Area Retail Clinic Expansions Eyed

November 2, 2007
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GRAND RAPIDS — Several local health care organizations are seeking to add more health clinics in retail settings, joining a trend that is gaining momentum across the country.

Physicians Organization of Western Michigan is working with Metro Health to re-open retail clinics that closed earlier this year in Meijer Inc. stores in other parts of Michigan and in Indiana. Three Affordable Basic Care retail clinics are still open in Grand Rapids-area Meijer stores, operated by an arm of Metro Health.

Advantage Health, the 110-physician primary care practice owned by Saint Mary’s Health Care, intends to place retail clinics in more Spartan Stores Inc. groceries after opening one recently in the new Family Fare store in Allendale.

“I think we’re looking at this as a first step,” Spartan Director of Pharmacy Eddie Garcia said. “We believe this is what customers are looking for. If we’re wrong, the clinics will go away. If it works the way we think it will, this is the beginning.”

Health clinics have been mushrooming inside stores over the past several years as retailers seek ways to attract customers. The clinics provide basic care for minor health problems such as sprains and colds on a fee-for-service basis.

“We went back to Meijer and said if you’d like to try and put together a different organization to reopen and expand the stores … we’re in the midst of that right now,” said Bob Smedes, executive vice president of growth strategies for Metro Health.

A subsidiary called Metro Health Basic Care works with POWM, an alliance of nearly 600 doctors, to provide the physician oversight that’s required under state law for the mid-level practitioners — nurse practitioners and physician’s assistants — who staff clinics.

“We credential them to make sure they’re up to snuff and we train them,” Smedes said. “For every two practitioners, we have a supervising physician, who is a Metro physician, that is supervising them at the site. Supervising physicians are available on a moment’s notice to deal with any problems that occur, to give them advice, and they go there once or twice a month and meet with the nurse practitioners and review all the charts.”

Smedes said MHBC has enlisted a recruiting company to find nurse practitioners and physician’s assistants for clinics in other cities. “We are working with some venture capitalists interested in this arena,” he added.

The arrangement between Metro Health and its partner, Arcadia Resources Inc., in operating 16 clinics in Meijer Inc. stores in Michigan and Indiana fell apart in August, shortly before clinics in Saginaw and Bay City were to open.

Arcadia, a publicly traded home health, health products and staffing company headquartered in Southfield, reported in its Securities and Exchange Commission filing for the quarter ending June 30 that its clinics had incurred “significant operating losses” since their inception in 2006.

According to the filing, MHBC and Arcadia agreed to a five-year contract to operate the clinics. Arcadia provided non-physician staffing and support services, such as billing, collections and third-party negotiations. Metro Health Basic Care was responsible for medical management, including physician credentialing.

MHBC paid Arcadia subsidiary Care Clinics Inc. 7 percent of billed charges each month, plus a monthly fee, based on patient care revenues, for administrative and staffing services. Nine clinics were opened in Indiana Meijer stores and seven in Michigan, including three in the Grand Rapids area. Arcadia had announced plans to open as many as 34 clinics by the end of 2007.

But the clinics never made a profit for Arcadia. The company reported that revenue in its clinics division for the quarter ending June 30 was $138,000, but costs amounted to a negative gross margin of $739,000. In August, Arcadia pulled out of the contract, closing clinics, incurring costs of $470,000 and planning to liquidate furniture, fixtures and computer equipment valued at $161,000. Arcadia now intends to “sell such services to retailers under a licensed service model on a fee-for-service basis,” rather than own clinics.

Struggling with multimillion dollar consolidated losses over the past two years, Arcadia acquired a new CEO in May, severed its relationship with its chairman in July, and recently announced corporate headquarters would move to Indianapolis.

Now MHBC and POWM are re-grouping in an effort to re-open the Meijer clinics. POWM Executive Director David Silliven said a meeting with Meijer could happen within the next week. A thumbs-up on the new arrangements would allow clinics to re-open in Indiana and Kalamazoo, Lansing and Traverse City, he said.

“We’re learning lessons from our past activities in how to operate these and redefining them,” Silliven said. “Our goal is to make them better than ever. We will continue in our partnership with Metro Health.”

Meijer spokesperson Stacie Behler said that although Meijer has no financial stake in the businesses operating health clinics in its stores, it plans to work with Metro Health to re-open the clinics.

“We think there’s great value and convenience for customers to have a health clinic that provides basic care at a lower cost in the store,” Behler said. “We are working with them to get those clinics opened back up.”

Smedes said Meijer works with several clinic operators across its markets.

In the meantime, Advantage Health and Spartan Stores have launched a clinic inside the new Family Fare in Allendale.

“Knowing this is emerging in other markets, we had three options,” Advantage Health COO Daneen Caro said. “We could sit back and see if this is embraced in our market; we could play in this model as a supervising group; or, the third option was we would ourselves embrace this care model. …We felt the third option was the best fit.”

Caro said the plan now is to put four or five clinics in Spartan stores, after some time to evaluate the first one. She said Spartan Stores and Advantage Health first discussed the idea about a year ago.

Garcia said with competitors such as Meijer and Wal-Mart hosting clinics, Spartan also wanted to “take that convenience up another notch. We hope to meet those (customer) expectations, and hopefully exceed them. Competition obviously is a factor, but I can’t say it’s an overriding factor.” He added that should the Allendale clinic prove successful, clinics would be considered for any of Spartan’s banners, including D&W Fresh Markets and Glen’s Supermarkets.

Advantage Health CEO David Blair said the clinic is a way for the practice to reach patients it otherwise might not encounter. “This allows us to be exposed to a new group of people who have the potential to enlarge our patient base, to be patient-centric and to grow our business. We chose a model to place our own providers in the facility. That gave us best chance to assure quality care.”

Caro said Advantage Health used a combination of new hires and existing employees to staff the Convenient Care Clinic. Unlike Affordable Basic Care clinics, where charges vary according to the service, the Advantage Health clinic charges $49 for every service. Caro said the pricing scheme was chosen to simplify the business model.

Some primary care doctors are wary of retail clinics, including Dr. Robert Redeker, an independent family practice physician in Byron Center and president of the Michigan Academy of Family Physicians. He said the idea of enacting state-level regulations for the clinics has come up to the Michigan State Medical Society, but with the budget crisis in Lansing, there’s little political will to lobby the Legislature at this time.

“The current public health code just requires there be an appropriate supervisory relationship. A physician has to be available for consultation, if necessary, and that can be over the phone.”

Redeker said family physicians are concerned that nurse practitioners and physician’s assistants working in clinics may overstep their bounds, may be too quick to prescribe over-used antibiotics and may fail to communicate with patients’ doctors. So the academy has issued recommendations for clinics.

“I can’t tell you it doesn’t cut into some of our business, but we’re almost talking apples and oranges,” Redeker added. “Most of these people are not people who would have made it to my office anyway. The idea that clinics are cutting into our business is not the main argument we have. We’re more concerned about the type of care and the quality of care.”

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