The Executive Suite: Successful investing in urgent care

Opening an urgent care facility may just be the perfect business opportunity. It fits doctors’ skill sets and can supplement income or provide more independence while tapping into a physician’s entrepreneurial nature. But, according to those who have made the leap, the hours are long, the profits margins are thin, and the financial risks are high.

“I wish I knew before I opened my urgent care how many hours I would have to put in,” says George G. Ellis, Jr., MD, FACP, chief medical adviser to Medical Economics. Ellis owns the 910 Rapid Care clinic adjacent to his private practice in Youngstown, Ohio. “The private practice and urgent care consume about 90 hours a week for me.”

For a new urgent care to succeed, physician-owners must carefully research all the details about the location under consideration, the services and staffing requirements, and accept the fact that urgent care medicine demands a different mindset than private practice.

But when done right, urgent care can be an opportunity to help meet the medical needs of the community while providing financial rewards for the long hours and risks a physician must take to open the doors.

Where to start

“There are a lot of people that think of open- ing an urgent care as a construction project, but that’s just 20 percent of what needs to be done and what they need to be thinking about,” says Laurel Stoimenoff, PT, CEO of the Urgent Care Association, which provides accreditation and resources to urgent care facilities. “Like studying for an exam, a lot of work needs to go in upfront before you start.”

The first thing to understand is the financial commitment. Stoimenoff says it will most likely take between $800,000 and $1.2 million to build and open an urgent care, depending on facility size and location.

And experts say location is extremely important.“This is retail medicine,” says Thomas Brown, MD, an internist and founder of Kathy’s Urgent Care, which operates three urgent care centers in the greater Hartford, Conn., area and has leases signed to open two more in the next several months. “The first consideration is what’s a viable location that will be profitable, and that entails a detailed demographic analysis.”

This analysis should include population density in a one-, three-, and five-mile radius around the proposed clinic. To be successful, an urgent care needs at least 30,000 people within five miles, says Stoimenoff. The analysis also should include daily traffic counts on the street where it will be located, ease of getting in and out, number of parking spaces, and nearby competition.

“Find a visible location that is easy to get to,” says John Kulin, DO, an emergency medicine physician who is the founder and CEO of six Urgent Care Now clinics in the Philadelphia area. “Sometimes the most visible spot is not the easiest to get to.” For example, a potential location may be easily seen from a busy road, but doesn’t have direct access, making it inconvenient for the patient.

An average urgent care requires about 3,000 square feet, which usually translates to six exam rooms plus space for a lab and X-ray equipment, says Stoimenoff. But the total square footage will depend on the amount of competition and how many patients are expected to be seen each day. For example, Kulin says that in 2005 when his urgent care was the only one in the area, he built a 5,000-square-foot facility. As competition increased and patient counts decreased, the space requirements shrank. The facility he opened in 2017 required only 2,500 square feet.

Get contracts and credentials

With a possible location identified, the next step is to obtain payer contracts. “A lot of insurers are closing or limiting panels,” says Kulin. “I’ve seen urgent cares open up that did not even have the major insurers in the area and suffered the consequences. Even if it takes another three to nine months to get the contracts set up, if you are paying $70,000 a month in payroll, it’s worth it to wait.”

Brown says not getting credentialed early enough with insurance companies can cripple an urgent care’s cash flow in those crucial first few months and create difficult choices. “Should you turn away patients because you aren’t credentialed with the insurance company yet or see them for free and hope that four months from now when you get credentialed that they will retroactively pay for folks?” says Brown.

And while insurance companies understand the value of urgent cares as a means to keep patients out of more costly emergency departments, the increasing number of facilities can make it more difficult to contract with payers. This is why physicians must understand the details of each contract to find out who is going to pay for what before investing money in a new urgent care, says Stoimenoff.

“Knowing and understanding reimbursement is key,” says Ellis. “If you don’t know what you are being paid for, then you are in trouble.”

Designing and staffing the facility

Doctors need to invest time considering the design of the facility, and understand that urgent care clinics require a more practical and utilitarian space than a private practice to keep building costs down.

“Watch your overhead as a new urgent care provider,” says Kulin. “We function on margins that are not huge, so you don’t want to build the Taj Mahal. The office should be neat and easy to keep up with infection control. You don’t need marble counter tops and other things that don’t make sense in an urgent care setting.”

The design of the space will also depend on what services will be offered. For example, 99 percent of urgent cares have X-ray capabilities, says Stoimenoff, and most provide some level of lab services.

“Before you put any services in place, find out if it will be reimbursed,” says Kulin. “Make sure that any service you are considering offering you have done a [return on investment] study for. Run it like a business and not just on the idea that, ‘It would be nice to have this.’”

Before starting his urgent care, Ellis made a list of equipment he needed and then prioritized it, getting the high-priority items first and adding the lower-ranked items later, he says. A physician must also strike a balance between having the required equipment and materials in every exam room versus wasting time looking for them, which can hurt the efficiency of the operation.

Experts advise carefully considering staffing levels based on the projected number of patients and the services offered.

