Retail Health Clinic Congress: The Massachusetts Experience and Lessons Learned


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Retail clinic experience in Massachusetts: the regulatory landscape, market challenges and opportunities, and thoughts on the way forward. David Harlow, The Harlow Group LLC.

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  • As detailed in the PPT, this is a quick-and-dirty est. --

    $2.2T (total spend) x 75% (% of all care that is for chronic condx) x 67% (1/3 of all care is unnecessary) x 2% (assumption re: % of chronic care mkt to be captured by retail clinics) x 25% (discounted rates in retail clinics vs. traditional settings) / $650K (annual gross needed to turn profit per site) = 8500 retail clinic sites.

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Retail Health Clinic Congress: The Massachusetts Experience and Lessons Learned

  1. 1. Operating retail based clinics in a heavily-regulated environment Retail Based Health Clinics Congress January 26, 2009 Las Vegas, NV David Harlow JD MPH THE HARLOW GROUP LLC
  2. 2. Retail clinics in a highly-regulated environment - Massachusetts <ul><li>Local perspective on a national phenomenon </li></ul><ul><li>Development of the regulatory scheme </li></ul><ul><li>Development of retail clinics after regulatory delays </li></ul><ul><li>Outlook based on current climate </li></ul><ul><li>Threats and opportunities </li></ul><ul><li>Old Blue Eyes: “If you can make it here, </li></ul><ul><li>you’ll make it anywhere.” </li></ul>THE HARLOW GROUP LLC
  3. 3. Massachusetts environment (1) <ul><li>Frustration, as elsewhere, with access issues </li></ul><ul><ul><li>Exacerbated by MA health insurance mandate + PCP shortage </li></ul></ul><ul><li>Higher proportion of population than elsewhere gets health care at academic medical centers and affiliates </li></ul><ul><ul><li>Ex: Partners, PCHI, NEQA and Atrius include ~10,000 MDs (~1/3 of MA MDs) </li></ul></ul><ul><li>Highly regulated: e.g., a Certificate of Need state, though most ambulatory care is exempt </li></ul>THE HARLOW GROUP LLC
  4. 4. Massachusetts environment (2) <ul><li>Organized medicine opposed the initial MinuteClinic license application </li></ul><ul><ul><li>Quality of care / Continuity of care </li></ul></ul><ul><ul><li>Infection control </li></ul></ul><ul><li>General public eager for alternative to overloaded system – but has deep-seated brand-name (AMC) bias </li></ul>THE HARLOW GROUP LLC
  5. 5. Massachusetts environment (3) <ul><li>State Commissioner of Public Health John Auerbach committed to improving access to care generally (not all Commissioners would have been so open) </li></ul><ul><ul><li>Consider historical precedents in MA of bringing new provider types into the big tent: assisted living (not licensed as health care facilities), “nurse’s clinics” </li></ul></ul><ul><li>Support for experimentation with model </li></ul><ul><ul><li>Patient advocacy community (Health Care For All) </li></ul></ul><ul><ul><li>Some providers, e.g. BIDMC CEO & blogger Paul Levy </li></ul></ul>THE HARLOW GROUP LLC
  6. 6. Limited Service Clinic chronology (1) <ul><li>MinuteClinic filed first license application in May 2007, as a standard clinic with many waiver requests (staffing, physical plant, etc.) </li></ul><ul><ul><li>Organized medicine registered strong opposition </li></ul></ul><ul><ul><li>DPH Commissioner: concerned about siphoning off desirable patients from community health centers </li></ul></ul><ul><ul><li>Boston mayor opposed as well </li></ul></ul><ul><li>Dept. of Public Health released draft regulations in August 2007 </li></ul>THE HARLOW GROUP LLC
