In a June 2015 announcement, Cleveland Clinic called itself “the first hospital in Ohio to offer 24-hour online healthcare statewide.” It touted, for example, its new online video visits for patients with a rash or a urinary tract infection. But the very end of the press release contained a critical detail: American Well, an independent telehealth company, was providing both the technology platform and the health care professionals who deliver the 24-hour care.
Cleveland Clinic’s brand, but a telehealth company’s doctors. Surprising? Maybe not for long. Partnerships like these are becoming commonplace in the “convenient care” revolution. Loosely defined, convenient care offers patients extended hours, minimal wait times, and low out-of-pocket costs for low-acuity conditions (e.g., sinusitis, bronchitis, ear infection). Retail clinics, urgent-care centers, telehealth kiosks, and online video visits are among the many new convenient-care options.
The Rationale for a Partnership
Healthier, younger, wealthier, and urban populations are likelier than other groups to seek convenient care, and retaining the business of these patients is clearly in the interest of health systems. But for many systems, the infrastructure of convenient care is not necessarily in their wheelhouse — so they need partners.
Consider this analogy: A car has about 30,000 parts. An auto manufacturer cannot make all of those parts and still turn out a competitively priced vehicle. How does an automaker decide which car parts to make, which to outsource to partners, and which partners to choose?
In simple terms, the car company compares its in-house capabilities with those of available suppliers — can it make this part better, cheaper, and faster than anyone else? Car manufacturers excel at creating top-notch engines in-house. But for a secondary part like an airbag or a blind-spot warning camera, a dedicated supplier may be a better choice.
Health systems face the same dilemma. If another company can do a better job of providing simple, low-acuity care, a partnership may be worth considering, especially if by partnering a health system can — with limited capital investment — attract new patients, retain existing ones, and experiment with new delivery partners that are willing to assemble new networks of care.
Types of Partnerships
Partnerships between health systems and providers of convenient care vary in form. Here are a few:
Non-exclusive agreements, as with a CVS Health MinuteClinic or Kroger’s The Little Clinic, have been popular because health systems bear little financial risk and because these clinics can be new sources of referrals to the health system’s primary care doctors. Some retailers even pay health-system physicians to function as the clinics’ medical directors. But there is a fine line between being partners and being competitors. Unlike auto parts suppliers, which have no market without the automakers, convenient-care companies have an independent customer base whose needs they can try to meet on their own. Walmart, for instance, has tested the waters as a primary care provider in a few locations, and several other companies are offering components of chronic disease management.
Joint ventures, where each party has a stake, may appeal to health systems that want more ownership, though this type of partnership requires greater capital investment. In this format, each party may have an equal stake and equal representation on the joint-venture board of directors. RiteAid’s RediClinic, for instance, unveiled a large joint venture with MultiCare Health System in 2015. Other joint ventures involve urgent-care companies, such as GoHealth or Premier Health, which provide a wider range of services (e.g., laboratory, imaging) than retail or telehealth providers do. As with any joint venture, however, success requires navigating the differing management styles, cultures, and goals of each side.
Leased-space arrangements involve health systems’ wholly operating convenient-care clinics within a retail space. Advantages include fully integrating electronic medical records, referring patients exclusively to the health system, staffing the clinics with health-system providers, and benefiting from retail pharmacists’ expertise. However, many health systems lack the operational capacity to staff and run such a clinic efficiently. For instance, more than 60% of the health system–operated clinics opened within Walmart stores were eventually shuttered.
Telemedicine partnerships may involve the health systems’ paying a fee for the technology and the provider services and, in return, getting exclusive referrals and complete branding, such that patients may not even know that outside providers are providing the care. The telemedicine company Carena, for instance, makes this assertion: “We are your health system’s partner, not your competitor. We help expand your patient base and build loyalty to your brand.”
In auto industry partnerships, the automaker’s brand dominates. That’s because parts suppliers have little incentive to promote their brand directly to consumers without a direct market for their products. The branding dynamic between health systems and convenient-care providers is not as simple.
Retail clinics are typically located within pharmacy or market chains that have a strong brand identity and continually seek to expand their customer base. Given that branding matters to both the health system and the retail clinic, most partnerships involve some degree of mutually beneficial co-branding. Convenient-care providers benefit by association with a trusted health system, and health systems can draw patients from the existing retail clientele.
However, the details may make a difference. In its unsuccessful model, Walmart did not allow its partner health systems to use signage outside the store, as the hospitals were one of many lessors in Walmart’s retail space. Walgreens, which now also offers health-system leasing options, will allow outside signage and no competing lessors.
For now, many telemedicine partnerships have a branding relationship not unlike the one between auto parts suppliers and car companies. Consumers often primarily see the health system’s (automaker’s) branding and advertising, even when a telemedicine company (parts manufacturer) supplies the providers.
Independent research on patients’ visits to retail clinics has generally found them to be of high quality and equal to physician office visits, whereas the limited research on direct-to-consumer telehealth is mixed on the question of quality. But general trends don’t guarantee success in particular partnerships — each arrangement must be monitored.
In the auto industry, vetting a supplier is a rigorous process. The supplier’s quality, cost, timeliness, financial viability, and even ethical standards must be assessed — and random quality checks are often conducted. The stakes are high. When, say, an airbag gets recalled, customers typically associate the recall with the maker of the car, not the airbag. Similarly, health systems should be aware of convenient-care partners’ performance on quality metrics, such as measures for appropriate testing and medications. If more health systems become accountable care organizations (ACOs), reimbursement will be increasingly linked to performance, bolstering the incentive for the health systems to ensure high-quality, cost-effective care wherever patients get it.
Of course, if you monitor a partner’s quality, you must decide how to act on the results. For example, will a health system dissolve a partnership because a telehealth provider’s antibiotic prescribing rate is too high? After all, switching convenient-care care vendors could be difficult after a health system gets comfortable with one vendor’s people and practices and, perhaps, after the health-system’s patients become loyal to the care at, say, a particular retail clinic.
Making the Care Seamless
For complex care, many people continue to visit health system–based primary care providers, who are responsible for tracking patients’ multiple care streams. But Washington University researchers found that although almost 1 in 4 survey respondents reported taking their kids to a retail clinic for pediatric care, only half of them subsequently volunteered information about those visits to their regular pediatricians. In addition, retail clinics increasingly offer medication counseling, diabetes and hypertension management, preventive screenings, nutritional counseling, and even behavioral health services to health-system patients. Therefore, integration of electronic medical records is crucial in achieving full coordination between convenient-care settings and health systems.
Seamlessness of care also provides a business opportunity. Many patients who visit retail clinics and telehealth providers do not have a regular clinician. Smooth, frustration-free transitions can make convenient-care partners a source of new patients. The partner should be able to quickly make referrals into the larger health system and address logistical issues (e.g., order required testing before a specialist visit). By the same token, health systems should seamlessly refer patients to convenient-care partners as appropriate. This kind of seamless referral does not have a clear parallel in the auto industry. Some aspects of convenient care are simply unique to health settings.
Convenient-care partnerships won’t work for every health system. Those that value direct control of quality, reimbursement, and staff culture over lower operational costs may continue to create convenient-care options in-house or partner with outsiders only for technology infrastructure. Others may wait to assess how well existing partnerships work before joining the fray. But as convenience becomes a core value for many patients, health systems should at least become familiar with the partnership landscape and its growing options.
This article originally appeared in NEJM Catalyst on April 21, 2016.