Convenience Care: “You’re sick. We’re quick.” ¹

1. Convenience Care:“You’re sick. We’re quick.”¹ Presented by Stephen C. Waldhoff, FACHE ¹MinuteCare, Michael Howe, CEO

2. Acknowledgements • Albert Lea Medical Center – Mayo Health System • Karen Conn, Administrative Assistant • Ginny Larson, Clinic Administrator • Steve Underdahl, Hospital Administrator • Michael Howe, CEO – MinuteClinic • Charles Liedtke, Ph.D., University of MN • John Vollum, The Wellspring Group

3. Background Information • Changing healthcare market conditions • Niche medicine movement • Consumer driven retail model • Retail medicine appeal • Convenience • Cost • Appointment access

4. Objectives • Introduce and become familiar with the concept of retail medicine • Understand the driving market forces behind convenience clinics • Gain an appreciation for the impact this care model will create for traditional medicine • Suggest some potential take-home business plan strategies • Assess how one rural healthcare system is responding to retail medicine initiatives

5. Overview • Concept Description • Implications • Potential Strategies • Albert Lea Medical Center (ALMC) Express Care Model • Questions

6. Convenience Care Concept Description

7. Definition “A walk-in neighborhood medical clinic in retail locations where certified nurse practitioners diagnose and treat select common family illnesses using defined medical protocols.” (PR Newswire US, 02-02-05)

10. Origin • Consumer driven concept -- Convenience -- Accessible -- Quick -- Little or no out-of-pocket cost -- Low Cost -- Consumer empowerment -- Simple • Founded in 2000 • Minneapolis Based

11. Origin (cont.) • MinuteClinic – early pioneer/founder • One physician and two investors • Partnered with Target • Opened a kiosk in Towson, Maryland • 19 Minnesota locations • Contracted directly with Best Buy and Guidant Corporation with on-site medical kiosk services • 84 locations in 10 states • 300 clinics in 22 states by year end

12. Origin (cont.) • CVS Corporation • Acquiring MinuteClinic for $170 Million • 6,100 retail and specialty pharmacy stores • Currently 66 CVS stores with a MinuteClinic • 450-500 locations or more by 2007

13. Retail Locations • Partnerships are emerging nationwide • Well-known retailers: -- Wal-Mart -- Hy-Vee -- Target -- Albertsons -- Kroger -- Cub Foods -- CVS -- Osco Drug -- Rite Aid -- Save-On Pharmacy

14. Express Care MinuteClinic MinuteCare FastCare Little Clinics Quick Clinic MedSpot Ready Clinic Wellness Express Clinic Take Care Redi Clinic Convenience Clinic Brands

16. Attributes - Clinical • Employ a Nurse Practitioner • Treat non-emergent conditions • Conduct physicals • Offer routine tests • Utilize algorithm based clinical pathways • Physician supervised • Referrals offered

17. Attributes - Operational • No appointment necessary • Open 7 days a week with extended evening hours • Sophisticated computer software utilized • Easy consumer access • Personal and attentive staff nature • Available medical menus with posted pricing • Offer beepers • Kiosks measure 10 ft. x 12 ft.

18. Attributes - Administrative • Convenient locations • Low overhead • Limited square footage (110 - 440 sq. ft.) • Priced well below traditional healthcare options • Covered by most insurance plans • Promise patients an average waiting time of 15 minutes

19. Clinical Safeguards • Utilize Masters prepared Nurse Practitioners • Follow evidence based clinical protocols with treatment algorithms • Supervised by a physician (M.D.) Medical Director • Available physician consultation • Offer referrals to primary and secondary care providers

20. Clinical Safeguards (cont.) • Avoid treating children younger than 18 months or people with chronic diseases • Maintain complete patient records • Fax records to the patient’s primary care provider to ensure treatment continuity • Patients returning with the same medical complaint are flagged by the computer system • Protocols prevent Nurse Practitioners from prescribing antibiotics without a positive test result

21. Urban vs. Rural Sensitivities • Urban communities are attractive markets • Rural locations have appeal • Regional shopping venues • Close proximity to larger communities • Physician under served areas • Little or no competition

22. Market Appeal and Consumer Reactions

23. The Three “P’s” of MarketingApplied to Convenience Care Clinics • Product • Price • Position

24. Product • Consumer acceptance/empowerment • Options/choices • Convenience • Appeal to working mothers • Quality care • Timely: “You’re sick. We’re Quick.” • Affordable

