The New Clinic Buildouts
Has software changed what's necessary in the clinic?
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When I think about the physical doctor’s office, here are the things that come to mind:
Weirdly beige or white walls
TIME magazines from 6 months ago
Fighting the urge to play with these because I’m a grown man now
This was before joining One Medical, whose offices are immeasurably better and have water with those orange slices in it because I’m worth it. Also I might have been seeing my pediatrician for a little too long.
I’ve been curiously watching some new clinics that have been popping up. Some of these are in response to a shift in consumer preferences stylistically (matte colors and serif font 😍) and where they’re willing to pay a premium. Some are also developments in technology that change the patient-physician relationships from “in-clinic only” to a blend of things that can be done virtually vs. in-person.
My loose thesis is that tech is changing clinics for the following reasons:
It is much easier to build up patient demand first via apps, newsletters, telemedicine, etc. This helps estimate demand and allows for clinics in cheaper real estate with less foot traffic value.
As more physicians with individual brands on social media rise to prominence, we’ll see more physicians strike out independently and with more flexible employment. As a result, there is an increased demand to buy services and space “as needed” that they would normally get at a larger facility without the employment strings attached. Tech has also enabled gig-economy work that allows physicians to plug into existing demand without needing a hospital to generate it for them.
Less office space is generally needed as more can be done through telemedicine/remote patient monitoring and equipment becomes smaller but more versatile thanks to software. Offices can optimize for higher throughput and less wait times by pushing non-procedure stuff outside of the office.
Pop-Up and Mobile Clinics
The concept of a pop-up clinic (e.g. showing up for a specific period of time) has historically been difficult to pull off in healthcare for many reasons. Equipment is bulky and might need a labor intensive installation that makes it not worthwhile to do a short stint in that place. Knowing if there would be enough demand to justify a pop-up and where it should be placed would be hard. Building continuous relationships with patients would be difficult if you’re constantly changing locations.
But this seems to be changing. You can maintain longitudinal relationships with patients digitally, even if the physical locations move. You can estimate demand by seeing user data. You can more easily market a pop-up if you have distribution already via an app, newsletter, etc. The devices are becoming smaller and more portable thanks to more powerful chips and the ability to use a smartphone as a computer.
Some companies are even creating pre-fab “clinics in a box” that are self-contained, requiring engineering of new equipment. Walmart has partnered with a company called Blox to standardize the manufacturing process and reduce clinic buildout time. Ever/body (a cosmetic dermatology clinic) has built self-contained sinks and can spin up a location in 10 weeks. If you talk to anyone that’s built a clinic, they can tell you how much a pain in the ass sinks/plumbing is.
Its treatment rooms are sleek wood-paneled boxes with lights that glow so softly you feel like you’re inside of a ring light, a common tool of beauty vloggers. They’re also modular. Each of the company’s treatment cubes is built offsite and plopped into the clinic. Because of this prefab approach, EverBody was able to set up its first retail location in 10 weeks.
Even the sinks are self-contained inside each modular unit, and they use water from a tank rather than being hooked up to the building’s water lines. It’s one of the ways that EverBody is able to build its retail spaces so quickly. By designing the sinks to run using water tanks, EverBody avoids the traditional process of installing a sink, as you would in most doctors’ offices, which requires landlord permission, permits, and plumbers—all of which take time and cost money.
Mobile clinics are another variant of this. By going to areas where there’s already a high density of eligible patients and pre-marketing your arrival, you can make it convenient for patients and utilize the clinics effectively. Walmart had talked about having mobile specialty clinics for dermatology and women’s health come to their various care centers. Pediatric mobile clinics are going to underserved areas that are falling behind on regular vaccinations. Cityblock has some mobile clinics I see floating around my neighborhood, waiting for me to go up and ask them if their valuation reflects a tech multiple or service multiple.
There are even mobile clinical trial sites to test the COVID vaccine in typically underserved areas - which is a huge barrier to getting diversity in trials. You can imagine this becoming a natural evolution for fully virtual/fully decentralized clinical trial companies, though I would NOT want to be the person that has to get a compliance team on board with this lol.
