News

Urgent Care Centers on the rise

Friday, December 9, 2011, 5:00am CST

The urgent care market is heating up. The largest company in the industry in Middle Tennessee, Tennessee Urgent Care Associates, was recently purchased by a California-based company, while another large national operator, Jacksonville-based Solantic, has opened a corporate office here that could become the firm’s headquarters. On top of that, smaller but growing companies have recently opened or plan to open local urgent care centers. By the end of 2012, there could be at least six new clinics that would have opened in the Nashville area over a two-year period.

Industry observers say interest in urgent care is on the rise as consumers become increasingly frustrated with long waits — both in the emergency room and for primary care appointments. According to the Urgent Care Association of America, there are approximately 8,700 urgent care centers in the U.S. The number of centers grew by 330 from 2008 to 2009, and by 304 from 2009 to 2010.

“There is a lot of growth in Tennessee right now and some big players are moving in there, so it’s a very active area from an industry standpoint,” said Lou Ellen Horwitz , executive director of Urgent Care Association of America. Urgent care provides walk-in, extended-hour access for illness and injuries either beyond the scope or availability of the typical primary care practice. “Nashville is certainly following the pattern of national growth in urgent care,” said Robert Cranfield , regional medical director for U.S. Healthworks and former president of Tennessee Urgent Care Associates. U.S. Healthworks is the second-largest urgent care operator in the U.S. with 171 clinics, according to UCAA statistics. The Valencia, Calif.-based company acquired 11 Middle Tennessee medical centers with the acquisition in October of TUCA, marking its first foray into Tennessee. Cranfield said local operations will remain the same as U.S. Healthworks ratchets up marketing efforts. The TUCA brand name will phase out by the end of the year.

Meanwhile, startup company NeighborMD Urgent Care has two centers in the area — Hermitage and Brentwood — after being founded less than two years ago by a management team that includes former O’Charley’s Chairman and CEO Greg Burns . “People don’t want to go to an emergency room unless it’s life-threatening,” Burns said. “People care about their health care experience. It’s more than just waiting for a physician.” NeighborMD, which raised $1.5 million in a first round of funding and is currently raising capital in a second round, plans to open two more clinics in the area in early 2012 and have five total by this time next year.

Growth on the horizon

Recent studies have found that the average cost of an urgent care visit is slightly below the average primary care visit, $155 versus $165, according to data compiled by Nashville-based Plutus Capital Partners. Moreover, the role of the typical primary care physician is expected to expand in the future, leaving them with two options — extend their office hours and take in additional patients, or partner with urgent care centers to handle episodic visits.

“If you look at other industries that have consolidated rapidly, then you can really see urgent care taking off,” said Gordon Maner , managing partner for Plutus Capital Partners. “People aren’t signing up for primary care, and the primary care doctors are getting older.” Maner said there are several factors contributing to the interest and growth in urgent care, including: additional coverage provided through health reform; hospitals increasingly looking for ways to better coordinate care with specialists, physician groups and other providers; and managed care companies attempting to lower costs.

Cranfield said teaming with U.S. Healthworks made sense as it broadens TUCA’S “power of national purchasing.” “Ultimately, this will make us a stronger organization,” Cranfield said. “There’s been a move for several years to consolidate urgent care, and we’ve been looking at it for some time.” Said Maner, “There’s a pretty unbelievable growth opportunity, due to the converging tailwinds in urgent care.”

Spirited competition

Solantic opened a new office in Brentwood on Nov. 28, and company CEO Michael Klein and other C-level executives work there. Paul Dickison, vice president of marketing for Solantic, said the company is in the process of developing its business plan for 2012 and that new urgent care centers will likely be announced in the fourth quarter. Solantic operates 32 clinics across the country. Although the company hasn’t committed to opening any clinics in Nashville, observers feel it will eventually.

“I would be incredibly surprised if they didn’t make their presence felt here in Nashville, and in Tennessee in general,” Maner said. Other out-of-state companies involved include Hoover, Ala.-based American Family Care, which opened a clinic in Smyrna in late September, its second urgent care location in the area. Burns said competition can be healthy, but only up to a point. “Just as long as we don’t cannibalize ourselves,” Burns said. “There’s only so many people who get sick.”

Steve Samudrala , medical director of Nashville-based America’s Family Doctors, said he’s seen a sharp decrease in walk-in appointments over the past five years, which he attributes largely to an increase in urgent care centers. Walk-ins for America’s Family Doctors — which has three clinics in the area — have dropped from about 80 percent of customers in 2006 to roughly 30 percent now, Samudrala said. “It’s getting incendiary,” Samudrala said. “There seems to be an urgent care center on every corner.”

CenterWatch, Plutus Capital launch Clinical Trials Quarterly

Plutus announces the Sale of Urgent Cares of America, Inc. to The Comvest Group

Plutus Advises FAIM Investments, LLC on its Recent Acquisition of Eastover Capital Management

Plutus Expands its Cross-Border Advisory Focus Between Latin America and India With the Recent Addition of Mark Padgett.

Securities Offered Through Allen, Mooney & Barnes Brokerage Services, LLC, (Member FINRA/SIPC)

x

Subscribe to CTQ