UnitedHealth and Walgreens are mixing urgent care with pharmacy

The tiny suburb of Hilltop, located just north of Minneapolis, is hosting an experimental mash-up of health care services that's helping to generate buzz on Wall Street.

Hilltop is one of more than a dozen locations across the country where pharmacy giant Walgreens has carved out space in its stores for urgent care clinics from MedExpress, a company that Minnetonka-based UnitedHealth Group acquired in 2015.

The collaboration shows how Walgreens is testing ways of bringing other health care services under its roof, including partnerships that could be part of the pharmacy chain's future, a Walgreens executive said this month at an investor conference.

For UnitedHealth Group, the pilot is one example of how the company hopes to shape regional health care markets via its fast growing Optum division for health care services.

"This is just part of developing an overall higher-performing local health system," said David Wichmann, chief executive at UnitedHealth Group, after a stock analyst asked about the Walgreens venture during a Tuesday conference call. "This is the future health system that we see delivering considerable value to people."

Urgent care centers often consist of a medical office with extended hours of operation, walk-in service and treatment for a variety of current health issues that don't require a trip to the emergency room.

Urgent care center sales in the U.S. grew to more than $15 billion in 2017, up 27 from 2011, according to estimates from Kalorama Information, a health care data group in Maryland.

The expansion of the urgent care market has come on the heels of growth in "retail ­clinics," a trend launched in the Twin Cities more than 10 years ago. Minneapolis-based MinuteClinic got the ball rolling with small clinics in grocery stores and pharmacies that were staffed with nurse practitioners.

Ultimately, MinuteClinic was acquired by pharmacy giant CVS, which is based in Rhode Island. Illinois-based Walgreens, meanwhile, also bought into the trend, and currently operates some 400 retail clinics.

"We see retail clinics and urgent care as complementary and generally serving different patient needs," said Scott Goldberg, a Walgreens spokesman, via e-mail.

The urgent care pilot for Walgreens and MedExpress is different because it offers patients a much-wider range of services, in a space that's about five times the size of a typical retail clinic, said Tom Charland of Merchant Medicine LLC, a Shoreview-based consulting group that follows the market.

One of the problems with retail clinics, Charland said, is that patient demand has been highly seasonal, with the clinics struggling to attract business outside of cold-and-flu season. Urgent care centers in retail settings might avoid this pitfall, he said, since they are staffed and equipped to handle a broader range of health care problems.

"It's a development to watch," he said.

Established players in the Twin Cities market are watching, although they sound a bit wary.

"Ultimately, the consumer will decide if this model is going to be successful, or if they prefer the care coordination provided by a primary care clinic and a relationship with a primary care provider within a system that also provides specialty care," Wendy Burt, spokeswoman for the Minnesota Hospital Association, said in a statement.

At the Minnesota Medical Association, the group's president said that doctors want Minnesotans to have access to affordable and appropriate care. "But convenience also runs the risk of undermining patient-physician relationships and continuity of care, which is particularly critical for patients with chronic or complex conditions," said Dr. George Schoephoerster in a statement.

Kevin Ruffe, the chief operating officer at MedExpress, said his company's health care providers want to help make sure that patients have good continuity in their care. Since opening its first outpost in Minnesota in 2016, MedExpress currently has 11 locations in the state and will open its 12th soon in Rochester. Across the country, MedExpress operates nearly 250 urgent care centers.

MedExpress and Walgreens have separate entrances, but there's also a pass-through door from the clinic to the pharmacy.

The pilot program — and not Hilltop, in particular — is receiving attention in both retail and health care circles this month after a Walgreens official made comments at the annual ­JPMorgan Healthcare Conference.

David Heupel, an analyst in Minneapolis with Thrivent, said the conference is a big deal, and the urgent care-pharmacy pilot is an interesting test. But he added: "In the grand scheme of UnitedHealthcare overall, this is tiny."

And like many new ideas in health care, the Walgreens-MedExpress pilot has a familiar feel to some.

Minneapolis-based Fairview Health Services, for example, has its network of retail pharmacies and has co-located the operations with most of its urgent care centers. A Fairview spokeswoman said by e-mail: "Our first co-located urgent care opened 15+ years ago."