Eye on Retail: How Health Clinics are Driving Drug Store Business
I was struck recently by how services like walk-in clinics are becoming ancillary revenue centers for retail drug stores. My own experience, while maybe not adding significantly to the bottom line of such enterprises, certainly added something to the gross sales of the CVS I visited, because after my brief and successful trip to their MinuteClinic, I ended up spending an unplanned $40+ on odds and ends, in addition to the medication I needed.
MinuteClinic is a division of CVS Caremark, and its president Andrew Sussman noted that by the end of 2011, MinuteClinics reached “break-even on an all-in basis, with all costs and benefits to the company accounted for.” He also cited revenue growth of 22% for the first quarter of 2012. CVS has 565 drug store clinics in 25 states and MinuteClinic is the largest walk-in clinic operator to date.
One of the reasons these retail drug store clinics are successful is that they can offer care more cheaply than a doctor’s office or emergency room. The Rand Corporation in a 2009 study found that the cost to treat common illnesses like sore throats, ear infections, and urinary tract infections were at least 30% lower at a walk-in clinic than at other health care facilities. The study also found the quality of care was equal to that of other medical settings.
These clinics are staffed by nurse practitioners or physician assistants, who are qualified to write prescriptions. The added convenience of having a pharmacy in-store and the availability of over-the-counter medications make the drug store even more attractive for one-stop shopping. While low cost, efficiency and ease make these walk-in clinics attractive, they are not intended to replace doctors and there are collaborative arrangements between some walk-in clinics and area physician groups. This is adaptive medicine at its core.
A local market manager for Walgreens’ Take Care clinics, Rick DiCarlo, observed that uninsured customers frequent this set-up because of the discounted and prompt service. Also, because of the lower cost and less wait time, procedures like flu vaccines, immunizations and sports physicals are highly sought-after. Walgreens has 350 Take Care Clinics around the country; Walmart has 140 nationwide.
How does this contribute to the financial success of drug stores? In my case, I would not have gone to that CVS had it not had a MinuteClinic, which means I would not have spent that extra money in that store. It’s not only the added value of having the clinics themselves, it’s the “after-market” affect of the patient/consumer buying conveniently located medications and a number of other extra items in the store they may not have even considered before going there. This is a new path for retail marketing that combines medicine and health to bring in customers.