Convenience Clinics: Passing Fad or Smart Business Move?

Instead of “a chicken in every pot,” or a car in every garage, the modern epitome of lifestyle convenience might be a walk-in clinic on every corner. At least in some upscale suburban areas, this informal version of a licensed medical facility has become a trendy amenity and a big business opportunity for smart investors.

Whether it exists as an urgent care clinic or simply offers the ability to receive professional medical advice without first calling for an appointment, this type of clinic has sprung up from coast to coast since the beginning of the century.

These retail clinics exist in many forms: Stand alone operations, satellite facilities affiliated with major medical organizations, “boutique” components of other businesses, notably pharmacies, and as other business models that seek to provide better care at lower cost to more citizens.

Key to the Future?

For physician-investors interested in high ROI, such clinics hold promise, whether or not the plan is to play an active role as consulting physician or to take a backseat and hire other doctors to dispense treatment. There are associated risks and tax considerations of course, but an increasing number of medical professionals are becoming investors in private practices and retail clinics. In some cases, private equity investors are sought for relatively short terms, after which a sale is anticipated to a larger hospital group or health-care provider.

Much of this testifies to the current uncertainly of Medicare providers, medical insurance, and medical professionals themselves. It illustrates the need for wider reform of healthcare in the United States. But what about ROI?

Trends

Patient visits to walk-in clinics increased substantially between 2006 and 2014, from 1.5 million to 10.5 million. And, in Minnesota, a 2013 evaluation by a private non-profit research firm, gave high ratings to the quality of care received at such clinics. According to reports, the implementation of the Affordable Care Act has only served to broaden the appeal and expand the burgeoning business opportunities for both urgent care and retail clinics.

Even though the American Medical Association and other medical groups have voiced concerns about such clinics over the years, most states either opt not to regulate or keep the regulatory requirements minimal. Despite ongoing concerns that such clinics will weaken the doctor-patient relationship and cause health problems for American citizens, the opposite has been the case. In some communities, it is the walk-in clinics that refer a large number of patients to specialists for additional care. And, for the foreseeable future, the market seems to trend upward for the opening of more convenience clinics.

As an investor, due diligence is required, just as with any other financial commitment. But the current belief is that future growth of the retail medical clinic is assured, and that financial gain is not only possible but to be expected.