The Surge in Urgent Care Centers: Emergency Department Alternative or Costly Convenience?

HSC Research Brief No. 26

July 2013

Tracy Yee, Amanda E. Lechner, Ellyn R. Boukus

As the American health care system contends with overburdened hospital emergency department (ED) capacity in certain regions, shortages of primary care clinicians, and escalating health care expenditures, urgent care centers have surfaced as an alternative treatment setting that could help broaden access and manage costs. Having expanded to roughly 9,000 locations in recent years, urgent care centers offer walk-in treatment for illnesses and injuries requiring prompt attention but falling short of true emergencies. Although their overall effect on health care access and spending remains uncertain, hospitals and health insurers express optimism about the capacity of urgent care centers to enhance access while reducing ED utilization, according to a new qualitative investigation by the Center for Studying Health System Change (HSC) for the National Institute for Health Care Reform.

In the six communities examined — Detroit; Jacksonville, Fla.; Minneapolis; Phoenix; Raleigh-Durham, N.C.; and San Francisco — interview participants indicated that urgent care center expansion is largely propelled by consumer appetite for convenient access to medical services. Concurrently, hospitals regard urgent care centers as a mechanism for acquiring patients, while health plans identify opportunities to control expenses by redirecting patients from expensive emergency department visits. Although certain providers contend that urgent care centers undermine coordination and continuity of care, others suggest these worries may be exaggerated, given that urgent care concentrates on episodic and straightforward conditions rather than chronic and complex cases. Going forward, health coverage expansions under national health reform could intensify capacity pressures on both primary and emergency care, potentially fueling even greater growth in urgent care centers.

The Rise of Urgent Care Centers

Throughout the past two decades, urgent care centers (UCCs) have multiplied rapidly, expanding to 9,000 facilities across the United States.1 The recent swift proliferation of urgent care centers is frequently attributed to factors such as prolonged wait times for primary care appointments, overcrowded emergency departments, and patient demand for more readily available care, including appointments outside standard business hours.

Urgent care centers deliver treatment on a walk-in basis, typically during standard business hours as well as evenings and weekends, though not around the clock. UCCs routinely address conditions commonly seen in primary care practices and retail clinics, such as ear infections, strep throat, and influenza, along with certain minor injuries like lacerations and uncomplicated fractures. Unlike emergency departments, UCCs are generally not equipped to handle trauma, perform resuscitation, or admit patients to a hospital — all of which are reasons for seeking ED care. UCCs are usually staffed by physicians, most often with training in primary care or emergency medicine, and some also employ nurse practitioners or physician assistants practicing under physician oversight.

Urgent care centers initially appeared in the 1980s but failed to gain a strong foothold, partly because the industry lacked an effective marketing approach to attract consumer interest.2 Since that time, patient demand for more convenient access to medical care has reportedly grown, driving renewed expansion of urgent care centers. In fact, according to a recent study, roughly 60 percent of patients with a regular primary care physician (PCP) indicated that their PCP practices do not provide extended hours, pointing to a niche that urgent care centers are well positioned to fill.3

Historically, urgent care centers were frequently independently owned, standalone operations, but the urgent care landscape has undergone substantial transformation. Large UCC chains now operate in some regions. Additionally, hospital systems are launching UCCs to broaden their service areas and referral networks. More recently, health insurers have been partnering with or establishing UCCs as a strategy to curb spending growth by shifting certain care from emergency departments to lower-cost UCCs. Urgent care center visits typically cost less than emergency department visits, though they tend to be comparable to primary care office visits.4

This Research Brief investigates the expansion of urgent care centers across six communities — Detroit; Jacksonville, Fla.; Minneapolis; Phoenix; Raleigh-Durham, N.C.; and San Francisco — to assess the impact of urgent care centers on local delivery systems, focusing on access, coordination, and overall costs of care. The six communities were chosen for their high concentration of urgent care centers and represent different levels of provider integration, a factor that may shape the role of urgent care centers in expanding access to care as well as the extent to which they may disrupt continuity of care (see Data Source).