  7. 7. Limited Service Clinic chronology (2) <ul><li>Public hearing September 2007, comments accepted for a couple months </li></ul><ul><li>Final regulations adopted January 2008 </li></ul><ul><li>License applications filed under new rules </li></ul><ul><li>First MinuteClinic site opened September 2008 in Medway (I-495, 30 mi. from Boston) </li></ul><ul><li>Twelve now open, another 22 surveyed and ready to open . . . (but stay tuned) </li></ul><ul><li>No other provider operational in MA (Walgreens Take Care Clinic has application in) </li></ul>THE HARLOW GROUP LLC
  8. 8. Massachusetts model (1) <ul><li>Nurse Practitioner staffing (with off-site supervising physician – NP licensure requirement) </li></ul><ul><li>Licensed as “limited service clinic” for specific services </li></ul><ul><ul><li>Standard MinuteClinic menu of services, but no childhood immunizations other than flu, and no services to children < 24 months </li></ul></ul><ul><li>Requirements adjusted to accommodate small footprint, limited services </li></ul><ul><ul><li>Physical plant </li></ul></ul><ul><ul><li>Medical records </li></ul></ul>THE HARLOW GROUP LLC
  9. 9. Massachusetts model (2) <ul><li>Communication with patient’s physician required (fax record) </li></ul><ul><li>Information re: local PCPs available to patients without PCP </li></ul><ul><ul><li>Initial proposal was to limit patients to 4 visits a year </li></ul></ul><ul><li>Each provider has a “main” site; all other sites are licensed as satellites </li></ul><ul><li>Transfer agreement with hospital required </li></ul>THE HARLOW GROUP LLC
  10. 10. MA definition of “Limited Services” <ul><li>A prescribed set of pre-identified diagnostic and treatment services that </li></ul><ul><ul><li>require only a focused history and physical examination that does not require venipuncture; </li></ul></ul><ul><ul><li>may make use of only CLIA-waived tests; </li></ul></ul><ul><ul><li>are of a nature that may be provided within the projected duration of patient encounters, using available facilities and equipment; </li></ul></ul><ul><ul><li>are for episodic, urgent care related to an illness or for immunizations; and </li></ul></ul><ul><ul><li>are included in the site-specific list submitted to and approved by the Department. </li></ul></ul><ul><li>Limited Services shall not mean surgical, dental, physical rehabilitation, mental health, substance abuse, or birth center services. </li></ul>THE HARLOW GROUP LLC
  11. 11. Massachusetts experience to date <ul><li>Start-up mode; first site open September 2008 </li></ul><ul><ul><li>Averaging 10 visits/day </li></ul></ul><ul><ul><li>Targeting 18 visits/day in next year or two </li></ul></ul><ul><li>Difficulty in attracting nurse practitioners </li></ul><ul><li>Plateau in national retail clinic growth mirrored in Massachusetts </li></ul>THE HARLOW GROUP LLC
  12. 12. Current state and future outlook: in Massachusetts and beyond <ul><li>Threats </li></ul><ul><li>Opportunities </li></ul><ul><li>NP shortage </li></ul><ul><li>Soft demand </li></ul><ul><li>On-line MD visits </li></ul><ul><ul><li>Ultimately, inadequate volume </li></ul></ul><ul><li>Alliances with health care systems </li></ul><ul><li>Chronic care </li></ul>THE HARLOW GROUP LLC
  13. 13. Threats – NP shortage <ul><li>MA has 5000 NPs total, but only Family NPs are qualified to staff clinics </li></ul><ul><ul><li>Other classifications: geriatric, adult, pediatric, psych, nurse-midwives </li></ul></ul><ul><li>Most Family NPs, who have a broad scope of practice, don’t want to move to “isolated, limiting” setting </li></ul>THE HARLOW GROUP LLC
  14. 14. Threats – Soft demand <ul><li>Brand-name medicine bias </li></ul><ul><ul><li>Efforts afoot to address this for other policy reasons </li></ul></ul><ul><li>Market saturation </li></ul><ul><ul><li>Urgent care options in medical practices </li></ul></ul><ul><ul><ul><li>Longstanding availability in large practices </li></ul></ul></ul><ul><ul><ul><li>Available as a reactive stance by small practices in retail clinics’ service areas </li></ul></ul></ul><ul><li>Compact geography </li></ul><ul><ul><li>Keys back in to brand-name bias: Many residents consider MGH to be the “local” provider of first resort, not last resort </li></ul></ul>THE HARLOW GROUP LLC
