The experiment of retail health clinics at Walmart, Walgreens, and CVS is facing challenges.

• Retail health clinics are being scaled back or shuttered by CVS, Walmart, and Walgreens.
• The $6 billion loss recorded by Walgreens' VillageMD highlights the challenges of generating profits from a health-care model that retailers have been betting on for the past decade.
• According to Definitive Healthcare's annual report, CVS holds the largest market share of in-store clinics with 63%.

Last Thanksgiving, Bobbi Radford visited the CVS MinuteClinic in Batavia, Ohio, due to arm pain.

Radford waited an hour before being told to go to the emergency room. After filling the staffer in on her history of congestive heart failure, she was directed to the ER. However, it was determined at the ER that she had a case of tennis elbow.

Radford stated that it was a waste of his time, despite still needing to visit his family doctor.

Although initially expected to be profitable and user-friendly, in-store clinics have not met retailers' expectations. As a result, Walmart has decided to close its 51 full-service healthcare centers. Additionally, Walgreens has announced the closure of 160 VillageMD locations, which it owns a majority stake in. CVS's MinuteClinic, with over 1,100 locations, has also announced several clinic closures this year in Southern California and New England.

Not all patient experiences with CVS's MinuteClinic are negative. Karla Lemon of Conway, South Carolina, had a positive experience with the clinic for vaccines and sinus infections. "I've had a pretty good experience with them," said Lemon.

The retail health clinic space has largely failed to meet expectations, according to Timothy Hoff, professor of management healthcare systems at Northeastern University. Hoff has studied the delivery of primary care in retail clinics and found that margins are often thin or non-existent, and that other challenges have hindered their success. The once-promising "2.0" version of primary health care is now being left behind as in-store clinics close.

Urgent care centers emerged 20 or 30 years ago as alternatives to primary care doctors, but in recent years, they have shifted into heavily trafficked stores like groceries and department stores. This move presented challenges for retailers and providers alike.

"Some organizations have grown their business too quickly and failed to consider the cost of maintaining it, resulting in low insurance reimbursements and rising expenses," Hoff stated. "Many places are struggling to sustain their growth due to the math not working out. Some large organizations are now retrenching and reducing their involvement," Hoff added.

The success of retail clinics relies on high patient volume. "If you can't handle a large number of patients, it won't work," Hoff stated. Staffing was also a challenge. "They found out that running them was more expensive than they anticipated, along with a shortage of workers, they just couldn't make it work."

Retail chains often use clinics as loss leaders to encourage customers to buy other products and services. However, if someone is sick enough to seek care, they may not be in the mood to purchase additional items while they are out. Similarly, people coming in for groceries may not necessarily visit the clinic.

A retail reality check for MinuteClinic

Colleen Sanders, a family nurse practitioner in Washington, D.C., who now works in healthcare education, previously worked at MinuteClinic for two years. She highlighted the challenges she faced with margins and staffing.

"Sanders stated that although the healthcare industry in the USA generates billions of dollars, it does not necessarily mean that there will be large profits. He believes that retailers have come to the realization that they will not be making millions and millions of dollars. According to Sanders, margins are small."

Sanders explained that at MinuteClinic, she was responsible for checking people in, billing, and cleaning the clinic at the end of the day. The undertrained support staff was part of the model to keep staffing costs low, but with increasing volume, ancillary staff was needed to allow the professional to focus on patient care, which is where revenue comes from.

The limited time allotted to see patients often did not suffice for the intricate health issues they faced. Some patients expressed dissatisfaction with the slow pace of treatment, recalling a 7-year-old patient who remarked that treatment was taking over a minute. The "want-it-now" culture prevalent in America does not align with the demands of medicine, as evidenced by the closure of retail clinics. According to Sanders, the pace at which patients want healthcare to be delivered does not match the level of service that should be provided, coupled with the high cost of hiring support staff. If the goal is to improve retail healthcare, then it would be more cost-effective to hire registered nurses instead of medical assistants.

A CVS spokesperson stated that the latest strategy involves a blend of virtual, in-store, and in-home services to deliver a more convenient experience.

Walmart and the problem of volume vs. price

In 2019, Walmart declared a daring plan to establish 4,000 in-store health clinics by 2029. However, this initiative was recently abandoned after the closure of the 51 clinics that had already been opened.

According to Arielle Trzcinski, a principal analyst at Forrester Research, health care is a low-margin business due to the challenges of dealing with insurance companies and administrative burdens.

Other health care organizations can recoup money from offering primary care as a loss leader, but retailers cannot.

Primary care serves as a gateway for patients requiring higher-level services, such as surgery or specialists. Hospitals generate revenue on the backend, and Walmart and Walgreens lack this capability. CVS excels due to its merger with health insurer Aetna, enabling the upselling of additional services, including mental health.

"Walmart believed they were addressing a crucial problem, but Trzcinski stated that they did not utilize their full marketing resources or establish connections with other businesses to create a smooth transition into the clinic. "Their goal was to make healthcare more accessible and affordable for their customers. However, achieving this requires volume or a different pricing model. Walmart ultimately lacked the necessary volume or pricing structure to make it successful.""

A missed opportunity for rural America

Sanders claims that the limitations of the business model have weakened one of the retail clinic idea's main advantages: providing healthcare to rural regions.

Sanders stated that Walmart's attempt to expand into rural areas where providers were scarce and address a community need is a great idea because everyone knows where the local Walmart is. However, attracting providers to work in rural areas is challenging due to the quality of life and the things people can do in small towns not being as appealing as urban centers. This, in turn, affects revenue.

Retailers will continue to experiment with the model.

Dollar General has introduced mobile clinics to provide minor medical services in some of its rural locations.

Amazon's recent introduction of One Medical, which comes with a $9 monthly subscription fee for existing Prime members, presents another revenue-generating opportunity.

MacroHealth CEO Virgil Brantz stated that the platform charges a good price for virtual care, and you can walk in to a One Medical facility if you're nearby. Unlike most models that profit from patient visits, Amazon makes more money if you don't show up, which sets this retail model apart.

In-store health clinics can be profitable and viable, and retailers are experimenting with piecemeal approaches tailored to the local market. For instance, Walgreens recently announced the opening of a few in-store health clinics in Connecticut, which will be run by Hartford HealthCare. These clinics, called "Hartford HealthCare at Walgreens," will offer patients access to Hartford's larger network of specialists and care options, going beyond typical small-scale clinic services.

A Be Well Health Clinic, which specializes in sexual health issues, is located in a Walgreens near Arizona State University's campus in Phoenix.

A spokesperson for Walgreens stated that the common thread in their locally-based partnerships with local providers is their shared goal of providing convenience and access.

In Atlanta, Kroger's Little Clinics are shifting their focus to provide senior care services.

Walmart and Kroger did not respond to requests for comment.

According to Hoff, "health care 3.0" involves the ongoing transformation and advancement of primary care delivery, driven by market and customer demands, and incorporating retail clinics. Different models will emerge, but not all of them will be successful.

"Periodically, outsiders attempt to reform healthcare, but they inevitably encounter the intricacy of the system."