Framing the Issue:
• Urgent care, long a component of the health care system, is getting renewed interest as payers and investors buy up locations to reduce costs and find profits.
• Hospitals are seeking urgent care partners to lend their brand names to clinics, and to help build out their networks.
• Urgent care will be a key piece of value-based care, helping patients to avoid unnecessary ED visits and readmissions, and delivering care in affordable settings.
• Under Urgent Care 2.0, hospitals and others are seeking ways to make clinics more retail-like, with the same quality of care delivered in the clinic setting that they would expect to receive in a hospital or a doctor’s office.
There was a time not long ago when a patient might have been willing to wait an hour in the emergency department to have his arm stitched up, or a week for an appointment to have an achy knee X-rayed.
That was then.
Now many hospitals face steep competition as Americans demand more convenient, less costly care. One example: urgent care clinics — easy for patients to get to, open nights and weekends, and offering a wider scope of services than the typical retail clinic or primary care practice, including radiography, casting and suturing.
North Shore-LIJ Health System found itself in just such a predicament, with independent urgent care clinics popping up across its market. It had a choice: either build its own network of clinics or team up with with an outside company to share the logistical and cost burdens. Leaders decided to partner with Access Clinical Partners, an urgent care operator backed by private equity investment firm TPG Capital. Under the North Shore-LIJ GoHealth brand name, they plan to open about 80 clinics across the area in the next five years.
Finding a partner was the smartest choice for the system, says Mark Solazzo, executive vice president and chief operating officer of the health system. It affords a much faster rollout, more efficiencies and the ability to leverage someone else’s money to fuel growth and development.
“Our whole ambulatory strategy is about pushing out into the communities that we serve,” he says. “The patient doesn’t want to travel. If a mom has a baby with an ear infection in the middle of the night, she wants something that’s convenient. She doesn’t want to sit in the ED for three or four hours. She wants to be able to get in, get out, get her child feeling better and get back home.”
Hospitals, Solazzo says, “have to change our focus from how we thought care should be delivered to how the consumer wants care to be delivered in this new era.”
The concept of urgent care has been around for decades, but the model has gained renewed interest in recent years as both Wall Street investors and insurance companies jump into the business with both feet, inspired by the rise of health care consumerism and a primary care shortage — not to mention solid returns on investment. That, in turn, is persuading a growing number of hospital systems like North Shore-LIJ to partner with urgent care operators, says Thomas Charland, founder and CEO of Merchant Medicine, a consulting and research firm specializing in walk-in care. Experts say the market is entering a new phase, “Urgent Care 2.0,” in which the stakes are being raised significantly, and hospitals may need to seek outside expertise to ensure that their clinics provide a uniform experience — both in appearance and quality — from location to location.
In some markets, urgent care centers are eating into traditional providers’ bottom lines, but Charland sees an opportunity to swing the trend in hospitals’ favor. A recent survey of consumers by Merchant Medicine found that 70 percent of consumers prefer an urgent care clinic affiliated with a hospital, compared with just 16 percent who prefer independent clinics.
“It is a space that is creating a lot of angst for hospital systems, mostly because a lot of them are way behind,” Charland says. “But I’m a big believer that, when it comes to urgent care, people do have a preference for clinics that are affiliated with a hospital system brand.”
Seek a partner or go solo?
Whether it makes sense to build your own urgent care clinic or seek out joint ventures depends on several things, Charland says. Some hospitals may have a strong enough market position and the cash reserves to fuel expansion. Others may be in an area already saturated with urgent care operators and are weighed down by an organizational to-do list that’s a mile long. “Hospital systems have so much on their plates right now, and this is becoming a very competitive, dynamic, well-funded industry,” Charland says.
Leaders at North Shore-LIJ debated whether to go it alone before teaming up with Access Clinical Partners. Adding urgent care to its repertoire, Solazzo says, was part of a strategy to add easy access points for patients while alleviating unnecessary ED use. On top of that, the launch of its own health plan in 2013 intensified the need to provide care in less costly settings.
Its New York metro market is highly competitive, however. Independent operator CityMD Urgent Care has 38 locations in the area and ProHEALTH Urgent Care has 15 and counting. Solazzo, along with other experts in the field, believes North Shore-LIJ can succeed because of its well-regarded brand name and the full range of care it provides, in addition to the clinics.
A North Shore-LIJ physician or midlevel clinician will staff each GoHealth clinic, many of which are located near other health system facilities in case a patient needs specialty care, rehab services or is without a primary care physician. Meanwhile, North Shore-LIJ’s head of emergency medicine will oversee the entire clinic chain, ensuring uniform quality and seamless care across all the sites.
Numerous other hospitals and health systems nationwide are joining with urgent care operators to expand their reach. In the Pacific Northwest, Access Clinical Partners also is teaming with six-hospital Legacy Health; they’ve opened six GoHealth locations around Portland, Ore., with five more in the works.