Market Dynamics Influence Location, Ownership

Urgent care centers in the study communities tend to be situated in more densely populated, higher-income areas. Urgent care industry respondents stated that they generally target locations generating substantial vehicle or foot traffic and that are visible from major roadways. They also tend to position UCCs in more-affluent areas, especially suburbs with a high concentration of people carrying employer-sponsored coverage, a younger population, or rapid population growth. "Urgent care is a volume-driven model, so a certain population density must be present for the UCC to capture sufficient volume to break even. That's a big reason you see UCCs in the suburbs of larger metro areas," one urgent care chain executive stated.

Based on national survey data from the Urgent Care Association of America (UCAOA), in 2012, 35 percent of UCCs were owned by physicians or physician groups, 30 percent by corporations, and 25 percent by hospitals. An additional 7 percent were owned by non-physician individuals or franchisors. However, the ownership breakdown differs across communities. For instance, approximately four out of five UCCs in Minneapolis are owned by or affiliated with hospitals, according to UCAOA data, compared with one in four in Detroit (see Figure 1 and Figure 2). Generally, Minneapolis, San Francisco, Jacksonville, and Raleigh-Durham have a comparatively higher proportion of hospital-owned or affiliated UCCs, while Detroit and Phoenix have more independently owned UCCs (including chains).

The comparatively high rates of hospital-owned or affiliated UCCs in Minneapolis, San Francisco, Raleigh-Durham, and Jacksonville likely reflect the stronger presence of integrated delivery systems in those markets. For example, in Minneapolis and San Francisco, several prominent health systems have created urgent care centers to expand their service locations. Likewise, in Raleigh-Durham, some major health systems have partnered with or acquired urgent care centers. Jacksonville has a high prevalence of hospital-affiliated UCCs largely due to a partnership between Solantic/CareSpot — a large urgent care chain — and Baptist Health, a major hospital system. Hospital respondents in these markets viewed urgent care centers as a means of retaining existing patients and attracting new ones by offering additional, more convenient access points. According to a San Francisco health system executive, urgent care is "viewed as a funnel into our integrated health system. It's a way to get a referral to [one of our affiliated providers]. It's a gateway."

In contrast, more fragmented provider markets — those with a greater number of competing hospitals and health systems and a larger share of physicians in independent practices, such as Detroit and Phoenix — tend to have higher penetration of independently owned urgent care centers. The absence of dominant hospital systems or physician groups in these markets relative to the other study communities may enable smaller, independent UCCs to enter and compete more effectively. Respondents in Detroit and Phoenix reported that urgent care centers frequently provide ancillary services, such as travel and occupational medicine, as a strategy to attract more patients.

The Impact of Urgent Care Centers

Overall, respondents perceived that urgent care centers enhance access to certain services for privately insured individuals without substantially disrupting care continuity. However, respondents were uncertain regarding UCCs' effect on costs.

Access to care. Urgent care centers address an access gap by providing walk-in treatment, particularly during evening and weekend hours, for patients lacking a primary care physician or those who cannot secure a timely PCP appointment. While urgent care centers do not expand the overall number of primary care clinicians because they draw from the existing pool of PCPs, they may enhance access to primary care services by offering more convenient availability, especially during evenings and weekends, when primary care offices are generally closed.

UCCs predominantly serve privately insured and Medicare patients. Across the study sites, UCC respondents reported contracting with numerous private insurers that cover urgent care visits with patient copayments ranging from $30 to $60. Health plans reported a recent trend of setting urgent care copayments lower than ED visit copayments, higher than primary care visits, and comparable to specialist physician visit copayments.