“Once you are up and running, the biggest expense won’t be overhead, it will be payroll,” says Brown. Start adding up the salaries of any doctors beyond the founder, a mid-level, an X-ray technician, a medical assistant, a biller, and any other personnel needed to provide the services and the financial demands become apparent. “Payroll is the beast you have to pay attention to,” says Brown.

Some payer contracts require a physician to be on-site at all times while others do not, so that’s another reason to have contracts settled before any construction starts. But regardless of the mix of physicians, mid-levels, and technicians, Kulin says everyone has to work to the top of their license and be cross-trained to do anything that is needed, such as turning exam rooms around and helping with splinting or casting. “You have to run as lean as you can without affecting the patient experience,” he says.

And if business declines or falls short of projections, doctors must be willing to make staffing reductions. “When you come into the market, you are the disruptor and the new guy offering something new and different,” says Kulin. “Then others come in and disrupt you. How will you respond? You have to be prepared if patient volume drops down.”

Establishing the business

Running an urgent care requires a different mindset than a private practice, experts say. It’s not just about the building and the on their way as quickly as possible, she adds. This allows the physician to see as many patients as possible while also creating a positive patient experience.

“Urgent care is a different kind of care,” says Ellis. “You have to cater to the patient. If you don’t, you won’t see them come back.”

Kulin says that urgent care patients expect a better customer service experience, starting with registration and running through the nurses and physician. This means that to grow the business, physicians have to have methods in place to get feedback from patients.

“We have a mechanism through our EHR where we get reviews back from people and adjust to that, making sure all our staff is informed about anything said, both positive and negative, and looks for opportunities to make a better overall patient experience,” says Kulin.

“The customer is never wrong,” says Brown. “It kills me when a patient comes back and thinks we misdiagnosed something. I can try to explain, but it’s too complicated, so I just say sorry and write off the bill. I can’t imagine that happening in a primary care practice.”

A commitment not just to customer service, but strong operational principles is the only way to succeed. “Running [profit and loss] statements and proformas have to become part of what they understand,” says Kulin. “If it’s not in their wheelhouse, they need to make sure they have someone at the beginning who can help. Realistically, an urgent care is a medical retail business.”

Consumers shopping retail stores expect convenient hours, and the same goes for an urgent care. To be accredited by UCA, a site must be open seven days a week for a minimum of four hours a day, for at least 3,000 hours total. “But we see most open 12-14 hours a day during the week and eight to 10 hours a day on weekends,” says Stoimenoff.

Physicians should create consistent hours matched to the patient population and where the facility is located to reduce confusion and increase visits. “If you run different hours on different weekdays, that tends to be problematic,” says Kulin. “If you have a bedroom community where patients are coming in later, you may need to extend your hours to 9 p.m. or later.”

Marketing

Marketing tactics for a new urgent care depend on how much money can be allotted, but it starts with something simple.

“The best marketing you can do besides a good website is a good sign,” says Stoimenoff. “So many people will discover the urgent care because they drove by the sign five days a week. Don’t scrimp on your sign.”

Beyond a good sign, doctors have found success with different strategies.

Kulin relies primarily on community involvement for marketing, including spon- soring civic and school groups. “I’d rather help put up a scoreboard at a school and get a lot more goodwill than a billboard that I’m paying $30,000 a year for,” says Kulin.

Ellis also relies on word-of-mouth and school sponsorships plus a Facebook presence. “Early on I did some traditional advertising, but the problem was only one in 100 said they heard about us through an ad; everyone else was word-of-mouth,” he says.

Brown focuses on marketing his urgent care facilities before they open. “We do a lot of local ads roughly two to three months before opening, and you want to do a big grand opening with the mayor to help get the word out,” he says.

Another key to marketing is building relationships within the medical community to attract referrals, experts say. Stoimenoff says this could start with the local hospital system, where maybe the urgent care could operate under the hospital’s brand in exchange for financial support and referrals for more complex cases.

“Most urgent cares do well and ramp up sooner if tied in through a hospital’s medical staff or in some other way to local physicians and specialists,” says Kulin. “You have to tie in to the local medical community. All of us should be fostering patient-centered medical care; urgent care is not primary care, and we don’t want it to be.”

The primary care physicians will refer a sprain to the urgent care, for instance, and the urgent care will keep the primary care practice informed about treatments to their patients. He suggests meeting with primary care physicians in the area to get feedback, build relationships, and make sure they feel like a part of the care team.

A big challenge

Even when everything is done right, experts say running an urgent care is a big challenge. “The operating margins are thin, the upfront expenses are huge, and the payroll expenses are enormous compared to a private practice,” says Brown. But there is a sense of satisfaction that comes from creating and growing a business, and while he says six months into his first clinic he couldn’t imagine opening a second, he’s now looking at opening a fourth and fifth.

Likewise, Ellis is looking to expand. “For me, it’s the satisfaction of seeing the facility grow,” he says. “There are days where we’ve outgrown the building, and those are becoming more frequent.” He’s contemplated opening a second facility, but the problem is finding qualified staff.

“More people are getting into urgent care, thinking it’s easy or a great place to make money, but that’s not really true,” says Kulin. “It’s a good place to earn a living, but not a great place to get rich.”