In Illinois, the state’s largest urgent care provider, Physicians Immediate Care, which is backed by investments from insurer Anthem, recently inked a care coordination agreement tied to three of the four hospitals at Hinsdale-based Adventist Midwest Health. Company President and CEO Stan Blaylock, former president of Walgreens Health Services, says his firm is actively seeking other partners, pitching hospitals on their ties to the payer community and ability to quickly recruit staff, and bringing a clinic to market in 90 days or less.
In Massachusetts, a franchisee of the largest national urgent care chain — AFC/Doctors Express, with 142 clinics in 24 states — inked affiliations with both Boston-based Steward Health Care System and the Central Massachusetts Independent Physician Association.
While some physicians initially felt threatened by the idea of shifting care elsewhere, acknowledges CMIPA CEO Gail Sillman, they realized their practices couldn’t stay open 24/7 and want the assurance that patients have access to quality care on nights and weekends.
Those involved believe such partnerships between urgent care and provider organizations are the wave of the future. “The system spends so much money because patients don’t have the comfort to go anywhere else other than the ER,” Sillman says. “So, we see it as our job to ensure quality in an urgent care center that we’ve partnered with, in terms of patient care, but also the affordability of services for both the patient and the system overall.”
Boosting consumer-friendliness, population health
The urgent care field seems to have recently entered a new era, where the “bar is being raised substantially,” says Si France, M.D., founder and president of Access Clinical Partners. In what France calls “Urgent Care 2.0,” operators are making sure that locations are convenient, employees are well-trained and the space feels more like a coffee shop than a clinic, with a consistent experience regardless of location.
At GoHealth’s New York locations, every visit is assessed based on quality, and clinics are closely linked with hospitals to ensure continuity of care, he adds.
“Urgent care is not a new model, it’s just a model that’s in the midst of evolution,” France says. “Previously, patients weren’t sure what they would get when they walked into urgent care centers, and we try to answer that question for them. We have a standardized look and feel, a standardized patient experience, and we try to communicate very clearly that the quality standards are the same that they’ve grown to know and trust over the 100 or so years that the leading hospital system has been part of the community.”
Intermountain Healthcare, based in Salt Lake City, has deployed urgent care clinics since the 1980s. Recently, it’s been fine-tuning the concept. The number of InstaCare brand, system-owned clinics has almost tripled to 30 in the past decade.
Where possible, Intermountain strategically places clinics on medical center campuses across Utah to allow for better care coordination with primary care practices and the ED, and to gain economies of scale, says Tony Wallin, M.D., chairman and medical director of Intermountain’s urgent care system. Patients seem much more comfortable using a clinic that’s in the same building as their family doctor, and it saves costs by sharing X-ray machines and other equipment, he says.
Intermountain is now working to bolster the consumer-focused aspects of its urgent care clinics. Just recently, it started a pilot project, expanding regular closing hours from 9 p.m. to as late as midnight or even 1 a.m. The 22-hospital system is responding to an influx of patients who were using the ED at late hours, after clinics had closed.
Wallin sees urgent care as key to the organization’s accountable strategy — providing services in the lowest-cost, most appropriate setting that’s most convenient for the patient. “If you want to have an accountable care system that makes sense and is efficient and cost-effective, how many patients are you going to have to train to try to keep them out of the ER [when it’s not appropriate]?” he asks. “We already have a major problem with that. Many people are being seen in the ER [who shouldn’t be there], and we’re a good alternative for them.”
Leaders of Aurora Health Care in Milwaukee also view urgent care as vital to thrive in the new health care reality. The 15-hospital system owns 34 clinics across Wisconsin and has operated in the space for 30 years. Bob Stuart, M.D., chief medical officer of Aurora’s Medical Center in Summit, says urgent care is an integral part of population health management — providing patients easy access to the system at a lower cost than the ED. In an era of declining reimbursements, urgent care centers are also a source of “downstream revenue,” or dollars that aren’t part of the hospital’s main billing system, and may end up going elsewhere, such as third-party practitioners, he says.
Rather than aggressive expansion, Aurora’s focus is standardizing care at its clinics. There’s a movement afoot to develop quality metrics to better quantify urgent care’s success, both at Aurora and nationally. The system hopes to have those metrics in place across its clinics by the end of the year.
Meanwhile, the Urgent Care Association of America last year launched its own accreditation and certification program to standardize quality among all providers around the country. By Merchant Medicine’s estimate, there are about 6,000 clinics. Under the program, the association gauges clinics on certain operational and clinical measures, including governance, human resources, quality improvement, physical environment and management of health records, among others. Scope, quality and safety are the primary focus, says Laurel Stoimenoff, vice president of the association’s board of directors and co-chair of its accreditation and certification committee. “Really, we’re just looking for a way to raise the bar.” Insurers, such as Blue Cross Blue Shield of Massachusetts, have taken notice. The company announced in February that it will begin covering visits by its 2.8 million members to any UCAOA-accredited urgent care clinics.
Urgent care presents an exciting opportunity for hospitals and health systems to convert potential customers into hospital loyalists, Stoimenoff adds. The association estimates that upward of 40 percent of urgent care patients do not have a medical home.
