Retail Clinics Poised to Gain from Medicaid and SCHIP Expansion

The hospital industry pushed for the expansion of Medicaid as a safety net for the growing number of uninsured patients and the hospitals who care for them.  However, the health care providers poised to benefit the most may be retail clinics, such as those owned by pharmacy chains Walgreens and CVS.

Most retail clinics now accept many major insurance plans as well as government sponsored Medicare, Medicaid and State Children’s Health Insurance Programs – a departure from the cash-only model the clinics used to provide when the industry was founded nine years ago. According to a study last year by Market Strategies International, there was a 33 percent increase in retail clinic use in 2008, compared to 2007  (“Consumers Flock to Retail Health Clinics,” July 7, 2008).

Robert Zirkelbach, a spokesman for American Health Insurance Plans, told insideARM that more private insurers are contracting with retail clinics because the clinics can be a good low cost source of care for non-emergency services.

“With health care costs rising at unsustainable rates, health plans are looking for affordable care options for the consumer,” he said.  

It stands to reason then that state and federal health care programs will do the same.  Health services experts say many physician practices don’t accept Medicaid because payments aren’t timely and the public plans don’t cover the cost of the care they provide. The situation has left many government-insured patients, particularly children, with no choice but to visit hospital emergency rooms for ailments such as the flu, rashes and urinary tract infections.  

Tine Hansen-Turton, executive director of Convenient Care Association, the retail clinic industry’s trade group, told insideARM that the 1,200 retail clinics throughout the United States are poised to take on that care because they can provide it at a cost of $40 to $75 a visit compared to exponentially higher costs associated with a visit to a hospital emergency department.

“Part of the success of the (retail clinic) model is the practitioner skill set is much larger than the scope of services provided in the clinic,” she said. “Health care is expensive because of the overhead and a lot of administrative costs. The model is relying on one provider versus a host of providers. It’s a very lean staffing model. ”

Hansen-Turton added that all the retail clinics are electronic medical records capable – a documenting standard the entire medical industry is hoping to achieve to help lower health care cost. And the clinics help patients connect with physicians in their community who accept their insurance coverage.

While most hospitals aren’t looking to grow their government insured patient base, hospitals still will benefit from the Medicaid expansion and any success the retail clinics have. Jason Gurda, a Leerink Swann health services analyst, said most people don’t apply for Medicaid until care has been provided in an emergency room or after admission.  

“After the treatment is given, the hospital starts to look for payment or insurance and finds out that they don’t have it,” said Gurda, who covers for-profit hospitals. “It’s a safety net not just for people in general, but also for certain hospitals where there is a high amount of uninsured and Medicaid patients.”

Gurda added that if more people use clinics for minor ailments, these illnesses may not turn into life threatening conditions that require hospital admission, which may lead to higher bad debt expense for the hospital.