An aspect of pop-up/mobile clinics that I like is that it forces a time window on patients. I think a lot of people delay regular check ups, etc. because it’s not top of mind and not convenient. But if a Kare Mobile dental clinic or a VSP eye care clinic shows up to the office for a single day I’d probably sign up since it was convenient and only happening for a short period of time. Flu vaccinations at offices seem to get uptake with this principle.
A general theme of this newsletter is healthcare is coming to where patients are instead of the opposite - mobile/pop-up clinics feel like an important part of that equation. There are still big barriers however. Cost is still an issue - most of the companies that sell modular options focus on the speed of build outs but price similarly per square foot and those thicc buses for mobile clinics are also expensive. Permitting for mobile clinics and short-term leases on commercial spaces are expensive and a hassle (though COVID might normalize this and make it easier to deal with due to retail collapse). If the sunk costs of a pop-up are high, there’s a good chance it’ll just stay there.
WeWork for Healthcare
The cost of starting your own clinic can be prohibitively expensive. Why not rent space as needed while getting access to shared amenities that the space has? With a model like this you can spread the cost office management functions (front desk, scheduling, storage space, etc.) across a lot of tenants and only pay a portion of the costs. Companies like ShareMD, Cowork Medical, Clinicube, etc. are all playing in this space.
Using shared medical spaces, physicians can have more flexibility around when they conduct in-person visits. If you’re paying for a space, you’re going to want to utilize it fully. But if you can batch in-person appointments for specific days you can choose which days you want to use the space. This feels like a more efficient usage of space, plus it potentially lessens one of the perverse incentives of wanting patients to come in when they don’t need to so more visits can shift to telemedicine.
Another potential benefit is being able to use the real estate as a wedge to other functions. This can be other back-office functions like billing where you’d hire a full-time employee to handle or outsource to a third-party like a Managed Services Organization anyway. Or it could be scheduling/practice management software. Or it could be a marketplace for patients to see physicians in a directory that use the space. Or the company could aggregate the providers to negotiate group rates with payers.
I’m still not sure if real estate is the best wedge to get into these other things since it’s so unscalable and constrained to the geography of the clinic. Alma seems to have started as a therapy co-working space and now focused more on the non-real estate back office functions, which makes me think that route is less viable than I think.
Most of the companies I’ve seen in this space tackle some cash pay part of healthcare or some generally primary care-esque part of healthcare. It feels like there’s more room to do this for specialties, where access to certain machines is expensive but significantly increases what you can do within your practice (e.g. GIs and a good endoscopy suite). Are there specialty-specific shared medical space companies I’m missing?
Now I know the I-am-actually-very-smart type of readers are going to say something along the lines of “a hospital, you’ve created a hospital”. I’m talking about paying a fixed amount for access to the facilities but you have to actually go about getting patients under your own brand instead of relying on a hospital or group to do it for you. That’s a different type of arrangement where the specialist is independent, captures the upside of bringing in patients, and has a more flexible working relationship with the facility than what a hospital could provide.
I’ve been really interested in these tiny, extremely low overhead clinics. The idea of a sustainable one-person shop makes it viable for physician creators/influencers to convert their social capital and patient demand into an actual business. Low overhead clinics also make it more viable to embed clinics into existing areas that consumers already go like grocery stores, airports, etc. Also small things are cuuuuuute.
For example Dr. Timothy Wong, a primary care doc in Pittsburgh charges $35 flat inclusive of most things. He’s able to do this by keeping his overhead extremely low which means an extremely small square footage office (one exam room) and it’s a one-man shop. He built an iPad check-in system using a combination of Google Forms + Google Sheets + Athenahealth to prep a patient chart in about 1 minute. No insurance means a very straightforward payment system via credit card or cash. His goal is to see 20 patients a day (target seems to be less than 15 min per patient), so let’s say ~400-450 visits per month. At $35 a visit, this would suggest a breakeven cost somewhere around ~$15K/mo including salary, malpractice, supplies, marketing, etc.- or $180K a year.
I’m going to compare this against Kevin O’Leary’s now famous primary care economics post where he maps out the costs of running a primary care clinic.
