Gone in 60 Seconds
An innovative chain called MinuteClinic is trying to reinvent the way you get treated for routine ailments.
(FORTUNE Small Business) – Is it possible that one remedy for the ailing health-care system can be found in a Target store in Minneapolis? To see for yourself, head down the main aisle, past greeting cards and gift wrap, toward the back of the store, where you will find a small office with a sign that says MINUTECLINIC. A menu board lists about a dozen common ailments, from strep throat to ear infections, and fees that range from $44 to $48. This is the first glimpse of MinuteClinic's retail-based approach to medical treatment—akin to the introduction of fast food to the restaurant industry—which could, according to experts, help fix the American health-care system and create a $675 million market in the process.
MinuteClinic is based on the premise that certain simple health problems can be more quickly and cheaply diagnosed and treated at a walk-in clinic than in a doctor's office or an emergency room. It employs nurse practitioners armed with software that helps them test for and treat a handful of medical conditions, including bronchitis; ear, eye, and bladder infections; and the flu. The software has the most up-to-date medical guidelines for diagnosis and treatment and applies strict rules that help ensure consistency of service. (It will not, for example, allow a nurse to prescribe antibiotics unless there is a positive test result.) If a patient comes in with a complaint not on the list or symptoms that indicate something more serious, he is referred to a doctor or an emergency room.
Harvard Business School professor Clayton Christensen has labeled this change in the delivery of medical services a "disruptive innovation"—the kind of change that obliterates a market's price points, turning an industry upside down and shifting the balance of power. Growth by way of disruption is, of course, not easy. MinuteClinic faces a serious challenge to change not only consumers' attitudes toward how they receive health care, but also doctors' attitudes about acceptable ways to deliver it. "There's some concern that patients will use the clinics for their regular health care instead of maintaining an ongoing relationship with their physician," says Dr. Michael Fleming, a family practitioner in Shreveport and chairman of the American Academy of Family Physicians.
But on the whole the MinuteClinic model has generated more enthusiasm for its potential than alarm about endangering the physician-patient relationship. As rising health-care costs continue to bleed companies' bottom lines, employers are searching for ways to cut spending, and MinuteClinic has become an option not just for individual patients but for workplace health-care plans as well. The company currently operates ten MinuteClinics in Target and Cub Foods grocery stores around the Twin Cities, as well as three corporate clinics and one at the University of Minnesota student union. In the summer it made its first foray outside Minnesota to open eight more Target clinics in the Baltimore area. MinuteClinic brought in just under $4 million in revenue in 2004, a leap over 2003's $2.5 million. And it has recently received $15 million in funding from Bain Capital Ventures and others to fuel its aggressive growth plans, which call for an expansion to 350 clinics in 20 metropolitan areas by 2009.
When Lynn Casey, 49, CEO of a public relations firm in Minneapolis, woke up with a scratchy throat one morning, she decided to visit the MinuteClinic at the Target store downtown. After a wait of about five minutes, she was asked some preliminary questions by the nurse practitioner—Did she have a stiff neck? Difficulty swallowing?—to rule out more serious problems. Then they sat down at the computer and went through a series of questions about symptoms and any medications she was taking. A swab test for strep throat came back negative, so the nurse practitioner told Casey that she would perform a separate, overnight test to make sure the first result was correct. The computer generated a receipt and automatically sent the test results to Casey's primary-care physician. Elapsed time from the moment she arrived at the clinic? About 20 minutes. "I have high standards about how quickly things should happen," says Casey, "and I was surprised at how efficient this was."
The nurse practitioners who staff MinuteClinics must hold a four-year bachelor's degree and a two-year master's, both in nursing, and they can prescribe drugs with varying degrees of oversight by a physician (depending on the state). Still, their salary is much lower than a doctor's, and that, combined with much lower overhead, explains why MinuteClinic is so much cheaper than conventional medical practices. (See chart for a comparison.) Still, some doctors worry that nurse practitioners will miss subtle symptoms that may indicate a more serious problem. "One of the reasons we go through training for so many years is to have an index of suspicions for things that might be something else," says family doctor Fleming.
But Dr. Glen Nelson, a surgeon and former vice chairman of medical device manufacturer Medtronic, who is the chairman of MinuteClinic's board, says the company is simply introducing standardized practices to a field that has long resisted them. "Physicians say, 'I didn't go to medical school for ten years so that I could let a computer tell me what to do,'" he says. "But the fact is, they should, because it will help them make fewer errors." (To date some 183,000 patients have been treated at a MinuteClinic; none has filed a malpractice suit.)
The idea for the company, originally called QuickMedx, came about in 1999 when Steve Pontius, now 42, and two business associates were meeting to discuss a medical website they wanted to launch for physicians. During a break, one of the men complained about the hassle he had encountered getting his son tested for strep. Pontius could sympathize—the previous Sunday he had spent three hours at an urgent-care clinic in Minneapolis waiting for the doctor to confirm what Pontius already knew—that his 5-year-old son's earache was indeed a sign of an ear infection—and to give him a prescription for antibiotics. As they swapped stories, the three men realized they had stumbled onto a market niche, and within a few hours they had sketched out the broad outline for a new company.
The first clinics opened in 2000 and focused on individual patients. All services cost a flat $35, cash only. The model offered slim profit margins, though, and there were not enough patients to produce the kind of returns the founders had projected. In 2002 all three left the company, and a new management team took over. Under CEO Linda Hall Whitman, 56, the company changed its model to target insurers and large employers that paid their employees' health-care costs directly. The move paid off: In its first two full years of operation MinuteClinic treated 49,000 patients. In 2004 alone the company treated more than 70,000 patients, says Whitman.
Today large employers such as General Mills and Best Buy encourage their employees to use MinuteClinics. St. Jude Medical, a St. Paul--based maker of cardiovascular medical devices, reduces employees' co-payments to $10 from $15 or $20 if they use MinuteClinic. "For the employees, it's a slightly lower co-pay and increased convenience, and for us there are some reduced costs as well," says Jim Bishop, director of compensation and benefits for St. Jude. The company, which implemented the lower co-pay in January 2004 for its 1,700 Twin Cities employees, estimates that it will save $20,000 in health-care costs annually.
MinuteClinic's success in Minnesota has spawned competition in Indiana, Kentucky, and Wisconsin. But Whitman, the CEO, says she is not worried. She maintains that the proprietary software, which the company has spent nearly $1 million developing—incorporating current best practices for diagnosis and treatment as well as a drug interaction database—ensures a competitive advantage. "Our competitors can't demonstrate clinical competence the way we can," she maintains. "You can't shoestring this and provide top-quality service."
But can you deliver top-quality medical treatment at shoestring prices? MinuteClinic thinks it can. How well it delivers on that promise will determine just how successful—and disruptive—the company becomes.
For common medical problems, MinuteClinic costs much less than a doctor's visit.
[*] Doctors' figures reflect median costs per episode of care, based on claims from Health Partners, a large Minnesota insurer.