Unbiased Analysis of Today's Healthcare Issues

Attention Shoppers

Written By: Jason Shafrin - May• 15•06

Can consumer-driven health care (CDHC) really work?  According to the New York Times, many entrepreneurs believe it can. In “Attention Shoppers,” the newspaper details how Wal-Mart, CVS and other chain stores are opening walk-in health clinics. The clinics are staffed by Nurse Practitioners and operated independently of the chain store. The benefits of the walk-in clinic are: 1) shorter waiting times, 2) more convenient locations, and 3) lower prices. What about quality? Princeton economist Uwe Reinhardt assuages fears of a low standard of care. He state that with a their reputation on the line, chain stores have an incentive to maintain a high level of care.

This concept is an economists dream. I believe this model will be very successful, though limited in scope. These clinics work where the medical services market does not have many imperfections. Patients generally will know what treatment they seek (flu shots, ear infection treatment, etc) so there is not problem of asymmetric information. Since many of these clinics will presumably open, there will be significant market competition and patients will only return to these clinics if they receive good service. I also believe moral hazard problems will be minimal since patients will still owe a co-pay even if they are insured and the co-pay will be a significant portion of the fee.

I do not, however, believe these clinics will reverse the trend of increasing healthcare costs. The clinics are narrow in their scope; they only will stock basic medical equipment and all cases with complications will be referred to a physician. People with serious diseases will still seek specialist care. Nevertheless, this innovation should make the provision of primary care services more cost effective and convenient.

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  1. […] As the art and practice of medicine opens up to free market forces and entrepreneurs, we are going to see new business models replace old ones. The New York Times recently underscored this by covering the rise of retail health clinics, which Kevin, M.D. calls the “Starbucks modelâ€? for urgent and primary care and Healthcare Economist thinks are a “dreamâ€? come true. One of the companies mentioned by the Times is RediClinic, a Revolution Health Group company. Another is MinuteClinic, headed by franchising veterans from the fast food industry [Read more about these clinics at the Kaiser Family Foundation and Kiplinger’s]. […]

  2. […] a year ago (”Attention Shoppers“), this blog noted the rapid expansion of walk-in health clinics staffed by nurse […]