The monthly cost here is more than 10x of the microsite (or 5x per PCP). The economics of the microsite seem to be much cheaper because the headcount costs significantly less, the rent is lower per person since it’s a one room clinic, the EMR is Athenahealth which is 6.4% of practice revenue instead of flat fee/installations, and the upkeep costs are likely lower since the square footage is smaller. As a % of revenue he seems to spend much more on marketing (~$1K a month). Realistically, Dr. Wong also currently takes a lower salary than the average primary care physician in his current practice. And...maybe skips health insurance himself (you gotta dogfood your own product, right?).
However, you can see the beginnings of a practice that could theoretically work very well for patients and providers.
Make the practice run maximally efficient - get patients in and out without wait times.
Have them fill out as much info as possible before the visit and during check-in (including which issues they’re coming in for so you can know the billing in advance).
Keep operations to 1 person or a generally lean team.
Plug into a network of (video or asynchronous) telemedicine visits during down time to produce cash.
Redeploy the saved dollars into targeted ads/channel partnerships for cash pay patients.
If the patient needs something while you’re away, have a trusted “overflow” partner that can handle the simple stuff like prescription refills.
I don’t know if this model definitively works since it seems to be an experiment even for Dr. Wong, but it feels like something interesting is happening here thanks to some hacked together tech and less reliance on sizeable, high priced real-estate. This is a similar trend we’ve seen across retail like restaurants (ghost kitchens), gyms (small boutique studios above a dunkin’ donuts), pharmacies (last-mile pharmacy delivery), and more.
However, even for Dr. Wong’s clinic, consistently getting patients to show up is tricky so he might need to tweak the model a bit into some form of subscription and/or figure out other ways to reduce the customer acquisition cost (friend referrals, etc.). The key is to generate demand online first and then guide them to the physical location later. I think this is where physician creators become really interesting, aka. physicians that build social media followings, newsletter followings, etc. (a company I advise DocSpace is helping physicians with these audiences start virtual clinics).
Wellness/Healthcare Under One Roof
If I have to take time off work for preventive care, I kind of wish it was like a formula 1 pitstop situation where I could just get everything tuned up at once. Dental, derm, primary care, therapy, etc. in one place so I can maximize my time allocated to healthcare stuff and make it easier for all those related primary care-esque services to talk to one another. Health Quarters looks a bit like this, sort of like a food court for health and health adjacent services. I’ve never been but I assume these all look like micro-clinics as well.
Or another version is: while I’m doing some wellness related thing sprinkle a lil’ healthcare on it. Wellness is a good wedge into healthcare because you do wellness activities more regularly. Oscar’s clinic used to have yoga/mindfulness stuff alongside their primary care services but I’m guessing they didn’t double down on this for a reason. The Well seems to be a primary care/integrative medicine clinic in one. One employer onsite clinic has a primary care office alongside physical therapy, acupuncture, and a test kitchen to teach people how to cook. I used to take a cardio class that was in a room attached to a broader physical therapy clinic. I was very tempted a few times to have someone check out my back if it was flaring up during the workout. That’s called sYneRgY.
In short, blending healthcare use cases at a physical location might make it easier for folks to get checkups because the friction is so much lower if they’re going anyway.
Parting Thoughts - Modern Specialty Clinics?
Most of what I talked about above focuses on primary care related clinics. But I’m optimistic that in the future, specialty care clinics will also look very different. I think telemedicine + home devices will make it much easier to do the routine/screening stuff out of the clinic and then in-clinic can be focused on procedures + other tests that require supervision.
Most specialties want to optimize their in-clinic time for procedures since they’re most lucrative anyway. In the most extreme version of this, you might look at India where the Aravind Eye Clinic is set up to be a literally assembly line to churn out a massive volume of eye surgeries at low costs. Eye surgeons at Aravind perform 2,000 operations per year vs. 125 per year in the US.
I’m not 100% sure what modern specialty clinics look like, but it feels like a lot of virtual specialty groups will eventually be moving in this direction once they build enough consumer demand for the virtual-only offering. By starting virtual first, these companies can better rewrite the workflows for in-person visits. If you have ideas, I’m all ears.
Nikhil aka. “unabashedly into millennial aesthetic clinics”
Thanks to Varun Anand and Kevin O’Leary for giving feedback on this post
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