The past year has seen the emergence of a new business model in the health-care industry. Known as “retail clinics,” these onsite heath clinics are popping up in pharmacies and retail chains across the country, and offer convenient, accessible and less-costly non-emergency health care services.
A typical retail clinic is located in the corner of a drugstore, supermarket or “big box” store, such as Target and Wal-Mart. Retail clinics are staffed by nurse practitioners or physician assistants, who are trained to diagnose and treat minor illnesses such as colds, ear infections and strep throat; treat minor injuries such as cuts, burns and sprains; perform simple diagnostic screenings for conditions such as mononucleosis, diabetes and high blood pressure; administer vaccines such as hepatitis B and chicken pox; and write non-narcotic and non-controlled substance prescriptions. Retail clinics do not treat medical emergencies or administer prescriptions that require continuity of care.
Retail clinics appear to offer tremendous incentives to patients, employers, insurance companies, hospitals and retailers alike. Patients are attracted to the clinic’s affordability and convenience – particularly since most visits take about 15 minutes and do not require an appointment. On average, services cost between $30 and $110, and many retail clinics accept health insurance.
Finding that retail clinics make it easier to contain health care costs, employers such as Bank of America and General Mills encourage employees to use the clinics. Lower health care costs have led more health insurers to offer insurance policies that include retail clinic services.
Hospitals may have an incentive to participate in the retail clinic boom, since a partnership with a retail clinic could lead to increased referrals. (Some concern exists that retail clinics can lead to discontinuity of care; however, the American Medical Association has responded to the increased number of retail clinics by publishing a number of principles for clinics to follow. One of the guidelines requires clinics to encourage patients to consult a primary care physician.)
Additionally, retail stores have tremendous financial incentive to offer clinics onsite. Patient visits not only increase store traffic, but also enhance sales of prescription drugs, over-the-counter medication and non-health care products.
The retail clinic expansion has caught the attention of the investment community. CVS acquired Minneapolis-based MinuteClinic, operator of more than 150 locations in 19 states. Two other prominent retail chains, Take Care Health Systems, which has placed clinics in Walgreens, and RediClinic, which has opened clinics in Wal-Marts, have benefited from recent capital investments.
To these investors, retail clinics offer an interesting business model; because of lower payments on rent, staffing costs and malpractice premiums, the clinics face relatively low overhead costs. However, the dynamic presents many legal issues that retail clinics should evaluate, including scope of practice, Stark, HIPAA, EMTALA and accreditation.
Scope of Practice
Licensure regulations for retail clinics and the nurse practitioners and physician assistants that staff them vary from state to state. Many states have corporate practice of medicine regulations, which require the clinic to be a medical corporation owned by a physician. The ability of nurse practitioners to provide care at retail clinics may be restricted by the nurse practitioner laws of the state.
In Pennsylvania, for example, nurse practitioners are required to submit detailed collaborative agreements with physicians. Collaboration is defined as “a process in which a certified registered nurse practitioner works with one or more physicians to deliver health care services within the scope of the certified registered nurse practitioner’s expertise.” Part of this process requires physicians to be immediately available at all times to the nurse practitioner through direct communication. Other states may require a physician to be present physically for some or all of the time.
Stark
Perhaps the most interesting legal issue implicated by the CVS-MinuteClinic marriage is its relationship to the Stark regulation against physician self-referral. The Stark law prohibits a physician who has a financial relationship with an entity from making a referral to that entity for furnishing a designated health service (like prescription drugs). The relationship between the retail clinic and the pharmacy in which many are located may cause concerns about over-prescribing. Parties should tread lightly when pursuing contractual arrangements between physicians and store-based health clinics.
HIPAA
The Privacy Rule of the Health Insurance Portability and Accountability Act (HIPAA) regulates the use and disclosure of a patient’s protected health information (PHI), which includes written documents, electronic files and verbal information. Retail clinics must be certain that patients’ PHI is secured in accordance with HIPAA’s privacy regulations. The small size, public location and relative informality of retail clinics make privacy concerns especially relevant.
EMTALA
Because retail clinics are designed to treat non-emergency conditions, some hospitals may see a partnership with a local retail clinic as a way to lessen the strain on their overcrowded emergency rooms. These hospitals should take care not to run afoul of the Emergency Medical Treatment and Labor Act (EMTALA), which requires all hospitals that participate in Medicare and Medicaid and have emergency rooms to provide appropriate medical screenings to any patient who comes to the emergency department requesting examination or treatment for a medical condition.
Accreditation
Among the obstacles retail clinics face is establishing organizational quality and safety-of-care standards similar to those of traditional hospitals, which typically undergo voluntary accreditation with the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). Last year, MinuteClinic became the first retail clinic to earn JCAHO accreditation. However, accreditation with JCAHO can be time-consuming and costly, and some retail clinics may choose to forego the process entirely.
As a possible alternative to accreditation, the Convenient Care Association (CCA), a recently formed trade association for retail clinics, issued 10 mandatory standards for its members. The standards include monitoring quality through peer review and collaborating physician review, encouraging patients to establish relationships with primary care providers and complying with OSHA, CLIA, HIPAA and ADA standards. The CCA’s approach is an important step towards establishing standards of care for members of the emerging retail clinic community.
The emergence of retail clinics is an exciting, evolving model, and one that’s worth keeping an eye on. The clinics’ acceptance as a viable provider of health care services depends on a number of factors, including the response of the regulatory and medical community. We’ll certainly be watching.
Andrew J. Siegel