Aurora’s Stuart advises hospital leaders to remain cautious, however, in their approach to urgent care, weighing the expense of opening a clinic vs. what the hospital may gain. Above all else, drill down on quality and the dollars will follow, he advises.
“What we’ve learned over the last 25 or 30 years is that it needs to be thought out carefully — locations, patient-centric concepts, hours of the clinics are all crucial to success,” Stuart says. “I think that it’s most effective to align with a well-known hospital system, as we have done with Aurora, to enhance the likelihood of success. But the bottom line is that one cannot compromise on the quality of the staff, meaning the physicians and nursing providers. High-quality delivery has to be the most important perspective of the clinic, and the finances and downstream revenue will follow.”
Insurers take the leap
ealth insurers have shown keen interest in the urgent care field in recent years, buying brand-name chains and coming up with creative ways to direct care to those clinics. But running such businesses has proved more difficult.
In 2010, industry giant Humana purchased Concentra, an urgent care and occupational medicine chain operating more than 300 medical centers in almost 40 states. In March, however, the Louisville, Ky.-based insurance company announced plans to sell the chain for $1.05 billion, amid speculation that it has struggled to operate its own provider clinics, according to Reuters. In a statement, the company said it planned to focus more on owned primary care practices to advance its integrated care model. Other large payers in the market include Blue Cross Blue Shield of South Carolina with 50 or so Doctors Care clinics in the state, and UnitedHealthcare with eight Optum Clinics in Kansas, Nevada and Texas.
Insurers see the clinics as attractive for a variety of reasons, particularly the potential to save on costs by directing patients to the right setting, says Mark Padgett, founder of consulting firm Estill Advisory Group, which advises clients on urgent care transactions. Clinics might hold another allure. “I think a lot of it comes down to, when they’re negotiating with different health systems, if they’re having contract disputes, being able to offer patients other options is significant as well.”
In Virginia, Anthem Blue Cross Blue Shield analyzed emergency department claims data, finding that 60 percent of visits easily could have been treated at a lower cost at clinics. After an effort to educate patients on alternative care sites, the insurer decreased unnecessary ED visits by 14 percent in one year.
Blue Cross Blue Shield of North Carolina is a minority stakeholder in the FastMed Urgent Care chain. All told, FastMed has about 50 sites in North Carolina. Five locations are run as “dual models” to help relieve primary care shortages — operating as PCP clinics during the day and flipping over to urgent care in the evening.
The partnership was sparked after the insurer saw a spike in inappropriate ED use, says Susan Menendez, director of strategic provider relationships. BCBSNC used claims data to identify people who had used the ED unnecessarily in the past and predictive analytics to determine who was likely to do so in the future. Based on that information, it sent vouchers to about 65,000 members, waving the cost of an urgent care visit at FastMed. The insurer estimates that about 14 percent of visits in its claims are nonurgent, and some $8 million could be saved annually by shifting 5 percent over to an urgent care setting.
“It became clear that, in certain pockets of the state, members had few options, if any, other than the local emergency room,” says Menendez, a former ED nurse. “We’ve always wanted our members to have the right care at the right time at the right place of service because, what we’ve seen over the last several years is that ER co-payments are steadily increasing, sometimes even doubling or tripling, and it’s real important for us that our members have other options.”
Hospitals want a level playing field to compete with other urgent care clinic operators
In certain regions, hospitals are losing dollars to urgent care competitors.
John Hawkins, senior vice president of government relations for the Texas Hospital Association, says the trend dates to about five years, sparked by pressure from payers to reduce costs and a slew of independent urgent care providers entering the market. Urgent care is highly competitive and fragmented in Texas, notes Merchant Medicine CEO Thomas Charland. For instance, HCA recently acquired 24 clinics in the Dallas-Fort Worth area, NextCare Urgent Care operates 28 clinics under several different names and UnitedHealthcare has seven locations in Texas, mostly in the Houston area.
Hawkins is concerned that nonhospital clinics are operating on an unlevel playing field. Texas emerency departments must accept any patient, regardless of insurance status, he notes, while many independent operators can turn away those with Medicaid or who are unable to pay for treatment.
“I think most hospitals and health systems welcome competition,” Hawkins says. “It’s just [that] in health care, because of the payment sources, it’s not a true, free market. So, on the regulatory side, we just need to make sure that everybody is coming at it from a level playing field.”
At a national level, the American Hospital Association is monitoring the urgent care trend, but different markets are experiencing it differently, says Jeff Goldman, vice president of coverage policy. Some may own health plans and use urgent care as part of their own strategy to control costs, while others have shared some of the same concerns expressed in Texas.
How a hospital responds to the trend depends to a large degree on where its market is on the volume-to-value curve, Goldman says. Hospitals should work to educate consumers about coverage options in their states, he adds.
“It’s certainly a trend we’re watching and the field is experiencing as systems evolve more and start to take on financial risk for covered lives,” Goldman says.