Operating retail health clinics in a heavily-regulated environment Retail Health Clinic Summit May 28-29, 2009 Orlando, FL David Harlow JD MPH THE HARLOW GROUP LLC

Retail clinics in a highly-regulated environment - Massachusetts Local perspective on a national phenomenon Development of the regulatory scheme Development of retail clinics after regulatory delays Outlook based on current climate Threats and opportunities Is future success a fantasy? THE HARLOW GROUP LLC

Local perspective on a national phenomenon

Development of the regulatory scheme

Development of retail clinics after regulatory delays

Outlook based on current climate

Threats and opportunities

Is future success a fantasy?

Massachusetts environment (1) Frustration, as elsewhere, with access issues Exacerbated by MA health insurance mandate + PCP shortage Higher proportion of population than elsewhere gets health care at academic medical centers and affiliates Ex: Partners, PCHI, NEQA and Atrius include ~10,000 MDs (~1/3 of MA MDs) Highly regulated: e.g., a Certificate of Need state, though most ambulatory care is exempt THE HARLOW GROUP LLC

Frustration, as elsewhere, with access issues

Exacerbated by MA health insurance mandate + PCP shortage

Higher proportion of population than elsewhere gets health care at academic medical centers and affiliates

Ex: Partners, PCHI, NEQA and Atrius include ~10,000 MDs (~1/3 of MA MDs)

Highly regulated: e.g., a Certificate of Need state, though most ambulatory care is exempt

Massachusetts environment (2) Organized medicine opposed the initial MinuteClinic license application Quality of care / Continuity of care Infection control General public eager for alternative to overloaded system – but has deep-seated brand-name (AMC) bias THE HARLOW GROUP LLC

Organized medicine opposed the initial MinuteClinic license application

Quality of care / Continuity of care

Infection control

General public eager for alternative to overloaded system – but has deep-seated brand-name (AMC) bias

Massachusetts environment (3) State Commissioner of Public Health John Auerbach committed to improving access to care generally (not all Commissioners would have been so open) 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” Support for experimentation with model Patient advocacy community (Health Care For All) Some providers, e.g. BIDMC CEO & blogger Paul Levy THE HARLOW GROUP LLC

State Commissioner of Public Health John Auerbach committed to improving access to care generally (not all Commissioners would have been so open)

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”

Support for experimentation with model

Patient advocacy community (Health Care For All)

Some providers, e.g. BIDMC CEO & blogger Paul Levy

Limited Service Clinic chronology (1) MinuteClinic filed first license application in May 2007, as a standard clinic with many waiver requests (staffing, physical plant, etc.) Organized medicine registered strong opposition DPH Commissioner: concerned about siphoning off desirable patients from community health centers Boston mayor opposed as well Dept. of Public Health released draft regulations in August 2007 THE HARLOW GROUP LLC

MinuteClinic filed first license application in May 2007, as a standard clinic with many waiver requests (staffing, physical plant, etc.)

Organized medicine registered strong opposition

DPH Commissioner: concerned about siphoning off desirable patients from community health centers

Boston mayor opposed as well

Dept. of Public Health released draft regulations in August 2007

Limited Service Clinic chronology (2) Public hearing September 2007 Final regulations adopted January 2008 License applications filed under new rules First MinuteClinic site opened September 2008 in Medway (I-495, 30 mi. from Boston) Sixteen now open, five more surveyed and ready to open . . . (but stay tuned) No other provider operational in MA Walgreens Take Care Clinic has application in for thirteen sites THE HARLOW GROUP LLC

Public hearing September 2007

Final regulations adopted January 2008

License applications filed under new rules

First MinuteClinic site opened September 2008 in Medway (I-495, 30 mi. from Boston)

Sixteen now open, five more surveyed and ready to open . . . (but stay tuned)

No other provider operational in MA

Walgreens Take Care Clinic has application in for thirteen sites

Massachusetts model (1) Nurse Practitioner staffing (with off-site supervising physician – NP licensure requirement) Licensed as “limited service clinic” for specific services Standard MinuteClinic menu of services, but no childhood immunizations other than flu, and no services to children < 24 months Requirements adjusted to accommodate small footprint, limited services Physical plant But cf. Board of State Examiners of Plumbers and Gas-Fitters Medical records THE HARLOW GROUP LLC

Nurse Practitioner staffing (with off-site supervising physician – NP licensure requirement)

Licensed as “limited service clinic” for specific services

Standard MinuteClinic menu of services, but no childhood immunizations other than flu, and no services to children < 24 months

