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Healthy Dose of Competition: Urgent Cares in St. Louis Battle for Patients Street by Street

Author: UCA Admin/Friday, March 15, 2019/Categories: Industry News

Posted on the St. Louis Business Journal

Erin Powell is in the middle of an urgent care conundrum.

As the system director of retail health at SSM Health, Powell is tasked with identifying locations for the St. Louis-based health care system’s expanding network of urgent care facilities.

SSM has a benchmark it tries to meet: It looks for parts of the metro area with a population of 25,000 when planning a new urgent care project. But as she surveys the increasingly competitive landscape, Powell wonders aloud, “What are the strategic guidelines some folks are using? Because there are, at times, urgent cares right across the street from each other.”

As of Jan. 1, more than 20 different health care providers were operating 114 express or urgent care locations within a 30-mile radius of downtown St. Louis, according to Business Journal research. Based on SSM Health’s criteria, that would give St. Louis — with a metro-area population of 2.8 million — one urgent care for every 24,500 people, nearing the region’s capacity for urgent cares.

With more facilities expected to open their doors in coming months, and a population that isn’t growing, something has to give. Yet executives from the St. Louis-area health care systems and private urgent care companies argue that the market hasn’t hit a tipping point — at least not yet.

“Patient demand for access to urgent care seems to have kept pace with the proliferation of urgent care centers,” said Christine Candio, president and CEO of St. Luke’s Hospital, which operates nine urgent cares in the St. Louis area. “At some point, there will be a natural peak, but we do not think we are at that point yet.”

Meanwhile, a competition is being waged neighborhood by neighborhood between regional health care giants such as SSM, Mercy and BJC HealthCare and privately-owned operators like Total Access Urgent Care, the current market leader, which last month opened its 21st location.

Their facilities are emerging as a key outlet valve for hospital emergency departments log-jammed from non-emergency patients, while providing consumers something rarely seen in the nation’s health care system: convenience and choice.

So when a new urgent care opens up a short distance from one of his Total Access locations, Dr. Matt Bruckel doesn’t worry much about losing market share.

“McDonald’s and Burger King found that there’s not a fixed number of burgers that a neighborhood orders in a day,” said Bruckel, the company’s founder, president and majority owner. “It can actually increase each other’s volume because of the (proximity). It’s a competitive venture, but it’s also very cooperative.”


An urgent need

Urgent care facilities are walk-in health care centers that treat non-emergency conditions that require immediate attention. And they’ve turned into a big business, growing to an estimated $18 billion nationwide last year with projections to grow by 5.8 percent each year.

To explain why they’ve emerged in such force requires an understanding of the impact they’re making on one of the health care industry’s most vexing challenges: overloaded emergency departments.

ERs are the most expensive option for patients when it comes to providing care, and it’s not really close.

“Even if you have really good insurance, generally speaking, there’s a sliding scale on what you have to pay for a copay for utilizing high levels of care,” said Dave Dillon, vice president of public and media relations at the Missouri Hospital Association. “A primary care visit may cost $20, an urgent care may cost $50 or $100, and an emergency room department may cost $200 to $500.”

Primary care physicians are a lower-cost option, but wait times can be a deterrent. It takes a new patient 24 days on average to schedule a physician appointment, according to a 2017 survey from MerrittHawkins, a national physician search firm.

That might be one reason why the emergency room is a go-to for many St. Louisans, despite its expense. Emergency department utilization rates in the metro area were 13 percent higher for commercially-insured patients in the St. Louis region from 2014 to 2016 than national rates, according to a 2017 study by the St. Louis-based Midwest Health Initiative, a nonprofit organization that works to improve Missouri health care quality.

The flood of non-emergency patients clogging waiting rooms inevitably leads to longer wait times, which creates another health risk.

“You decrease wait time in emergency departments when you have the right population of patients,” said SSM’s Powell. “Your sickest patients are meant to be in an emergency department and when an emergency department is flooded with earaches, coughs and sore throats, you only delay the care for more seriously ill patients.”

