The newest trend in healthcare may be coming soon to a mall near you.
Health insurance companies are opening insurance outlets to:
- Help consumers find individual and small business insurance plans, and to
- Help folks complete insurance applications.
Pennsylvania’s Highmark Inc. is planning to launch two such stores this year, one near Pittsburgh and another outside of Harrisburg.
The two stores will be similar to outlets opened by Florida’s Blue Cross Blue Shield last year.
The stores will provide:
- Kiosks with computers for folks to do research;
- Meeting rooms for informational sessions; and
- Private rooms with video equipment for consumers to speak directly to specialists from a central location about questions or complaints they might have.
The point of the stores will be to promote sales, says an article published in our local Pittsburgh Post-Gazette.
But the sales associates “must also be prepared to deal with angry and emotional customers who don’t understand their plans or who have been denied coverage.”
Do these stores represent the future of insurance sales?
- As more employers drop coverage, folks are scrambling to buy insurance on the individual market.
- Insurers realize that people need help to figure out how individual plans work.
If health care retail clinics are any indicator, the success of the insurance outlets is far from guaranteed.
What are health care retail clinics?
Hailed for their convenience (long hours, same-day appointments) and price transparency (low prices that are easily visible), health retail clinics spread quickly after first opening in 2000.
In 2006, there were only 60 of these stores in 18 states, but by the end of 2007, there were 900 clinics spread over 30 states.
Patients can receive basic medical services at the health clinics, which tend to have names like MinuteClinic, QuickHealth and CheckUps. Examinations and vaccinations are usually administered by nurse practitioners, which helps to keep costs low, but which has raised concern amongst doctors and state regulatory agencies.
Why do individuals go to a health retail clinic?
- To have a new illness or symptom diagnosed;
- To refill prescriptions and receive vaccinations; and
- To obtain care for a chronic condition.
The inexpensive services provided by the clinics have proven popular with uninsured individuals and families, as well as with those folks who have high-deductible health plans (HDHPs) and would otherwise skip or delay preventative visits.
- This study shows that retail clinics are cheaper for patients than going to a primary care doctor.
- The retail clinic “CheckUps” estimates that 30% of its patients do not have a family doctor.
- Uninsured clinic consumers were 3.5 times more likely than their insured counterparts to cite the low costs as a major reason for patronizing the retail clinics.
So what’s the problem with the clinics?
Despite the convenient and reasonably-priced services offered, most Americans have yet to visit a retail clinic. Clinic growth is slowing as a result. It was once predicted that there would be 6,000 such clinics by 2012, but clinics are now closing their doors left and right.
- A survey that looked at clinic usage in 2006 and 2007 found that only 2.3% of American families had ever visited a health outlet, which means that the vast majority of U.S. residents have never received care in a retail clinic setting.
- Even when the statistics were adjusted to account for a higher number of clinics in a given area, the total usage rates were still very low.
This is true even though most major public and private insurance providers now cover visits to the clinics, which removes one potential barrier. (The clinics take cash payments from those without insurance.)
Why is the retail clinic experiment faltering?
The retail clinics require a significant investment to get them up and running past the break even point (between $300,000 and $600,000 each).
Each clinic must also treat between 25 and 30 patients per day to remain profitable. It can take up to two years to attract this number of patients. It is especially difficult to reach this goal since many Americans are still unaware that the clinics exist. Clinics must spend a lot of money to advertise their services, much in the same way that private insurance companies do.
And in our shaky economic climate, investors are less and less willing to wait before seeing a solid return on their money.
Retail clinics are a for-profit venture, and they have been unable to satisfy the main requirement of any for-profit venture, which is to generate and return profits to shareholders and investors.
What does this mean for consumer-driven healthcare reform initiatives?
We are often told that the best way to solve the healthcare crisis is to encourage and allow for innovative, market-based solutions.
For example: Prices for medical services too high?
- Market-solution: Let the number of private providers expand unchecked so that they must compete for patients by lowering their prices. (We’ll discuss why this solution is a problem in the near future).
We’re not saying that all market-based plans are bad, or doomed to failure.
In the case of retail clinics, some experts believe that these stores hold tremendous potential for providing low-cost preventative services to uninsured or underinsured folks, which might cut back on more costly visits to the ER.
And if the number of people that visited the clinics on a regular basis increased exponentially, the clinics could help to drive down the cost of care offered by competing medical providers.
But we have to ask: are market-based initiatives the cure-all for our healthcare system?
Or do we just want to believe that they work, even when the hard data tells us there are problems?
In a coming post, we’ll discuss the fallacies behind the free-market approach to healthcare reform, while also looking at examples of successful market-driven plans.