Wal-Mart Rebranding its Walk-In Clinics

After two dozen of its in-store clinics unexpectedly closed last week, Wal-Mart announced today that it will open several new clinics under the Wal-Mart brand name. Last week, contract company CheckUps, which operated 23 clinics in Wal-Mart stores, closed without explanation. Details later emerged that the CheckUps company closed all operations.

Medical concerns continue to dog retail clinics, and the American Academy of Pediatrics continues to oppose them. In addition, the clinics are largely unprofitable, making it a curious avenue for Wal-Mart to pursue. But as Wal-Mart’s sales sag in the U.S. and the company has an increasingly difficult time building new stores, the retailer needs to find new sources of revenue. Retail clinics is an attempt at this. While Wal-Mart might be good at selling merchandise, the retailer has never excelled at services: customer service in the company’s stores is notoriously bad, the company’s own health care plan is paltry and continuing labor disputes show that the company values profit over quality-of-life. Will the company’s walk-in clinics be any different?

Wal-Mart Will Expand In-Store Medical Clinics [New York Times]

Moving to upgrade its walk-in medical clinic business, Wal-Mart is set to announce on Thursday plans for several hundred new clinics at its stores, using a standardized format and jointly branded with hospitals and medical groups.

The first of the new Clinic at Wal-Mart walk-in centers, as they will be called, is to open in Little Rock, Ark., in April and be run by nurse practitioners employed by the St. Vincent Health System, a three-hospital group in central Arkansas.

Wal-Mart also says it plans to brand 200 of the new clinics with RediClinics, one of the Revolution Health companies of Steven Case, the AOL co-founder. Those are to be operated in partnership with various local health care providers. RediClinic, which already operates 13 clinics in Wal-Mart stores, plans to open one of the new units in Atlanta in April and another in Dallas next summer.

“We have learned that people are willing to receive their health care from the front of a store or the back of a drugstore,” said Dr. John Agwunobi, a medical doctor who is a Wal-Mart senior vice president. “But customers also have said they would rather it be delivered by a trusted name, a local health care practice, a trusted local provider of care.”

In all, Wal-Mart plans to have 400 store clinics by 2010, including current units that will be converted to the new brand as their leases come up for renewal. The company currently has 78 in-store clinics around the country, but has had uneven performance in some cases. Wal-Mart does not operate any clinics itself but is seeking local hospitals and medical practices as partners, said Deisha Galberth, a Wal-Mart spokeswoman.

Walk-in medical clinics are a growing industry, with numerous competitors that include big-box retailers, drugstores and even grocery chains around the country. Industry executives say 1,500 to 1,800 clinics will be open by the end of the year.

Propelled by the drugstore chains CVS and Walgreens, by far the biggest sponsors of the clinics to date, more than 700 clinics have opened in the last 15 months. But the business model is unproven so far.

Few, if any, clinics are profitable, according to industry analysts, and only a handful have broken even on daily operations. Most have been open a year or less, and executives say it takes up to three years for a clinic to become profitable enough to recover start-up costs.

Medical societies are inclined to be skeptical of the clinics. The American Academy of Pediatrics opposes them, saying they add to fragmentation in the health care system.

Dr. Edward Zissman, a pediatrician in central Florida, said he had qualms about hospitals that hook up with the clinics. “Putting their name on a product that I don’t think has the highest quality,” he said, “is going to cost them dearly with physicians.”

The American Academy of Family Physicians and the American Medical Association have set forth principles for clinics to observe, including sending patients’ medical record to their doctors and finding doctors for patients who do not already have them. Most states require varying degrees of physician supervision of the clinic nurses. Clinic operators say they are complying.

Many patients have said they like the convenience of the walk-in clinics’ weekend and evening hours, the short waiting times to see a nurse practitioner, and the posted price lists for a limited menu of care like tests and prescriptions for sore throats and ear infections and seasonal flu shots.

The typical customer is a mother with runny-nosed children in tow. About one in five customers pay cash. Wal-Mart says 55 percent of patients at its store clinics do not have health insurance, like 47 million other Americans.

“The clinics are the latest big example of how you could think about consumers and what their needs are, rather than a health care system exclusively designed around the needs of providers,” said Margaret Laws, director of an innovations program at the California Health Care Foundation, an independent group that finances health policy research.

Wal-Mart, for its part, rents store space to clinics operated by eight independent clinic companies and two hospital systems: Aurora Health in Wisconsin and North Broward Hospital District in Florida. The company plans to convert all of them to the Clinic at Wal-Mart brand as those leases expire, Ms. Galberth said.

Wal-Mart sets standards of service but the quality of care is “clearly within the domain of the provider,” Dr. Agwunobi said. “The customer will always be able to trust that the partner we have chosen is fully licensed and in compliance with all local and regulatory rules and standards.”

Wal-Mart’s rebranding effort comes in the wake of one notable failure in its clinic business. Last month CheckUps, a clinic operator headed by Jack D. Tawil, a New York businessman, ran out of money and closed its operations in 23 Wal-Mart stores in four Southern states.

It was not the first unhappy business experience for Mr. Tawil, who had not previously worked in health care. In 2003, he became entangled in a legal dispute with the London department store Harrods over the use of its name on a line of watches he was selling. The case ended with Mr. Tawil defaulting and being ordered to pay Harrods $4.68 million.

He was able to avoid making that payment by filing for Chapter 7 bankruptcy protection in the United States, according to federal bankruptcy court records in New York.

Mr. Tawil said in a telephone interview that he had found new investors for CheckUps and hoped to reopen in the same Wal-Mart stores, starting next month. Wal-Mart has said that with or without CheckUps the clinics will reopen.

But even if they do reopen under CheckUps, at least some of the nurses will not be going back to work there, according to Nikki Leimer, owner of a nursing employment agency in Mandeville, La., that is suing CheckUps over money the agency says it is owed.

In the future, said Dr. Agwunobi, the Wal-Mart executive, “We are going to want to know that the local health care providers can keep their promises.”

Posted by Alex Goldschmidt on Thursday, February 07, 2008