Urgent cares are helping to chip away at the problem.

The number of ER visits per 1,000 people in the St. Louis area has begun to decline in the past three years. The 169.9 visits per 1,000 last year represents a 7 percent decline from 2013, according to the Midwest Health Initiative data.

Meanwhile, urgent care visits per 1,000 in St. Louis nearly doubled during that same time, rising from 104.3 in 2013 to 203.3 last year.


The strong survive

That’s a big reason why many of the primary players in the area’s urgent care market believe St. Louis has a long way to go before hitting its saturation point.

Laurel Stoimenoff, CEO of the Urgent Care Association, said there remains enough non-emergency patients in emergency rooms to continue to supplement the number of urgent cares.

“Patient volumes in our centers are holding and fluctuate throughout the year depending on factors such as the flu season and sports physicals,” said St. Luke’s Candio. “There is still a demand for urgent cares.”

Yet even Candio sees a tipping point on the horizon. And it’s coming sooner rather than later. “It is difficult to predict, but given the pace of urgent care center development, there likely will be peak within the next five to 10 years,” she said. “Those providing patients the best care and ease of access will continue to be successful.”

At that point, only the most nimble clinics — those capable of fine-tuning their cost structure and business model to avoid losses — will be left standing, Dillon said.

“The markets are self-regulating and if (an urgent care organization) doesn’t become profitable to have those locations, then they’ll probably close,” Dillon said. “The organizations that are successful at doing this are likely to be the ones who can figure out how to do it at the lowest cost.”

That’s why, as with any retail strategy, location matters.

Stoimenoff said the surge of urgent care facilities in recent years can be tied to the major hospital systems’ decision to enter the market, a trend she expects to continue.

“We’re going to continue to see it grow about the same,” Stoimenoff said. “It continues to grow, and I would expect to continue to see that partly because the hospitals are really getting into it.”

But for those hospital systems to get the most bang for their buck, they need to narrow their focus to more affluent neighborhoods, according to Dillon. In Chesterfield alone, there are four urgent care facilities operated by St. Luke’s, Total Access Urgent Care, SSM Health, and Mercy-GoHealth — all less than 5 miles from each other.

“If health organizations are looking at it from a money-making, enterprise perspective, they might ask, ‘What are the affluent neighborhoods?’ ‘Where will people have insurance?’” he said.


Power of choice

The urgent care industry is capitalizing on its core strength: convenience.

About 85 percent of urgent care patients are in and out in less than an hour, according to data from the Urgent Care Association.

That makes a difference for patients like University City resident Donna McKinney.

“My primary care doctor’s office hours are from 9 a.m. to 5 p.m., whereas Total Access Urgent Care is open until 8,” McKinney said. “The fact that I’m definitely sick and I need something right away, and the assurance that I can get some immediate relief is good for me.”

That's a big reason why Total Access Urgent Care isn’t in any rush to put the brakes on expansion. Bruckel said the company plans on having 26 locations operational by summer 2019 and said the St. Louis market still has room to grow.

“We understand that there’s a finite amount of resources that are needed in any given area, but I really do think if patients have the option to go to the best place and it happens to be the closest place – then it’s a win-win for everyone,” he said.

That choice is bringing a new and much-needed dimension to the overall health care market.

Louise Probst, executive director of the Midwest Health Initiative, said the competition is forcing organizations to battle for patients, which could lead to better quality of care.

“As much as it’s frustrating that we have so much excess capacity in health care, at least at this level they do seem to be competing for patients,” she said. “And we’ve seen almost no competition for patients in health care overall.”

Mercy’s Vice President of Business Development and Operations Keith Dacus said consumers demand better accessibility and service for health care.

“I think consumers have the options now and they’re viewing health care in more of a retail sense and shop around for their purchases,” he said. “They want the availability to see what options that they have. There’s really never been a better time for health care to think outside the box.”


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