Requirements adjusted to accommodate small footprint, limited services

Physical plant

But cf. Board of State Examiners of Plumbers and Gas-Fitters

Medical records

Massachusetts model (2) Communication with patient’s physician required (fax record) Information re: local PCPs available to patients without PCP Initial proposal was to limit patients to 4 visits a year Each provider has a “main” site; all other sites are licensed as satellites Transfer agreement with hospital required THE HARLOW GROUP LLC

Communication with patient’s physician required (fax record)

Information re: local PCPs available to patients without PCP

Initial proposal was to limit patients to 4 visits a year

Each provider has a “main” site; all other sites are licensed as satellites

Transfer agreement with hospital required

MA definition of “Limited Services” A prescribed set of pre-identified diagnostic and treatment services that require only a focused history and physical examination that does not require venipuncture; may make use of only CLIA-waived tests; are of a nature that may be provided within the projected duration of patient encounters, using available facilities and equipment; are for episodic, urgent care related to an illness or for immunizations; and are included in the site-specific list submitted to and approved by the Department. Limited Services shall not mean surgical, dental, physical rehabilitation, mental health, substance abuse, or birth center services. THE HARLOW GROUP LLC

A prescribed set of pre-identified diagnostic and treatment services that

require only a focused history and physical examination that does not require venipuncture;

may make use of only CLIA-waived tests;

are of a nature that may be provided within the projected duration of patient encounters, using available facilities and equipment;

are for episodic, urgent care related to an illness or for immunizations; and

are included in the site-specific list submitted to and approved by the Department.

Limited Services shall not mean surgical, dental, physical rehabilitation, mental health, substance abuse, or birth center services.

Massachusetts experience to date Start-up mode; first site open September 2008 Averaging 10 visits/day Targeting 18 visits/day in next year or two Difficulty in attracting nurse practitioners Plateau in national retail clinic growth mirrored in Massachusetts Seeking third party payors including MassHealth (Medicaid); some on board already As elsewhere in country, step back from cash-on-barrelhead model THE HARLOW GROUP LLC

Start-up mode; first site open September 2008

Averaging 10 visits/day

Targeting 18 visits/day in next year or two

Difficulty in attracting nurse practitioners

Plateau in national retail clinic growth mirrored in Massachusetts

Seeking third party payors including MassHealth (Medicaid); some on board already

As elsewhere in country, step back from cash-on-barrelhead model

Current state and future outlook: in Massachusetts and beyond Threats Opportunities NP shortage Soft demand On-line MD visits Ultimately, inadequate volume Alliances with health care systems Chronic care THE HARLOW GROUP LLC

Threats

Opportunities

NP shortage

Soft demand

On-line MD visits

Ultimately, inadequate volume

Alliances with health care systems

Chronic care

Threats – NP shortage MA has 5000 NPs total, but only Family NPs are qualified to staff clinics Other classifications: geriatric, adult, pediatric, psych, nurse-midwives Most Family NPs, who have a broad scope of practice, don’t want to move to “isolated, limiting” setting THE HARLOW GROUP LLC

MA has 5000 NPs total, but only Family NPs are qualified to staff clinics

Other classifications: geriatric, adult, pediatric, psych, nurse-midwives

Most Family NPs, who have a broad scope of practice, don’t want to move to “isolated, limiting” setting

Threats – Soft demand Brand-name medicine bias Efforts afoot to address this for other policy reasons Market saturation Urgent care options in medical practices Longstanding availability in large practices Available as a reactive stance by small practices in retail clinics’ service areas Compact geography Keys back in to brand-name bias: Many residents consider MGH to be the “local” provider of first resort, not last resort THE HARLOW GROUP LLC

Brand-name medicine bias

Efforts afoot to address this for other policy reasons

Market saturation

Urgent care options in medical practices

Longstanding availability in large practices

Available as a reactive stance by small practices in retail clinics’ service areas

Compact geography

Keys back in to brand-name bias: Many residents consider MGH to be the “local” provider of first resort, not last resort

Threats – This Year’s Model – Health 2.0 The next disruptive innovation: American Well On-line MD visits Hawaii BCBS affiliate rolled out service for all residents (not just subscribers; non-subscribers have higher copay) to be a good citizen in geographic access-challenged state Minnesota too . . . If driven by access/convenience, many visits may be rerouted from limited service clinics to on-line encounters Many uninsured have broadband service . . . THE HARLOW GROUP LLC

The next disruptive innovation: American Well

On-line MD visits

Hawaii BCBS affiliate rolled out service for all residents (not just subscribers; non-subscribers have higher copay) to be a good citizen in geographic access-challenged state

Minnesota too . . .

