7 Mega Trends in Urgent Care
Whitepaper
by David Stern, MD
CEO, Practice Velocity
Urgent Care
Mega Trends
Whitepaper by David Stern, MD, CEO, Practice Velocity
Old norms are shifting and savvy urgent care center owners need to
understand the changes in the environment to be successful in the future.
Some of the most prominent trends on the urgent care horizon include:
I.
II.
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Hospital ownership of urgent care centers
Hospitals are buying existing urgent care centers in their
communities, adding urgent care services to their primary care and
pediatric practices, launching joint ventures with urgent care center
owners, and partnering with retailers to enter the urgent care
market. The primary challenge in these relationships will be the
opposing goals of the partners; urgent care center owners will want
to keep operations lean and generate revenue, and hospital
administrators will be focused on increasing referrals to affiliated
specialists and generating admissions.
Decline of urgent care franchising
The sincerest form of flattery is imitation, and no one is following the
lead of the one and only urgent care franchising company as they
struggle to maintain current revenues with restrictive rules and high
franchise fees that continue for the life of the urgent care business.
Franchisees are burdened by requirements to use second-class
vendors and are fighting to get out of their franchise agreements.
This model has failed and is on its way out.
Whitepaper | 7 Mega Trends in Urgent Care
III.
IV.
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More competition from freestanding ED
How can this model work? Why would anyone pay ED fees for
urgent care services? It works because in some states, laws
require that care delivered in an emergency department must be
covered by insurance payors. Freestanding EDs do not need to
sign contracts with ED payors to get paid. These providers bill ED
fees for sore throats and sprains, driving up of the cost of healthcare for insurance companies and patients who will be charged
higher copays and coinsurance. We can only hope that this trend
reverses in the near future.
Investment interest from private equity groups
Private Equity owned urgent care groups are expanding rapidly.
With money to spend, they are paying high multiples for existing
urgent care centers and building new centers from the ground
up. Some focus on large urban markets and others on small rural
communities, but they are having a huge impact, consolidating
urgent care into very large groups. Urgent care owners should be
cautious when selling to ensure that they are receiving adequate
compensation for their existing practices and that they understand
the fine print of ownership transfer agreements.
Payor ownership of urgent care centers
Major insurance companies are starting and expanding
urgent care groups across the country. In joint ventures and as
full owners, payors are dominating selected markets with large
investments in urgent care. They purchase existing practices and
open de novo clinics to serve their members. This trend raises an
interesting contracting and patient access question, will one payor
give a contract to another payor in a market where the first has
an urgent care center that they prefer their members use? As with
hospital ownership of urgent care centers, there is also the issue
of competing goals. Can payors resist combining primary care
and urgent care, and if not, can they manage those businesses
simultaneously? One large experiment so far has proven that this
is much more difficult than it appears.
Whitepaper | 7 Mega Trends in Urgent Care
VI.
VII.
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Occupational Medicine is a shrinking business
Workplaces are safer than ever before and the economy is shifting
from manufacturing to service and technology. The resulting
reduction in the number of worker injuries is prompting the end of
the formerly lucrative dedicated occ med clinic business. With the
closure of these clinics comes a great opportunity for urgent care
centers able to successfully manage the addition of occupational
medicine as a complement to their existing business. Urgent care
center owners should be cautious and seek expert guidance if
they decide to offer occupational health services.
New markets for urgent care are gaining strength
Every urgent care center business will plateau and eventually
begin to decline. To succeed, urgent care owners must plan for
growth and explore new markets. Three particularly hot markets
at present include rural communities, urban markets and ethnic
neighborhoods. Rural markets represent an enormous
opportunity for new urgent care center start up. These
communities have been without healthcare resources for years
and welcome entrepreneurs with quality services. The number of
highly urban markets are limited, but urgent care centers focused
on meeting the needs of urban dwellers are expanding in these
locations at the expense of more limited retail clinics. Urgent care
centers with services designed to meet the needs of ethnic
populations can find great opportunities in city and suburban
locations. Eighty percent of urgent care center success is based
on location. To avoid failing before you begin, seek expert
assistance in identifying an optimal location. Practice Velocity has
developed an algorithm that can predict urgent care center
success for locations anywhere in the United States.
Knowledge of these trends, and understanding of your urgent care
center’s advantages/disadvantages and your customers’ expectations within
these larger market shifts will allow you to take advantage of changes in the
urgent care environment. Very successful urgent care centers continuously
plan, commit, and execute with passion, and they are never afraid to ask for
assistance to reach their goals.
Whitepaper | 7 Mega Trends in Urgent Care