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April 21, 2014

Business execs see opportunity in urgent care

Photo | Contributed Ron Krippner (left) and Tom Kelly (right) are former business executives who decided to open Doctors Express urgent care centers in Connecticut to get in on what they see as a growing industry. Dr. Thomas Brown (middle) is the franchises medical director in Danbury.
By Matthew Broderick

As the father of four children, Tom Kelly says he's spent his fair share of time in urgent care facilities for the litany of ailments and injuries to which kids typically fall victim.

“At times, I felt I was there constantly,” he joked. But Kelly — a former corporate marketing executive — also saw a business opportunity in urgent care and a marketplace ripe for innovation.

So, after a year of exhaustive research he and his business partner, Ron Kippner, a former Wall Street executive, opened a Doctors Express urgent care franchise in Danbury last year. They're preparing to open a second location in West Hartford.

Such facilities have grown in popularity in recent years, but what's unique about Kelly and Kippner is they don't have medical backgrounds. In fact, only about 7 percent of urgent care centers nationwide are owned by non-physician owners, according to the Urgent Care Association of America (UCAA).

“The urgent care model makes a lot of sense, but I thought we could improve upon the patient experience,” said Kelly, who has had senior corporate executive roles with The Stanley Works, Newell Rubbermaid and other publicly-traded companies. “In a world where fast food and pizza are at your fingertips, good health care is not. It can be difficult to obtain and is not always consumer-friendly or focused on customer service. We want to change that.”

Since 2008, the number of urgent care facilities nationwide has grown from 8,000 to 9,300 and is estimated to increase 10 percent annually, according to UCAA. There are about 60 centers in Connecticut.

That growth reflects fundamental changes in the healthcare landscape and consumer demands, Kelly said.

“Unlike most doctors' offices, urgent care centers are open nights and weekends, which is easier for people's schedules,” Kelly said “We supplement what primary care physicians are able to do.”

They're also helping to keep medical costs down. The average insurance reimbursement payment his franchise receives is about $135, Kelly said, noting his facilities offer X-ray and laboratory services to address more complex injuries and blood work.

“Those same services we provide might cost a patient $750 in an emergency room,” Kelly said.

With 70 facilities in 21 states, Doctors Express is the largest urgent care provider in the country.

In Danbury, Kelly's $750,000 facility — staffed with 23 employees — served thousands of patients in its first year of operation. He said they are one of the few urgent care centers that accept Medicaid patients.

Now, Kippner and Kelly are looking to crack into the Greater Hartford market, with the opening of a new 3,000-square-foot facility in West Hartford this May. Kelly anticipates the $1.2 million franchise will draw even more patients as nearly 120,000 Connecticut residents secure new insurance coverage under the Affordable Care Act.

“Physician's offices are not going to be able to meet that demand,” Kelly said. “Many aren't even accepting new patients.”

It takes about 25 patients per day for an urgent care center to break even, Kelly said. That's higher than a typical primary care office because unpredictable patient flows require urgent care centers to carry extra staff. They also have X-ray and lab equipment.

“We also generally carry higher lease costs as we open in convenient, retail areas unlike most primary care offices,” Kelly said. “The breakeven number increases as patient flow increases as to maintain the value proposition of getting folks in and out in under 60 minutes we need to increase staff. So at 30 patients we need to add an additional staff member.”

Patient flow and reimbursement levels are the two primary revenue drivers, Kelly said. To achieve, say a $50,000 profit, the facility needs to see about 27-28 patients per day.

Kelly said Doctors Express' competitive advantage rests on its ability to connect patients with different care providers like primary care, pediatrics or a specialist.

In addition, he said, every person on staff from the receptionist to center administrator has formal clinical training. “The second a patient walks through our door, there are clinically-trained eyes on them,” Kelly said.

That approach has created better outcomes and more efficiencies, which is what Kelly believes his business background helps provide. Yet, he and Kippner remain a minority in the industry.

That has not prevented Kelly from looking forward to more Doctors Express franchises opening in the state. “We are committed to providing urgent care in Connecticut for the long-term,” he said.n

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