A Really Big Boo Boo

When I started this blog a year ago this month, I gave fair warning that I found much of what passed for conventional wisdom in health care to be not very wise at all. Pundits run wild. Consultants develop fixes for problems you did not know existed. Management theories get confused for reality. Desired outcomes get mistaken for assured outcomes. Wistful thinking is no way to run an organization.

A frequent result of this process is that people who have success in one area of endeavor think they can duplicate their genius in health care. Remember Theranos which promised to completely change the paradigm for clinical laboratory tests? The founder’s trial starts next year. I am betting she is good for at least five years at a federal resort.

In “A Big Boo Boo” which appeared in this space on November 27, 2018, I critically questioned the wisdom of peripheral players in health care such as sloppily run drug store chains getting into the health plan and drop-in clinic business. Most of these outfits cannot even keep their stores looking presentable.

Well, at least so far in the case of what I called “boo boo” clinics in ragged looking drug stores, I appear to be correct. Walgreen’s has announced that it will close its 157 in-store boo boo clinics. Truth be told and all modesty aside, I first predicted this outcome when I was writing a blog for NorthBay Healthcare before I hit the beach.

Walgreen’s idea was that by opening these boo boo clinics, access to care would be improved and patients would save money. Also, there would be a handy pharmacy to fill prescriptions next to the clinic and you could buy candy and soft drinks on the way out. In one trip you could get fixed and then start the journey to your next ailment, sort of like a health care perpetual motion machine.

Studies are beginning to show that boo boo clinics and the like do not save money for patients. They are not profit centers in any way for the drug stores. They are losers.

Walgreen’s now hopes to find suckers–oops, I mean other health care providers–to rent the vacated boo boo clinic space so that the new operators can lose money while Walgreen’s happily continues to fill prescriptions and sell candy and soft drinks where the real profits are.

Meanwhile, CVS continues to try to figure out the health plan business while operating boo boo clinics in its stores. A prediction–they too will tire of the losses and will get try to get back to straightening the shelves in their stores and occasionally cleaning their floors.

Some pundits refer to what Walgreen’s and CVS are doing as a “funnel” strategy where a wide net is cast at the top of the funnel and as customers cascade down the funnel the enterprise has multiple opportunities to provide services and goods. The hope is that being many things to a customer will result in efficiencies and cost savings. This is also known as a pipe dream.

In the year or so before I hit the beach, I invited a physician from Silicon Valley to speak to my managers about innovation and disruption in health care. He had very specific ideas about where disruption and innovation would occur but to my surprise he made it clear that operating boo boo clinics and urgent care centers were not disruptive innovations and, because they could not be run efficiently at scale, would not move the needle in terms of health care costs. He said these kinds of clinics could only be effective in solving particularly local problems of hospitals such as decanting demand from overrun emergency services. I wish I could remember his name.

A mistake outfits like the drug store chains and others make is to view the provision of health care through a purely transactional prism. Health care is much more than that. It is an interpersonal transaction based on mutual trust. That is a completely different kind of “business” than peripheral health care companies are in. Their lack of understanding is profound.

Walgreen’s has discovered it made a really big boo boo with these drop-in clinics. They had a similar and costly experience with Theranos’ magic lab test machine. Hubris instead of common sense will do that every time. As the great academician Professor Harold Hill said in “The Music Man”, you have to know the territory.