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#2020Trends: The Retailization of Care

Amit Bhagat

Last week, I kicked off my new blog series on the six key trends I expect to have the greatest impact on the healthcare industry in 2020. This week, we move from my prediction for value-based care to trend number two: The retailization of care.

Prior to passage of the Affordable Care Act, healthcare was mildly exempt from typical consumer expectations. For example, in basically any other market, you would never agree to pay for something before you had any idea how much it cost. Post-ACA, many people found themselves far more exposed to the true costs of care via the surge in high deductible health plans. As you might expect, this created a much higher sensitivity not only to price but to the overall experience of care. What seems acceptable when something is low-cost or “free” is less so when it’s taking a much bigger bite out of your own pocket.

It’s this sentiment that helps provide context for the growing “retailization” of care. In response to the pressure to provide a more consumer-friendly experience and cut costs simultaneously, care is being driven out of traditional, high-cost settings into less formal and more affordable options.

The Rise of Retail Clinics & Urgent Care Centers

In the last decade, the growth of urgent care centers and retail clinics has skyrocketed to a CAGR of 7% and 20% respectively, with an average of 400-500 new centers now opening each year. The appeal to consumers is multi-faceted. First and foremost, these urgent care centers and clinics are money-savers. Studies have found that treatment costs in an urgent care center are an average of $2,200 less than the same treatment in an ER. On an industry-wide scale, the NIH estimates the potential cost savings of shifting care from ER’s to retail clinics and urgent care centers is $4.4B.

Additionally, patients have found that these lower costs do not come at the expense of quality. One study actually found quality of care for three of the most common ailments to be superior at retail clinics versus ambulatory surgical centers and ER’s.

Last but not least, consumers clearly value the easy access to care and convenience of the retail clinic and urgent care experience. Findings from a national survey cite shorter wait times and more convenient locations as the main reasons most patients choose urgent care and retail clinics over other care sites.

Shift to lower cost facilities

The average cost of a hospital bed is $2,000 a day. That kind of price tag, combined with a higher cost for procedures in inpatient settings, is pushing care to more affordable and convenient out-patient settings. According to the American Hospital Associations 2019 Hospital statistics report, hospitals’ net outpatient revenue was $472 billion and inpatient revenue totaled nearly $498 billion in 2017, a split of 48% to 52%.

Another positive trend is the development and growth of Ambulatory Service Center (ASC) – healthcare facilities that offer patients the convenience of having surgeries and procedures performed in an outpatient setting. Forty years ago in the US, all surgeries were performed in the hospital. Fast forward to today and you find that ASC’s function as a high-quality, cost-effective and convenient alternative to hospitals. For all these reasons, ASC, retail clinics and urgent care centers are increasingly replacing the dominance of traditional care settings for treatments, procedures and post-acute care. For example, the cost of a cataract extraction can be 42% less in an Ambulatory Surgery Center than the same procedure in a hospital outpatient department.

Telehealth Takes the Lead

What’s even more popular with consumers than retail clinics and urgent care centers? Telehealth. Today’s patient is increasingly comfortable with virtual alternatives like video chat, mobile apps, remote monitoring etc., which serve as an effective, convenient and low-cost option. In the last several years, Americans’ use of telehealth services more than doubled—outpacing growth in the use of urgent care centers, retail clinics, ambulatory surgical centers and ERs. As new players like Babylon Health prepare to enter the US market and continued mergers across large health systems exacerbate the issue of access to care in rural areas, telemedicine will become an ever-larger presence in the care delivery spectrum.

Can’t Stand the Suspense?

Check back next week to get the scoop on trend number three OR cut to the chase right now and download the full, on-demand webinar.