Could retail clinics deliver primary healthcare–and be financially sustainable?

by Anjali Sastry on November 26, 2011

Could a chain of retail clinics pass what franchise experts call the “three point test” for success in business format franchising? Here are three requirements laid out by franchising guru Michael Seid when he visited us in 2009:

  • ability to maintain brand standards at each location
  • ability to scale operations
  • ability to achieve economies of scale

Seid–who wrote “Franchising for Dummies”–recently blogged on this topic in a pair of posts entitled Going to Scale: What can clinical social franchises learn from for-profit franchising? on the Social Franchising for Health blog. The blog and the site contain a wealth of resources and discussions. We touched on some of the key topics in class.

First of all, what’s the link between retail clinics, franchising, and value? Here’s how one US-based consultant sees it:

… Typically staffed only by a nurse practitioner or physician assistant, these clinics already have established tight operating models, and they’ve developed a retail orientation that delivers high levels of patient satisfaction. They are continuing to improve their operations and the experience they deliver.

MinuteClinic is expanding aggressively. It has grown to 500 locations in 26 states. It has achieved a 95 percent patient-satisfaction level from more than 8 million patient visits. The organization is owned by publicly traded CVS Caremark (source)

If clinics can deliver efficient service and reliably stock needed medications, the franchise model holds promise for reaching underserved populations. But even if they manage to become financially sustainable, how far can low-cost clinics go toward providing full-on primary care? This is an open question, here in the US and elsewhere.

Now, Minute Clinics are only now turning a profit, some 5 years after the retail clinic chain was acquired by CVS Caremark (source; more on MinuteClinic). And Walmart has backed away from presenting its goal of rapidly growing its own retail clinics to develop some sort of primary care system (source), while experts in the US continue to debate what the projected growth in retail clinics will bring to the healthcare industry as a whole.

In the past, predicted growth in US retail clinics did not materialize (source). If cumbersome US laws constrain the ability of retail clinics to deliver needed healthcare, could the promise of retail clinics be better delivered elsewhere? We examined CFW shops, which franchises clinics in East Africa with the partnership of a US-based franchisor, The HealthStore Foundation. I’ve blogged about it before: see my original post, CFW Shops: The Subway of Global Health Delivery and additional discussion that captures student comments and links to additional resources  in Can a franchise deliver global health?

For an update of the organization’s current performance, take a look at The Child and Family Wellness Shops Story and for a case discussion, see Winifred Karugu’s study Child & Family Wellness Shops: A Model of Sustainable Health Care for the Most Vulnerable.

But, as  we discussed, before it can be franchised the health care delivery model must first work for the single clinic. So before you even get to brand standards, operational scalability, and economies of scale, first the single unit must deliver services and products that its customers value at the price they pay. And unit performance must be measured accurately, consistently, and rapidly enough for the data to be useful to the unit’s management and to the franchisor.  When it comes to these questions, we found ourselves wanting more answers.

{ 2 comments… read them below or add one }

kurdsoft.org November 27, 2011 at 3:16 pm

If clinics can deliver efficient service and reliably stock needed medications, the franchise model holds promise for reaching underserved populations. But even if they manage to become financially sustainable, how far can low-cost clinics go toward providing full-on primary care? This is an open question, here in the US and elsewhere.

Bohan Liu November 27, 2011 at 4:59 pm

Franchising of health services not only is cost-effective in remote, rural settings, but also actively empowers local health workers. Varying health organizations, such as Arogya Parivar in India, have relied on this empowerment and training of local health workers to increase patient accessibility of health services, such as medications. In particular, more reliable availability of medications will increase willingness to seek medical assistance and will improve health outcomes of those with easily treatable diseases.

However, it will be far more difficult to utilize franchised health clinics to deliver primary care in global health. The franchising model depends on sustainable growth and profits; while this may be possible in the US, it is far more difficult in low resource settings. Many poorer patients will not be able to pay for primary health services at all and the profitability of such health clinics may be questionable. Furthermore, huge challenges with determining how much care should be provided and maintaining quality of primary care exist. For instance, it may not be economically feasible for franchised health workers to perform surgeries even if it would increase patient accessibility of such health services.

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