MinuteClinic – Aligning towards convenience

CVS MinuteClinics are walk-in clinics that provide basic medical services on a single-visit basis.

The business model of CVS MinuteClinics is predicated on delivery of 1) convenient, 2) high quality, and 3) cost-effective[i] healthcare services outside of the traditional healthcare system. MinuteClinics can treat minor illnesses and injuries, monitor chronic health conditions, and can also administer vaccinations and physicals. Each clinic has a limited of menu of services it provides, with prices available online[ii]. The MinuteClinic value proposition stands in contrast to that of traditional clinics or emergency rooms, where patients may face long wait times and receive inefficient or expensive care. However, it seeks to complement rather than completely exclude the traditional healthcare system. This business model is monetized through payments made by patients or insurers, although CVS’s Pharmacy division reaps indirect financial benefits from the clinic system as well.

Financial and operations results emerging from this model have been notable.  A 2013 study in the American Journal of Managed Care showed that individuals using retail clinics had total lower costs of care, lower medical expenses related to physicians’ visits and hospital inpatient stays, and fewer emergency department visits.[iii]  While CVS does not break out specific sales figures for its MinuteClinic business, revenues were up 13% in 3Q2015 vs. 3Q2014, with similar and higher growth percentages reported in prior quarters[iv].  As of October 2015, there were 1,020 MinuteClinics in 32 states and Washington DCiv and 25 million patient visits were conducted from 2000–2015.[v]

The company’s operating model successfully supports its value proposition in several key ways:

  •      Wide accessibility and colocation with CVS Pharmacies – A key driver of MinuteClinic’s convenience proposition is its wide presence. The company boasts more than 1000 stores as of 2015, with 1500 locations projected by the end of 2017. Almost 100% of MinuteClinics are collocated with CVS pharmacies. In addition to its own organic expansion, in June 2015, CVS health recently bought and rebranded 80 Target clinics[vi]. Beyond their geographic accessibility, MinuteClinics clinics are open seven days a week and beyond regular business hours. From a patient perspective, CVS’s wide geographic reach and pharmacy colocation increases the likelihood that a customer has a clinic accessible when and where needed, in a location where they may have already picked up medication.
    • Colocation of services also helps drives cost-efficiency – it enables CVS to minimize capital expenditures for new locations and synergize operating expenditures with its pharmacy business.
  •      Care driven by nurse practitioners/physician assistants and use of clinical protocols– CVS’s provision of cost effective care is additionally driven by its employment of nurse practitioners and physician assistants rather than physicians. While the median salary of a physician in 2012 was $187,200[vii], that of a physician assistant was $90,930ii and that of a nurse practitioner was $92,670[viii]. To facilitate standardization and efficiency of care, MinuteClinics employ standardized clinical protocols for their services.  An interesting recent advance has been MinuteClinic’s partnership with telehealth companies such as Doctor on Demand, American Well, and Teladoc. In addition to potentially driving traffic to clinics, these partnerships can help assuage concerns about the quality of MinuteClinic’s lower cost workforce because they enable NPs and PAs to call upon a physician for cases that are more complicated than usual [ix].
  •      Link with the traditional healthcare system – finally, speaking to the company’s emphasis on convenience, CVS has smartly chosen to integrate the operations of its clinics with the traditional healthcare system from business, IT, and payment standpoints alike. CVS had formed partnerships with 49 major health systems nationwide as of 2014[x]. MinuteClinic also took the notable step of switching its electronic medical record system to Epic in 2014, allowing interoperability and information sharing with many major health systems across the US[xi]. These partnerships facilitate easy sharing of visit summaries with primary physicians, are intended to pave the way for joint physician/MinuteClinic management of chronic disease, and may be able to fuel further growth of the MinuteClinic business as healthcare systems try to shed low-return services under Accountable Care Organization models. Finally, there has been a major push to make MinuteClinic visits reimbursable by diverse insurance policies (with 84% of MinuteClinic visits paid for by third parties in 3Q2014), further reducing barriers to patients’ use of the services[xii].

Despite MinuteClinic’s apparent expansion success, outstanding questions ultimately remain about these clinics’ long term profitability and ability to be perceived as high quality, go-to institutions.




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Student comments on MinuteClinic – Aligning towards convenience

  1. I love this model. When traveling for work, it was extremely difficult to make and keep a doctor’s appointment. The minute clinic makes healthcare so accessible for people of all walks of life. Thanks for sharing more info on this.

  2. Great post! This industry is transforming so fast, and in different directions, from concierge doctors to CVS health clinics. It would be interesting to see if on the whole the lower end models (e.g., the Toyota’s of the space) might actually end up being more reliable… not sure…

  3. Really interesting post, Lisa! Despite their ubiquitous presence, I really didn’t know how they operated. Scalability seems to be inherent to the business model, but as you might predict, I would be curious to hear how the clinic approaches triage of patients who have needs beyond the scope of their care, how they deal with liability, and whether or not CVS is looking to expand into those other provider spaces. To your point about colocation, it would also be interesting to see how medical adherence compares to patients in a more traditional model of separate clinic and pharmacy. I would think it would be better.

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