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. 888.357.4209 www.practicevelocity.com [email protected] 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. V. 888.357.4209 www.practicevelocity.com [email protected] 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. 888.357.4209 www.practicevelocity.com [email protected] 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
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