  15. 15. Threats – This Year’s Model – Health 2.0 <ul><li>The next disruptive innovation: American Well </li></ul><ul><ul><li>On-line MD visits </li></ul></ul><ul><ul><ul><li>Hawaii BCBS affiliate just rolled out service for all residents (not just subscribers; non-subscribers have higher copay) to be a good citizen in geographic access-challenged state </li></ul></ul></ul><ul><ul><ul><li>If driven by access/convenience, many visits may be rerouted from limited service clinics to on-line encounters </li></ul></ul></ul><ul><ul><ul><li>Many uninsured have broadband service . . . </li></ul></ul></ul>THE HARLOW GROUP LLC
  16. 16. Threats – inadequate volume <ul><li>Deloitte paper says 11,000 visits/year needed to turn a profit ($650,000 gross, assuming $59/visit) without using the clinic as a loss leader </li></ul><ul><li>If the near-term target is no better than 18 visits/day (~6,600 running 365 days/year) it isn’t self-supporting </li></ul>THE HARLOW GROUP LLC
  17. 17. Opportunities - Alliances with health care systems (1) <ul><li>Co-branding </li></ul><ul><ul><li>Already happening with some providers, in some markets </li></ul></ul>THE HARLOW GROUP LLC <ul><li>Real benefit: partnering with health systems to fill a need in the broader health care system in each local market </li></ul>
  18. 18. Opportunities - Alliances with health care systems (2) <ul><li>Beyond co-branding </li></ul><ul><li>Joint strategic planning regarding a broad service area / service line </li></ul><ul><li>All parties can benefit through collaboration vs. competition </li></ul><ul><li>Can gain buy-in from physicians by solving some of their problems </li></ul>THE HARLOW GROUP LLC
  19. 19. Opportunities - Chronic care <ul><li>44% of U.S. population has a chronic condition </li></ul><ul><li>75% of U.S. health care spend is on chronic care </li></ul><ul><li>2007 total spend = $2.2 trillion </li></ul><ul><li>1/3 of all care is unnecessary </li></ul><ul><li>Assume retail clinics could capture 2% of the chronic market (e.g., certain monitoring visits for diabetics), and charge 1/4 as much </li></ul><ul><li>All this translates to over 8,500 fully-utilized sites </li></ul><ul><li>Another angle: Disease Management (one piece of this market) is est. to be $30 billion by 2013 </li></ul>THE HARLOW GROUP LLC
  20. 20. Opportunities – Chronic care through alliances with health systems <ul><li>Joslin Diabetes Center – Walgreens partnership re: diabetes information </li></ul><ul><li>Health information rather than service </li></ul><ul><li>Not yet making full use of the model to alleviate pressure on PCPs </li></ul><ul><li>Widen the range of NP-provided services in close collaboration with health systems to serve populations with chronic conditions </li></ul>THE HARLOW GROUP LLC
  21. 21. Bottom line <ul><li>Challenging times ahead in MA and elsewhere </li></ul><ul><li>Real opportunities for business development include </li></ul><ul><ul><li>Health care system affiliations </li></ul></ul><ul><ul><li>Chronic care market </li></ul></ul><ul><li>Need to thread the needle with “limited service” clinic definition (take out “urgent”) and NP scope of practice </li></ul><ul><li>Need to be cognizant of Anti-Kickback and Fraud and Abuse laws </li></ul>THE HARLOW GROUP LLC
  22. 22. Resources <ul><li>Massachusetts Dept. of Public Health website with limited service clinic regulations, staff memoranda and public comments </li></ul><ul><li>Deloitte report (2008) </li></ul><ul><li>Commonwealth Fund report (2008) </li></ul><ul><li>California Health Care Foundation report (2007) </li></ul>THE HARLOW GROUP LLC
  23. 23. Questions / Discussion <ul><li>David Harlow JD MPH </li></ul><ul><li>THE HARLOW GROUP LLC </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li>[email_address] </li></ul><ul><li>617.965.9732 </li></ul>THE HARLOW GROUP LLC