Big retailers are staking their futures on healthcare

By Nicole Witowski

From drugstore chains like CVS Health to big-box stores like Walmart, retailers are building a delivery model focused on the needs of the patient as a consumer, using retail clinics to grab market share in primary care, chronic diseases, and even behavioral health.

As retailers tap into the growing demand for consumer-centric care, data show their efforts are paying off: Over the last five years, the use of retail clinics has grown more than urgent care centers, emergency rooms, and primary care offices.

We explore why in our latest thought leadership report, but if you want an overview of recent trends in retail healthcare, then read on below.

Making sense of the retail clinic landscape

If you step into a drugstore in a major U.S. city, odds are you might spot a retail clinic. There are about 1,800 active retail clinics around the country offering convenient access to low-cost care for basic healthcare services. Most are owned by big chains like CVS Health, Kroger, and Walgreens. Others are owned or operated by health systems, hospitals, and physician groups – like Advocate Health and Kaiser Permanente – that have embraced this consumer-centric way of delivering medical care. The chart below shows the key players in the retail clinic space based on share of clinics.

Retail clinic market share in 2023

Fig. 1 – Data from Definitive Healthcare’s ClinicView product. Based on the number of retail clinics tracked as of March 31, 2023. Numbers may not add up to 100% due to rounding.

While retail clinics can be found almost anywhere in the country, they’re more likely to be in major metropolitan areas. Most serve higher-income populations. Only about 2% of clinics are in rural areas, half of which are owned by CVS. For the same reasons healthcare providers often don’t locate in these communities, such as workforce challenges due to low populations, retailers are also reluctant to open clinics in rural areas.

This could change as more retailers reach into rural America to test the waters in offering affordable care. For example, discount retailer Dollar General, teamed up with DocGo to pilot mobile health clinics in the country’s rural areas in 2023. Walmart is also making rural healthcare a target.

Retail clinic claims jumped 200% since 2017

As retailers race to expand their medical clinics nationwide, consumers are flocking in. Recent data from our Atlas All-Payor Claims Dataset reveals that retail clinics experienced the biggest surge in use among conventional and alternative care sites, surpassing urgent care centers, primary care practices, and even emergency rooms (ERs).

Between 2017 and 2022, retail clinic claims volumes grew a whopping 200%. Over the same period, urgent care claims climbed 70% while hospital ER claims decreased by 1% and claims made by primary care offices dropped 13%. Retail clinics outpaced other sites of care thanks to the federal government, which made national retail pharmacies, including stores like CVS and Walgreens, a key part of its COVID-19 vaccination strategy.

Retail clinic claims volumes over time, 2017 – 2022

Fig. 2 – Analysis of retail clinic claims volumes data from Definitive Healthcare’s Atlas All-Payor Claims product from 2017 – 2022. Data accessed March 31, 2023.

Other major reasons for retail clinic growth? They’re less expensive than other sites of care, including urgent care centers and physician offices. And they typically publish their prices upfront. Cash prices for most services at the largest retail clinic operator, CVS Health’s MinuteClinic, ranged from $99-$139 in 2022.

What’s more, retail clinics offer easy access to care. Most accept walk-ins. They also offer extended evening and weekend hours. A Robert Wood Johnson analysis found that 59% of consumers chose a retail clinic over another primary care facility because the hours were more convenient, while 56% chose to use a retail clinic because there was no need to make an appointment.

Patients with chronic conditions are turning to retail clinics

In the first wave of the convenient care trend, retailers targeted a limited range of health conditions, from minor illnesses and injuries to one-off visits for vaccinations. Today, retailers are making inroads into what has traditionally been the domain of doctors: primary care and chronic disease management. Several are even stepping into behavioral health. Let’s look at a few key players.

• CVS Health offers chronic disease management for patients with diabetes, hypertension, and other conditions. It also provides in-person and virtual mental health services, like depression screenings and cognitive behavioral therapy. Recently, CVS bought Oak Street Health, a large network of physician-staffed primary care clinics focused on Medicare patients – signaling a deeper push into primary care.
• Walmart, meanwhile, is working to double its footprint of in-store clinics with the rollout of enhanced retail clinics focused on primary care. The retail giant also inked a deal with UnitedHealth Group to deliver value-based care at certain Walmart Health centers.
• Walgreens is shifting its strategy from partnering with healthcare providers to owning them, increasing its stake in primary care clinic chain VillageMD. The company has plans to open 1,000 co-located, physician-staffed primary care practices by 2027.

Regardless of the player, it’s clear that retailers are trying to reach more consumers with more comprehensive care offerings. Let’s dig deeper into claims data to see what retail clinics are treating.

Top five diagnoses reported by retail clinics, 2022

Fig. 3 – Analysis of data from Definitive Healthcare’s Atlas All-Payor Claims product. Based on claims reported by retail clinics in calendar year 2022. Data accessed March 31, 2023.

Unsurprisingly, nearly 4 in 10 retail clinic patients came in for an immunization in 2022. Last year, public health campaigns continued to promote vaccination and emphasize the importance of booster shots to help prevent serious illness and death from COVID-19. Every year in the U.S., prior to the COVID-19 pandemic, 50,000 adults died from diseases that could be prevented by vaccines, highlighting the value of the kind of care retail clinics provide.

But retail clinics are not just treating the common cold and administering vaccines – about 10% of diagnoses are now attributed to chronic conditions like diabetes, hypertension, and chronic obstructive pulmonary diseases (COPD). With more than 6 in 10 adults in the U.S. living with a chronic condition, the opportunity for retail clinics to become meaningful players in chronic disease care is vast, especially as retailers evolve clinic offerings from episodic treatment to primary care.

So, how can traditional providers thrive in the next decade as deep-pocketed retail giants vie for a bigger slice of the medical pie? Be sure to read our full report: Retailers in healthcare: A catalyst for provider evolution for a data-driven look at the current state of retail clinics and some potential next steps for traditional healthcare providers.