COVID-19 Reveals the Strengths of Retail Clinics

A decentralized method of reducing the cost of routine healthcare

COVID-19 reshaped American healthcare in many ways, from states suspending certificate of need laws for hospital beds to the increased use of telemedicine for routine care. One particularly notable change has been the increase in the number of retail clinics and in their use. CVS, Walgreens and others became part of the front line in dealing with COVID-19 by providing a more decentralized distribution for tests and vaccination than the formal hospital system and state vaccination sites. This distributed network was able to reach outside the walls of a hospital to provide needed medical services in people’s communities in a more accessible manner than a large hospital. Part of the advantage over traditional hospitals is that overhead costs are so much lower at retail clinics, which can pop-up and enter the market when needs arise. One report from 2015 estimated that retail clinics cost between $50,000 and $250,000 to build.

Retail clinics were already bringing low, transparent prices for prescription drugs and new primary care facilities that are more easily accessible and affordable than traditional healthcare providers, before COVID-19. The boost in retail clinic business during COVID-19 has inspired CVS  and Walgreens to continue to expand retail clinics nationwide.

While retail clinics have been expanding in the last couple years, there are ways to tap into them to an even greater extent to not only help deal with COVID-19, but also to help provide high-quality and low-cost healthcare. 

The first step is to ensure scope of practice regulations allow nurse practitioners and physician assistants to provide routine primary care. Scope of practice laws influence many non-hospital forms of healthcare, including retail clinics, by decreasing the pool of medical professionals to draw on. Doctors cost more to employ, so the more that must explicitly be performed or directly overseen by a doctor, the more expensive that care becomes. Nurse practitioners and physician assistants are quite capable of many routine healthcare procedures and diagnoses with no effect on quality of care, as some states’ regulations already recognize.  

The next step is to make sure that state regulations on what services can be performed at a retail clinic stay up to date. While the very nature of non-standardized treatments and high fixed-costs treatments means that retail clinics will likely not offer those services in the first place, states will still impose regulations on specifically what care can be delivered at retail clinics for patient safety. States will need to review advancements in treatments to keep their limitations on what can be performed in retail clinics up to date as technology changes. There are some procedures, such as invasive surgery, that obviously require a hospital, but minor stitches or mole removal might not. No matter how standardized open-heart surgery may become, it still requires the hospital setting that has paid the high fixed costs of a surgical suite and rooms for recovery. But primary care and many common medical appointments don’t require the hospital setting and can be provided cheaply and safely by retail clinics.

The third thing for states to consider is the licensing of the facilities themselves. Most states, but not all, regulate retail clinics the same way they do a private physician's office. Some states, such as Rhode Island, classify retail clinics as ambulatory care facilities, drastically increasing regulatory burdens and severely curtailing retail clinic availability in the state. One of the strengths of the retail clinic model is that its relatively low capital investment allows for quick development of many new clinics, creating competition between clearly defined services with transparent prices. While safety is always a concern for medical procedures, regulations limiting competition undermine the very strengths of this method to produce widespread affordable healthcare options.

Some research indicates that total healthcare spending goes up because of retail clinics. However, this finding needs to be viewed more in depth. The same research indicates that two-fifths of people switched from using a doctor’s office or emergency room to using a retail clinic, lowering the cost of their medical treatment. The other three-fifths of people were receiving healthcare they wouldn't have otherwise been able to access. The overall increase in spending is driven by so many more people being able to afford care at all.

Retail clinics will need to overcome the fragmentation of patient’s health data between multiple providers. Retail clinics have found innovative responses to other problems in the healthcare system, and there is a lot of room for new approaches in how healthcare data is handled.

Retail clinics have the potential to increase high-quality and low-cost healthcare for many common medical needs, but state regulations can reduce their effectiveness. Overly restrictive licensing and oversight of nurse practitioners and physician assistants, restrictions on procedures, and facility licensing burdens can limit the potential of retail clinics. Instead, state regulation should be aimed at allowing these new healthcare models to safely innovate ways to provide even more treatments at lower cost. Allowing retail clinics to flourish under a regulatory system that ensures safety while allowing innovation has the potential to reduce the cost of routine healthcare for many people to the point that they can afford to get care they could not afford before.