Are micro clinics the future of healthcare delivery?
Two men on a quest to beat retail clinics by doing what retail did to hospital-based providers, only better. Which will succeed?
If you are feeling ill and want to be seen quickly by a healthcare provider, you have a few options. The first is to call your primary care provider, if you have one, and attempt to get a same-day appointment. The second is to visit a retail clinic, where you can get in quickly but may be referred back to the physician or a hospital if your condition doesn't meet a set of 40 or so conditions the nurse practitioner is licensed to treat without direct supervision. Third: You could visit an ER and likely wait a long time and pay a lot to be seen. Or, you could use a telemedicine website or app.
If this last option sounds convenient, it is. But it has drawbacks as well, such as the physician's lack of ability to take basic diagnostics, like temperate or blood pressure.
However, there may be yet another option if Vince Waterson or Steve Cashman get their way: the micro clinic.
Vince Waterson's micro clinic: Primary care provider of the future?
Mr. Waterson, a 40-year veteran of the telecommunications industry, is embarking on the start-up of his career: Medex Spot.
The company came about somewhat surreptitiously after a precursor company failed to take off: Mr. Waterson and two colleagues — Charlie Nahabedian, now president of Medex Spot, and David Sturgis, a UK-based computer engineer — had set out to create a satellite-based video with smart card technology to let immigrants safely transfer money from the U.S. back to their families at home. But the three ran into trouble getting U.S. banks to sign on to what would be a "cheaper service," says Waterson, and the project stalled.
However, one day Mr. Nahabedian was talking to a friend, who happened to be a visiting nurse, about the project. She quickly recognized its potential for primary care, and the three began to explore adapting the technology for healthcare.
"We looked at what else was there in automation, and the difference in healthcare is you have to provide a meaningful level of primary care on a self-service basis, and you have to address the issue of cleanliness," says Mr. Waterson.
The trio brought on a handful of shareholders and healthcare advisors, including Jay Saunders, MD, founder of the American Telemedicine Association.
In 2010, Mr. Waterson sold a telecom business he founded to pursue the development of Medex Spot full-time. Funded by its founders and around 20 investors, the company introduced a prototype of its micro clinic in April. Today, the company is entering into its second round of funding and looking to sign on health systems to beta-test the concept. (The company is in discussions with two major health systems already, but their names could not be disclosed.) In the future, Mr. Waterson imagines health systems expanding their brands by placing the micro clinic "cabins," which measure 5x6 ft., in a variety of locations outside the hospital, including retail stores and office buildings.
What exactly is a micro clinic?
The Medex Spot cabin includes satellite teleconference technology that links the patient to a nurse practitioner or other provider; FDA-approved, self-service diagnostic instruments; and a patent-pending automatic cleaning system, which allows the instruments to be cleaned in between patient visits without human labor. Using high-tech scanning technology, the cabin scans itself to assess if the space is soiled or objects are out of place. If that's the case, it shuts down, alerting a designated retail store or office building staff member to fix the problem. And, the air in the cabin is sanitized continually, in a manner similar to that used in the space station, says Mr. Waterson.
Health system partners would make their nurse practitioners available to treat Medex patients and would then share in revenue from the services, with health systems receiving a per-minute service fee for the virtual examinations. Medex plans to charge patients $40 for the first 10 minutes and $4 each minute thereafter, which is pre-paid using smart card technology when the patient registers. The cabin is fully branded under the health system, with Medex being an "invisible" player, at least to the patient, says Mr. Waterson.
Medex also plans to sell the cabins outright for use within hospitals (such as to fast-track ED patients) for $65,000, says Mr. Waterson. Roughly 20 percent of ED patients could appropriately receive care in lower-cost setting, and many hospitals have established "fast-track" alternatives to better utilize ED capacity. Moving the fast-track to a telemedicine model would also reduce the cost of caring for the patient, something of greater interest to hospitals that are part of accountable care models.
The competition: Steve Cashman's take on telemedicine for primary care
Medex isn't the only micro clinic on the scene, however. It faces competition from HealthSpot, a company that has already attracted the attention of a number of leading health systems, including the Cleveland Clinic and Kaiser Permanente.
He found lots of them — namely, telemedicine apps and websites, many of which had attracted serious venture capital money a few years prior. Yet, two years later, none had really taken off. He wondered why.
Overcoming the roadblocks of telemedicine, retail clinics
The answer he uncovered was obvious: "It was really simple. I went out to the doctors at top health systems and said, 'Why don't you use this?'" he explains. "And they all said the same thing: 'It doesn't do enough for me to write a prescription.'" That is, they couldn't take blood pressure, listen to the heart or look in a patient's ears. It seemed a situation ripe for a malpractice suit, the physicians told him.
Mr. Cashman also identified another major shortcoming of the telemedicine apps on the market: They didn't accept insurance. He went to the insurers to see why, and their concerns mirrored those of the doctors. If they reimburse the telemedicine visit, it's likely the physician will get halfway through the encounter, realize she needs to perform a diagnostic and ask the patient to come in to her office or send him to an urgent care center. It'd just create two claims and more costs.
Mr. Cashman has since overcome the telemedicine roadblocks. The HealthSpot locations (he doesn't explicitly use the term 'micro clinic'), include blood pressure cuffs, a stethoscope, otoscope, pulse oximeter and more. And perhaps the biggest of HealthSpot's 'wins': Physicians receive in-office rates for treating HealthSpot patients from all major insurers. In August, CareSource, an Ohio-based Medicaid managed care company, also agreed to do the same for its beneficiaries — making HealthSpot the first concept of its kind able to treat Medicaid patients.
Retail clinics also have their own set of problems. While popular among patients who use them, they haven't really taken off either, Mr. Cashman says. There are roughly 1,500 retail clinics in the U.S., but nearly 62,000 retail pharmacies.
And they're expensive. Retail clinics cost roughly $350,000 to build out and are staffed by two full-time nurse practitioners, requiring 26 appointments per day to turn a profit, according to the Forbes report. HealthSpot locations require much less space, a $15,000 upfront cost and are manned by a medical assistant, requiring just five patient visits per day to be profitable.
Who will win the micro clinic market?
What sets Mr. Waterson's and Mr. Cashman's models apart from current telemedicine and retail options, beyond simply overcoming the roadblocks of each, is that they want to partner, rather than compete, with both physicians and retailers.
Both offer opportunities for physicians, health systems and retailers to increase their earnings. Medex's model involves charging patients directly, and sharing revenue with its health system partners and retail locations. HealthSpot partners will bill patients' insurers and receive a monthly bill from HealthSpot for its service fee, and HealthSpot will share a portion of its fee with retailers.
Both approaches differ from current retail clinics, which employ their own providers and end up competing with local doctors.
While HealthSpot is the early leader with some big names in medicine behind it, Mr. Waterson believes Medex's model has a unique advantage: It's completely unmanned, meaning it's even less costly to operate. Innovative technology allows for automatic cleaning — no medical assistant attendant required. It also uses satellite, rather than the cloud, ensuring a greater level of privacy and security.
Regardless of who has more market share in 10 years, one thing is for certain: Both companies offer a model of healthcare that's much different from today — and much lower-cost.
For health system leaders whose interest is piqued, HealthSpot is actively signing joint venture parters, and Medex is looking for two to three more hospitals looking to beta test their cabins, free of charge.
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