As an urgent care consultant who focuses on startups, I am frequently asked the question: “Is the urgent care industry saturated?” More often than not this question is directed toward a specific location, state, or city where a prospective client is considering the development of a new center. Typically, my answer is a resounding no. Some of my colleagues may disagree and think it is only a matter of time before consolidation by large healthcare systems and national chains will force the solo owner out of the marketplace. Call me old-fashioned but I still believe there are opportunities for the entrepreneur who employs customer focused service, quality, and outside the box thinking when it comes to creating a new style of urgent care. After all, that is how the urgent care industry came about initially.
So what’s the choice? For many, the message that the sky is falling has been conveyed for the past several years. First, it was believed that retail clinics were going to destroy the urgent care industry. That did not happen. In fact, retail medicine lacked in many parts of the country. It never reached projections and often failed miserably. In some instances, retail clinics found symbiosis with local urgent care clinics. They recognized their service limitations and frequently referred patients who required higher levels of service to nearby urgent care competitors. In any event, it appears that only a few urgent care centers have felt the effects of nearby retail clinics. Moreover, our demographic still attracts and targets the middle-class, two-wage-earner families that focus on hectic lifestyles—they are the ones who need and seek convenient, cost-effective healthcare services.
Before we get too comfortable with staving off the threat of the retail clinic, what about the full-frontal assault of consolidation? Isn’t that the current watchword? Buyouts, private equity, and EBITDA multiples are as much a part of urgent care as bandages, strep tests, and crutches. Every urgent care owner wants to grow and add more clinics to their empire. Sometimes it feels like a real-life corporate game of Risk—takeovers and strategies formulated to aid and defend against potential conquests. There are some who argue that the whole point of getting into the urgent care business is to eventually get out. The sense that the owner of one or two centers is just mud under the boot heels of the large health system fans the fire of fear. Ultimately, the fear then leads to worrisome questions: “How can I even survive or compete? What’s the point of trying?”
The reality is a different story. The reality is urgent care ownership is relatively divided between physicians and physician groups, hospitals and health systems, and large corporations. There is a small percentage of non-physician owners as well. Often, non-physician owners are entrepreneurs that partner with physicians out of necessity—due to contractual obligation and assurance of long-term operational goals. While the percentage of physician ownership has come down the past few years—likely due to private equity buyouts—there has not been a perceivable decline in owner operated startups. The common complaint in the private equity world is that there simply aren’t enough urgent care centers in their target zone to purchase. Mid-level operators with three or more centers seem to be affected the most. Part of that problem is the industry is heavily weighted towards single-site ownership. There’s a thinner presence when it comes to mid-sized entities and large enterprise systems.
What does it all mean? If you look at the urgent care industry and health care in general, it is easy to see that both industries are facing challenges. The Affordable Care Act is supposed to supply everyone access to affordable healthcare. Unfortunately, instead of helping, it appears to be hurting. Nothing has changed. More than anything, the Affordable Care Act has benefited the insurance industry by creating unaffordable premiums and deductibles that force a majority of families to forego the care they need. Urgent Cares have long been the resource for the massive cross-section of our society who seek convenient, cost-effective care for non-life threatening illnesses and injuries. Now, it is becoming more apparent that urgent cares will fill the gap for patients who need a low-cost alternative to that same non-life threatening health care need that their high-deductible coverage does not provide. As the U.S. population continues to grow and people transplant back to suburban and urban areas, the demand for health care in these regions can only be met by the development of walk-in, non-appointment-based facilities.
Will the urgent care space turn into Starbucks with one on every other street corner? In more urban settings, it’s entirely possible. The population will dictate this need as our on-demand society continues to want convenience and little interruption to their lifestyle. Even if we don’t focus on urban centers of the country, how about putting an emphasis on the need for access to more rural, less populated areas? With the closure of small community hospitals and the difficulty of attracting primary care providers, the most beneficial resource for care may be the urgent care center. The model will have to transform slightly in order to be more operationally efficient, yet there’s no doubt that these services will be welcomed with open arms by the folks in and around these communities.
Is it really doom and gloom for the urgent care industry? If you are a physician who is thinking about opening an urgent care center, the opportunities are still there. We know there will always be a need for convenient, competent, and cost-conscious care. As Benjamin Disraeli said, “Change is inevitable, change is constant. The sky is not falling, and even if it looks that way, then get out there and figure out a way to sell umbrellas.”
ABOUT THE AUTHOR:
Patrice Pash is DocuTAP’s Director of Consulting Services. She has nearly 20 years of experience under her belt and has helped more than 150 clinics successfully start from the ground up.