics is patients with chronic diseases who struggle to access care within the traditional healthcare delivery system. The barrier to access for these patients often stems from a simple reason: they are too busy. Patients are often preoccupied with school, work, or family commitments, making it difficult for them to visit healthcare providers for consultations and follow-up appointments on schedule; in some cases, months may pass before they can find the time for a single visit. Furthermore, cultural and socioeconomic factors also hinder their access to medical services. For example, Hispanics represent the ethnic group with the lowest frequency of medical consultations in the United States, due to issues such as language barriers, differing cultural beliefs, low insurance coverage rates, and demanding work schedules. For these patients, retail clinics may be an optimal choice, leveraging their convenient locations, cultural competence, and experience in influencing consumer behavior.

From the perspective of health plans, the involvement of retail clinics in chronic disease management is also highly valuable. In the United States, 86% of all healthcare expenditures are attributed to patients with chronic conditions; among commercially insured populations, potentially avoidable complications from six chronic diseases (congestive heart failure, heart disease, diabetes, hypertension, COPD, and asthma) account for 29% of treatment costs. By enabling patients with chronic diseases to engage in appropriate medical care at an earlier stage, retail clinics hold substantial potential for cost savings.

As collaboration between healthcare systems and retailers deepens, both parties will face challenges. First, regardless of the cooperation model adopted, the following factors should be considered:

1. The fundamental element of an effective partnership is healthcare IT infrastructure. A robust healthcare IT infrastructure enables both parties to share clinical information and supports coordination between partners. Currently, all major retail clinic operators in the United States have invested in electronic medical record (EMR) systems and have embedded treatment protocols offered at retail clinics within these EMRs. However, in practice, because vendors’ and retailers’ EMR systems are often incompatible, their ability to share clinical data remains difficult to enhance.

2. In many disease-specific markets, local physicians serve as medical directors for retail clinics; these physicians conduct telephone consultations and perform regular reviews of patient records. As retailers expand their operations into the field of chronic disease management, this staffing model is expected to persist. The level of physician oversight, as well as the frequency and volume of communication between retail clinics and practicing physicians, are likely to increase.

3. In clinical collaborations with health systems, retail clinics are typically responsible for implementing the health system’s protocols and ensuring consistency in healthcare delivery. This study indicates that, given the limited range of common conditions that retail clinics can manage, the development and implementation of clinical protocols should be relatively simple and straightforward.

4. Given that referral relationships involve retail clinics, primary care providers (PCPs) affiliated with healthcare systems, and emergency medical facilities, referral processes should be established and integrated into electronic medical records (EMR) or medical practice management software.

5. Designing and implementing value-based contracts remains highly complex, requiring consideration of factors such as patient attribution, estimation of future utilization, application of appropriate quality metrics, and determination of risk-sharing arrangements.

In addition, both parties should pay special attention to the following aspects:

Determine the Business Model

A retailer’s primary business focus will shape the service orientation or priorities of its clinics. For example, pharmacy companies may choose to concentrate on medication-related healthcare services—such as medication adherence solutions, medication reconciliation, or pharmacist-led health coaching—while general merchandise retailers may specialize in services like nutritional counseling, health education, and community health. In any case, retail clinics can serve as a highly valuable complementary business for retailers, driving diversification of pharmacy operations and increasing foot traffic to stores. By engaging in chronic disease management, retail clinics can improve patient adherence to maintenance medications, thereby generating repeat business and potentially expanding pharmacy volume, ensuring that the clinics at least break even.

Establish Quality and Utilization Goals

As part of value-based healthcare reimbursement, the performance of retail clinics will be measured based on their service quality and utilization rates. This study does not recommend designating retail clinics as primary care providers (PCPs) for the purpose of assigning patients to them, because it is difficult to hold retail clinics accountable for medical quality or outcomes if they lack a certain level of clinical capability. Nevertheless, retail clinics can still deliver value-based healthcare services. For example, their contribution to quality metrics can be assessed based on the volume of visits from patients with specific conditions, with eligible visits identified through diagnostic codes.

Achieving Interoperability

Conceptually, the involvement of retailers in continuous care is no different from that of participants in other clinical integration initiatives. The challenge of ensuring compatibility and connectivity among disparate EMR systems is not unique to retail clinics and their partners; indeed, retail clinic operators appear to be further ahead than many community healthcare providers in terms of EMR adoption. However, this report indicates that retail clinics and providers must allocate adequate funding and personnel for business integration, as both parties often encounter setbacks in this area due to underestimating the time and resources required to achieve interoperability.

For retail clinics aiming to succeed in chronic care, the most critical factor is identifying and attracting the right patients—namely, those whose chronic conditions require additional medical services for effective management. Examples include patients with low treatment adherence, those needing regular testing and monitoring, and individuals who have recently developed complications or been discharged from the hospital.

Retail clinics should identify target patients through communication and analysis, and develop corresponding incentive measures to encourage them to undergo routine screenings or adopt health guidance. Achieving this successfully requires coordinated efforts from traditional healthcare providers, retailers, and health plan sponsors.

Obtaining information on patient adherence is highly challenging. While patients’ medical histories may be available within healthcare systems, such data are generally inaccessible outside the clinical networks of these systems; outpatient medication data for patients are also likely to be missing. A medical director at a health plan who was interviewed acknowledged that although patient medication adherence is a critical metric for evaluating treatment outcomes in healthcare institutions, many providers still fail to prioritize it and remain unaware of whether their patients consistently fill prescriptions on time and as directed. Pharmacy utilization data—such as proportion of days covered (PDC), gap analysis, or persistence metrics—for patients who fail to refill medications or renew prescriptions in a timely manner can be obtained from health plans, pharmacy benefit managers (PBMs), or retail pharmacies. However, it is currently uncommon for these entities to share such information with providers.

This study’s analysis indicates that existing retail outpatient capacity is sufficient to absorb a moderate volume of diabetes-related medical care. Furthermore, as previously noted, the retail sector holds potential for delivering healthcare services for several chronic diseases. Therefore, it is feasible to gradually expand the scope of services offered by retail clinics within their current operational capabilities. On the other hand, even considering current growth trends, it remains unclear when the clinical volume at retail clinics will reach a level sufficient to support broader chronic disease management and primary care. How this landscape will evolve in the future remains to be observed through practical implementation.

In general, collaboration between retailers and healthcare systems can facilitate the implementation of value-based care, improve access to services for patients with chronic conditions, and enhance the quality of care. This represents one of the potential future directions for healthcare delivery in the United States and even worldwide. Before initiating such partnerships, retailers and providers should consider the following factors:

1. Who Should We Partner With

2. Which collaboration models and which types of value-based healthcare contract arrangements are most meaningful

3. Whether to Choose Exclusive Cooperation

4. Should all medical services be made available to all consumers, or should certain specific services (such as disease management) be offered exclusively to patients or members of partner organizations?