26. Price¹ • Typical primary care visit cost $109 • Emergency Room visit costs $328 • Urgent Care visit costs $125 • Convenience Care fees: • FastCare $38 • QuickClinic $39 • MinuteClinic $44 • MedSpot $40 ¹ MN Council of Health Plans

27. Position • Typical locations: • Shopping Centers • Grocery Stores • Retail Centers • Target Market • Cash customers • Only 5% of MinuteClinic patients are 60 years + • Ages 18 months – 64 years • Process insurance claims • Some companies are reducing or waiving deductibles • U.S. Bank in Minneapolis • Individuals with HSA’s • Consumerism • Career singles, students, and families

28. Wall Street Journal by HarrisInteractive Survey1 • 2,245 adults surveyed • Convenience (92% satisfied) • Quality of Care (89% satisfied) • Staff Qualifications (88% satisfied) • Cost (80% satisfied) 1 October 2005

29. Consumer Reaction • “Patients think it’s a great alternative to an emergency room.” Rhonda Duke • “I thought they were very friendly and helpful. More convenient than having to wait elsewhere.” Kristy Parrish • “I think it’s a good idea. It’s convenient, and sometimes you just don’t need to see a physician.” Walter Fosser • “What I like about this is, it’s hitting people where they live, work, and shop. The advantage of it is that it’s the right kind of care at the right time.” Mike Walker

30. Implications for Traditional Medicine

31. Potential Healthcare Industry Consequences • Fragmentation - a possible/likely outcome • Lost market share • Patient panel erosion • Financial loss • Heavy private pay concentration • Loss of overhead coverage • Primary care provider threat

33. Market Potential for Retail Health Providers “The MinuteClinic concept represents an almost indescribable potential for growth.” Michael Howe, CEO MinuteClinic

34. Potential Healthcare Industry Strategies

35. Questions to Consider • What is our business? • How can we best meet the needs of patients? • Should we position ourselves to compete? • What should we consider doing? • Are there any viable options?

36. Healthcare Industry Options • Co-Exist • Do nothing approach • Accept consequences • Collaborate • Respond by working with others • Stratify existing fees based upon patient acuity levels • Become more customer friendly

37. Healthcare Industry Options(cont.) 3.Partner/Acquire Assets • Establish an equity position with other providers • Buy an established business 4.Compete • Open a de novo business • Establish kiosks in high density consumer traffic areas • Become more visible by creating a consumer driven model that is responsive to the changing market place

38. ALMC Case Example

39. Guiding Principles • Care provided in a retail setting • Care provided for limited diagnoses • Care provided by nurse practitioners • Minimal offered ancillary support • Care provided within a limited timeframe • Care is focused on immediate need (rather than preventative health) • Posted charges and point-of-care payment • Paperless environment • Serve as an innovative incubator

40. Why Now? • Significant retail medicine growth in metro areas and spreading in out-state areas (Winona & Mankato) • Minnesota now allows N.P.s to practice independently • Albert Lea retail corridor appears to be an ideal setting for a Convenience Care model • Anticipate Albert Lea Wal-Mart will follow the direction of retailers • One-Third of local survey respondents indicated they would use this new service

41. Potential ALMC Convenience Care Model • Patients referred to ALMC primary care for: • Acute care diagnosis • Follow up care • Extensive lab, radiology • 120 – 140 sq. ft. kiosk located within an existing retail location

42. Potential Diagnoses • Limited • Posted along with charges

43. Common Illnesses Pink eye Ear infections Sinus infections Strep Throat Allergies (over 6 years) Bladder infections (females age 12-65) Bronchitis (age 10-65) Additional Treatments Flu (ages 10-65) Laryngitis Mono Pregnancy Testing Swimmer’s Ear Minor lacerations Potential Diagnoses (cont.)

44. Skin Infections Athlete’s foot Cold Sores Deer Tick Bites (over age 12) Minor skin infections, burns, rashes, poison ivy, ringworm, wart removal, swimmer’s itch Vaccines Diphtheria, Tetanus, Pertussis Flu Hepatitis Polio MMR Meningitis Td Potential Diagnoses (cont.)

45. Goals • Meet operating expenses • Generate • Referrals to ALMC • Positive patient satisfaction scores • Positive patient outcomes • Effective patient utilization

46. Goals (cont.) • ALMC Innovation Center • Automated drug distribution dispensing system • Physician referral resource • Medical education and information kiosk

47. Exit Strategy • The expected goals will be reviewed quarterly by the Clinical Practice Committee for the first year and other appropriate review bodies annually • If the goals are not met on a consistent basis, an exit strategy will be implemented • One year space lease

49. Questions?