The Growth Channel

Siting your next retail clinic? Follow the coffee smell.

Retail clinics are expected to double in number across the next few years. And apparently our members have heard. In recent months, our researchers have gotten tons of inquiries from members who are considering investing in their retail health care capabilities.

Health systems seem to be grappling with all aspects of the retail clinic business model: the underlying economics, the staffing structure, even the right ownership approach.

Top retail clinics question: Location

But one of the most common inquiries we get is, “Where do we put it?”

Health system planners generally know how to choose the location for a new primary care practice or surgery center, but retail clinics just feel…different.

In reality, they’re not as different as they seem. Just as for any other bricks-and-mortar health care investment, institutions need to consider the current and future supply and demand in the market. We recommend that members ask a few basic questions:

  • Will the location attract the “right” patient demographic? Location will make a big difference as to which patients will visit the new retail clinic—and you need to make sure the clinic’s proposed location supports the patient population that is in your business model.

  • Is there unmet primary care need in this location? A retail clinic is less likely to succeed if there is ample primary care appointment availability close by. Swelling volumes in nearby emergency departments is one good indicator of unmet need.

  • How are the local demographics—and demand--expected to change? It stands to reason that investing an area likely to see population growth is a better bet than a market in decline.

Health care planners are used to asking and answering these kinds of questions—and their existing sources of data will probably help answer these questions satisfactorily. But there’s at least one other consideration that is critically important for retail clinics: traffic patterns.

Pinpointing the right site is all about traffic patterns

Much more than other health care facilities, retail clinics rely on proximity and convenience. Planners need to figure out how a potential location plays into existing patterns of traffic—and precision matters. The wrong block, or the wrong side of the street, could mean a meaningful difference in patient volumes.

There are consultants that specialize in retail traffic pattern analysis, and some of our members have retained them to evaluate potential retail clinic sites.

But there’s a shortcut to traffic analysis that several of our members have arrived at independently: look at where well-run national chains that rely on casual traffic place their outlets, and try to get as close to them as possible.

The “Starbucks shortcut”

I first came across this idea working with one of our health system members last year. They’d already determined that they needed a retail clinic strategy, and they specifically wanted to target the urban middle class. 

They identified the right area of town, and they knew the demographic projections were in their favor. But all the data at their disposal still left them with 10 city blocks to choose for the site, and they asked us if we had any data that could help them pinpoint the location more specifically.

On a whim, we suggested they look where all the Starbucks had been located. One of the strategic planners laughed and said, “Actually, that’s exactly what we did.”

When I came back to our office, I told a couple of our primary care experts about this exchange. To my surprise, they told me the “Starbucks shortcut” was not an uncommon approach. Some of our most resourceful members are piggybacking on the site selection expertise of big national chains.

After all, national chains are also looking at current demographics, population projects, and (most of all) traffic patterns. And retail chains, especially those like Starbucks that are corporate-run rather than franchise-based, are likely to exercise considerable discipline in choosing their locations.

Try it yourself

We’re not telling you to take planning shortcuts, exactly. But have you looked at where you can buy a $4 cup of coffee lately? That might be a good place for retail health care too.

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More on retail clinics

Want more about retail clinic growth? Check out these resources:

Daugherty: What providers should know about retail clinic growth

Report: Number of retail clinics to double by 2015

Walmart prepares to introduce self-service health kiosks

Learn more at the Health Care Advisory Board's national meeting

Hiten PatelWorking with the Data and Analytics Group, Hiten Patel leverages his consulting experiences and scientific training in the development and construction of quantitative research tools and analytics. His research focuses primarily on technology adoption and developing markets.

See all of Hiten's blog posts.