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Competition escalates in retail clinic arena

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Leading players steadily expand clinic count, geographic reach

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CVS Health’s MinuteClinic leads the retail health clinic market with nearly 1,000 walk-in medical clinics in CVS/pharmacy stores.

NEW YORK — The retail health clinic market is seeing competition intensify as the leading players expand their reach with new locations.

Market leader MinuteClinic, part of CVS Health, got a big boost last month with CVS’ $1.9 billion deal to buy the pharmacy and clinic business of Target Corp. With the move, the approximately 80 Target Clinics will be rebranded as MinuteClinics. The companies also said CVS is slated to open up to 20 new MinuteClinics in Target stores within three years of the deal’s completion, which is expected to happen near the end of this year.

“This might be an underreported detail in a deal of this size, but we think it’s significant,” observed Bruce Carlson, publisher of health care market researcher Kalorama Information, which earlier this year published the “Retail Clinics 2015” report.  “CVS has made it a goal to expand its provision of health services and to benefit from the indirect revenue clinics provide to the pharmacy operation. They now get new locations without the build-out, they get a new venue for new clinics, and they have a chance to turn the Target clinic operation into a consistent national brand that consumers can identify.”

In May, MinuteClinic reached a service milestone, surpassing 25 million patient visits since opening the nation’s first retail clinic in 2000. It was acquired by CVS Corp. in 2006.

MinuteClinic currently has nearly 1,000 walk-in medical clinics inside CVS/pharmacy stores in 31 states and the District of Columbia. CVS said this year, MinuteClinic plans to open more than 100 new locations and, by 2017, it expects to have over 1,500 clinics.

Competitors will have a hard time catching up, since CVS will have more than half of the $1 billion-plus retail clinic services market with the addition of the Target clinics, according to Carlson.

“Since our first tracking of retail clinics in 2007, we noticed a trend that drug stores benefit most from the concept,” he stated. “Of those chains, CVS has really moved forward with the concept.”

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Rite Aid now has 30 RediClinics in its stores since buying the company last year.

CVS’ chain drug rivals, Walgreens and Rite Aid, also have boosted their presence in the retail clinic arena.

In 2013, Walgreens rebranded its Take Care Clinics as Healthcare Clinic at select Walgreens, and since then the drug chain expanded its clinic base to more than 400 locations in 19 states. Kalorama projects that Walgreens will have 525 clinics in its drug stores by 2019.

Rite Aid became a bigger player in the retail clinic market in April 2014 with the acquisition of RediClinic, which at the time operated 30 clinics in H-E-B supermarkets in Houston, Austin and San Antonio, Texas. Before the deal, the drug chain had walk-in clinics in about a dozen locations, operated in tandem with area health provider organizations.

This past February, Rite Aid announced the opening of the first RediClinics inside its drug stores — 24 locations in the greater Philadelphia and Baltimore/Washington, D.C. areas — and then in May opened several RediClinics in Seattle-area Rite Aid stores, with plans to open 11 clinics in that market. Currently, there are 30 RediClinics operating inside Rite Aid stores and 35 RediClinics in H-E-B stores.

“We plan to open a total of 50 clinics throughout fiscal 2016, including additional locations in Texas, where RediClinic is already a leading provider of convenient care clinics services,” Rite Aid president and chief operating officer Ken Martindale said in a mid-June conference call on the company’s first-quarter results. “This would bring our total number of operating clinics to over 100.”

RediClinic’s value proposition has become even stronger since its acquisition by Rite Aid, RediClinic COO Danielle Barrera said in a recent interview. “For RediClinic, it transformed the company from a strong regional player into a national player. So we’re able to carry forward our mission, to provide easy access to high-quality, convenient care, in a much broader way,” she said.

“By joining Rite Aid and being located inside our retail stores, we’re able to provide more access points throughout the community,” Barrera noted.

The Little Clinic, a subsidiary of supermarket giant Kroger Co., also has stepped up its expansion, opening more than a dozen locations since the start of 2015. Over 160 Little Clinics are now located inside Kroger stores in Indiana, Mississippi, Virginia, Georgia, Kentucky, Tennessee and Ohio; King Soopers stores in Colorado; Fry’s Food Stores in Arizona; JayC stores in Indiana; and Dillon stores in Kansas.

Kalorama noted that The Little Clinic’s 15% increase in locations so far this year augurs further growth in the retail clinic market.

“This faster-than-expected growth in new store locations points towards a blue ocean market for retail clinics, not easily captured by one large player. Growth is also fast in competitor brands,” Carlson commented.  “Also, customers are comfortable with the concept. Our surveys show satisfaction levels are in the 93% plus range. There appears to be room to grow.”

The more than 2,100 clinics open at the start of 2015 are projected to exceed 2,700 by the end of 2019, according to Kalorama’s Retail Clinics 2015 report.

In April, Kalorama released the results of a survey finding that, of 2,000 U.S. adults polled, about 700 have visited a retail health clinic. The reasons they cited for going to a clinic included vaccination (named by 74%), cold/flu (55%), headache (23.3%), earache (13.4%) and a physical (18%).


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