December 18, 2017

CVS-Aetna deal could complicate state’s growing urgent-care industry

Photo | CNN Money
Photo | CNN Money
Aetna’s pending deal with CVS could upend the urgent-care clinic model, but some operators have early doubts.
Photo | HBJ File
Dr. Michael Gutman, co-founder of West Hartford’s New England Urgent Care, examines a patient.
Photo | Contributed
Kathy’s Urgent Care is expanding and plans a downtown Hartford clinic early next year.
Todd W. Latz, CEO, GoHealth Urgent Care

Connecticut's urgent-care industry has grown rapidly in recent years, as investors, hospitals, physicians and others try to stake ground in what many view as a lower cost, more convenient access point for people with non-life threatening illnesses or medical conditions to get care.

But the competitive landscape could soon get more complicated following CVS Health's $69 billion acquisition of Hartford health insurer Aetna, in which the combined company has pledged to offer more healthcare services in CVS stores, building on the pharmacy retailer's walk-in Minute Clinics, which generally offer vaccines and treatment for more minor illnesses. There are about 1,100 Minute Clinics across the country, including two dozen in Connecticut.

Some Connecticut urgent-care facility operators say the pending deal validates and shows greater potential for their business model, rather than posing a threat to it. But it's too early to gauge its long-term impact on the nation's $3.5 trillion healthcare marketplace.

"As of this second, I don't think it's a concern,'' said Dr. Thomas Brown, founder-CEO of Cromwell-based Kathy's Urgent Care, which is working to open its third urgent-care clinic in downtown Hartford's former CVS store location at 750 Main St. CVS is now housed across the street at the 777 Main St. apartment tower.

Brown and other urgent-care observers, too, are generally positive about a subsequent pending transaction in which UnitedHealthcare, with sizable Hartford operations, offered $5 billion to acquire Denver's DaVita Medical Group. DaVita serves 1.7 million patients a year through nearly 300 medical clinics featuring primary and specialist care. It also operates 35 urgent-care centers and six outpatient surgery centers. Affiliate DaVita Inc. operates dialysis clinics in Greater Hartford.

According to the Hartford Business Journal's latest tally, Greater Hartford is home to at least 78 for- and nonprofit patient walk-in and urgent-care clinics. Hartford HealthCare is the largest operator of such clinics — 17, including seven with GoHealth Urgent Care— in the region.

CVS operates 10 of its Minute Clinic locations in the Hartford area.

Brown, who operates two Kathy's clinics in Cromwell and Rocky Hill, said convenience is the most obvious benefit to consumers from an Aetna-CVS combination. He said CVS eventually could offer a wider range of care services beyond blood-pressure screenings and flu shots, including helping consumers set appointments with primary caregivers or rehabilitation therapists.

Moreover, he and others say, the potential is there for Aetna-CVS to partner with other segments of the patient-care continuum to lower the overall cost of care through better, more efficient management and sharing of patients' healthcare information and access to care. Leveraging its huge buying power with drugmakers, Aetna-CVS could continue providing a broader selection of prescription pharmaceuticals at lower price points, they said.

While it's unknown exactly what a CVS store is going to look like in five years (assuming regulators approve the deal) company officials have hinted at what's to come.

In an outline of the deal, CVS said its retail outlets would evolve into a space for wellness, clinical and pharmacy services, vision, hearing, nutrition, beauty and medical equipment. An entirely new health services offering available in many locations would function as a community-based health hub that would answer patients' questions about their health conditions, as well as prescription drugs and health coverage.

Aetna CEO Mark Bertolini told analysts and shareholders during a Dec. 4 conference call that the vision is for consumers to think of a CVS for healthcare services the way they think of Apple's popular retail stores for technology.

"Think of a Genius Bar at Apple and this ability at the store to walk in and get help," Bertolini said. "I think this is the kind of idea we want to create in the stores."

Local perspective

Todd W. Latz is CEO of GoHealth Urgent Care, which partners with Hartford HealthCare (HHC) to operate seven urgent-care clinics in suburban retail sites. An eighth was due to open Dec. 18 in South Windsor; 14 total will be open by next October, officials said. Atlanta-based GoHealth, owned by Texas equity firm TPG Capital, has grown the last three years from five to 76 clinics in Connecticut; Greater New York City/Long Island; San Francisco; and Portland, Ore.

"To me," Latz said, "the [Aetna-CVS] transaction is an affirmation that we're on the right path to find a lower cost, convenient alternative to accessing care."

HHC, through a spokesman, said it sees no threat to its business model from an Aetna-CVS combination.

HHC's model, said spokesman Shawn Mawhiney, "is to ensure the right care, at the right place, at the right time. Increasingly, that means offering greater access to appropriate lower-cost options like urgent care, located in or near convenient retail locations."

As proof that patients prefer an urgent-care clinic option, Mawhiney said that since HHC-GoHealth opened their first seven area clinics, HHC has seen a reduction of more than 12,000 emergency room visits that did not require a hospital admission, while GoHealth provided more than 15,000 urgent-care visits.

Dr. Michael Gutman, co-founder of West Hartford-based New England Urgent Care, with five area locations, said he sees no immediate threat to his business model from an Aetna-CVS merger. Earlier this year, New England Urgent Care opened its first primary-care office next door to its Enfield urgent-care clinic.

Gutman said that, post merger, Aetna-CVS face daunting complexities and logistics to create and operate the type of patient-care services they ultimately envision and that those should not be underestimated.

"This is such a large event and there's so much money involved,'' Gutman said, "we're not going to see the outcome of it for several years.''

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