If driven by access/convenience, many visits may be rerouted from limited service clinics to on-line encounters

Many uninsured have broadband service . . .

Threats – inadequate volume 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 If the near-term target is no better than 18 visits/day (~6,600 running 365 days/year) it isn’t self-supporting MinuteClinic turned 90 sites “seasonal” in March THE HARLOW GROUP LLC

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

If the near-term target is no better than 18 visits/day (~6,600 running 365 days/year) it isn’t self-supporting

MinuteClinic turned 90 sites “seasonal” in March

Opportunities - Alliances with health care systems (1) Co-branding Starting to happen with some providers, in some markets THE HARLOW GROUP LLC Real benefit: partnering with health systems to fill a need in the broader health care system in each local market

Co-branding

Starting to happen with some providers, in some markets

Real benefit: partnering with health systems to fill a need in the broader health care system in each local market

Opportunities - Alliances with health care systems (2) Beyond co-branding Joint strategic planning regarding a broad service area / service line All parties can benefit through collaboration vs. competition Can gain buy-in from physicians by solving some of their problems Examples: Cleveland Clinic, others THE HARLOW GROUP LLC

Beyond co-branding

Joint strategic planning regarding a broad service area / service line

All parties can benefit through collaboration vs. competition

Can gain buy-in from physicians by solving some of their problems

Examples: Cleveland Clinic, others

Opportunities - Chronic care 44% of U.S. population has a chronic condition 75% of U.S. health care spend is on chronic care 2007 total spend = $2.2 trillion 1/3 of all care is unnecessary Assume retail clinics could capture 2% of the chronic market (e.g., certain monitoring visits for diabetics), and charge 1/4 as much All this translates to over 8,500 fully-utilized sites Another angle: Disease Management (one piece of this market) is est. to be $30 billion by 2013 THE HARLOW GROUP LLC

44% of U.S. population has a chronic condition

75% of U.S. health care spend is on chronic care

2007 total spend = $2.2 trillion

1/3 of all care is unnecessary

Assume retail clinics could capture 2% of the chronic market (e.g., certain monitoring visits for diabetics), and charge 1/4 as much

All this translates to over 8,500 fully-utilized sites

Another angle: Disease Management (one piece of this market) is est. to be $30 billion by 2013

Opportunities – Chronic care through alliances with health systems Joslin Diabetes Center – Walgreens partnership re: diabetes information Health information rather than service Not yet making full use of the model to alleviate pressure on PCPs Widen the range of NP-provided services in close collaboration with health systems to serve populations with chronic conditions THE HARLOW GROUP LLC

Joslin Diabetes Center – Walgreens partnership re: diabetes information

Health information rather than service

Not yet making full use of the model to alleviate pressure on PCPs

Widen the range of NP-provided services in close collaboration with health systems to serve populations with chronic conditions

Bottom line Challenging times ahead in MA and elsewhere Real opportunities for business development include Health care system affiliations Beyond co-branding Chronic care market Need to thread the needle with “limited service” clinic definition (take out “urgent”) and NP scope of practice Need to be cognizant of Anti-Kickback and Fraud and Abuse laws THE HARLOW GROUP LLC

Challenging times ahead in MA and elsewhere

Real opportunities for business development include

Health care system affiliations

Beyond co-branding

Chronic care market

Need to thread the needle with “limited service” clinic definition (take out “urgent”) and NP scope of practice

Need to be cognizant of Anti-Kickback and Fraud and Abuse laws

Resources Massachusetts Dept. of Public Health website with limited service clinic regulations, staff memoranda and public comments Deloitte report (2008) Commonwealth Fund report (2008) California Health Care Foundation report (2007) THE HARLOW GROUP LLC

Massachusetts Dept. of Public Health website with limited service clinic regulations, staff memoranda and public comments

Deloitte report (2008)

Commonwealth Fund report (2008)

California Health Care Foundation report (2007)

Questions / Discussion David Harlow JD MPH THE HARLOW GROUP LLC www.harlowgroup.net www.healthblawg.typepad.com www.twitter.com/healthblawg [email_address] 617.965.9732 THE HARLOW GROUP LLC

David Harlow JD MPH

THE HARLOW GROUP LLC

www.harlowgroup.net

www.healthblawg.typepad.com

www.twitter.com/healthblawg

[email_address]

617.965.9732