Unlike hospital emergency departments, UCCs are typically not subject to the Emergency Medical Treatment and Labor Act (EMTALA), a federal statute requiring hospitals to screen patients and deliver emergency services irrespective of an individual's ability to pay. In uncommon cases, a UCC operating under a hospital's license may be subject to EMTALA. Across the study sites, UCCs generally do not participate in Medicaid, reportedly due to low reimbursement rates. Of the six communities examined, only Phoenix appeared to have meaningful contracting between Medicaid health plans and UCCs. This may result from health plans requiring providers to accept Medicaid managed care patients as a condition for receiving contracts to treat commercial patients, combined with Arizona's comparatively high Medicaid payment rates.

UCCs do treat some uninsured patients but generally require upfront payment, which can present a barrier for low-income patients. To ensure payment collection and promote their centers, many UCC respondents reported offering discounted or flat fees to patients who pay the full amount at the time of treatment rather than in installments. Other UCCs provide membership programs where subsequent visits carry reduced fees. According to a respondent at an independent Phoenix urgent care center, "[The membership card] is $5 more than you would pay for one visit. Any time you come back within a year, you would get a reduced rate [for the visit]." Such discounts and membership arrangements were reportedly popular among uninsured individuals who could afford to pay out of pocket for care.

Care coordination. Most respondents perceived that urgent care centers do not significantly disrupt existing relationships with primary care providers or the coordination of patient care. One explanation is that many patients treated at UCCs present with acute needs that can be addressed independently of other health care needs or conditions. Indeed, only an estimated 2.5 percent of urgent care visits in 2006 involved chronic or psychiatric conditions.5 UCC providers reported not wanting to manage patients over the long term or deliver care requiring intensive care coordination, such as treatment for chronic conditions. One Jacksonville UCC director stated, "[Patients] can't have chronic illnesses for us to continue to see them. If they need a physical or have an earache, we'll see them. But if [patients are] diabetic or hypertensive, we have to refer them to primary care because we do not follow that."

Although UCCs were not viewed as a major disruption to care coordination, they do not appear to prioritize care coordination either. In general, UCC respondents reported minimal to no involvement in connecting patients with follow-up care. Some exceptions were hospital-owned or hospital-affiliated UCCs, which are more likely to share electronic health records that can facilitate referrals to other providers. In fact, some hospital-owned UCCs reported occasionally being able to schedule follow-up appointments for patients within their system more quickly than if the patients had gone through their primary care provider or scheduled an appointment on their own.

Cost savings. The effect of urgent care centers on health care costs remains uncertain. Respondents across all categories reported insufficient data to determine whether the expansion of UCCs has generally saved money by redirecting patients away from EDs or increased spending by drawing patients from primary care practices. As a Jacksonville health plan respondent explained, "The original model for urgent care was to keep people out of the ER. The more we started looking at that and reviewing the data, it was kind of a wash. Were we keeping them out of the ER? Or were we keeping them out of the primary care office and making it easy for folks to go someplace and get something taken care of that a PCP could've done?"

Nevertheless, many respondents speculated that the availability of urgent care centers, with after-hours and weekend access, diverts patients from EDs to lower-cost settings. For example, a San Francisco health plan respondent noted that patients frequently visit UCCs or EDs because they cannot see their PCP during standard business hours. To the extent that UCCs are available, patients select UCCs for nonemergency needs. Furthermore, in response to UCC growth, more primary care practices are providing after-hours and weekend appointments as a competitive tactic to retain patients.

Other respondents believed UCCs did little to prevent patients from using EDs and instead disrupted care by diverting patients from their primary care clinicians. For instance, some observed that UCCs tend to be located in more-affluent, suburban areas and attract a relatively well-insured population rather than establishing themselves in inner-city areas where people may lack alternatives to the ED for urgent needs. A Detroit ED director stated, "In the inner city, I don't think urgent care centers have made any difference at all, because there are not too many urgent cares around. A lot of the inner-city population doesn't have money or insurance anyway. So it doesn't matter to them whether they go to the ED or to a UCC. If their costs are $100 or $200, they don't care."

Several respondents also theorized that UCCs increase costs by diverting patients away from primary care practices. An urgent care chain executive explained, "Urgent care can add to costs, in that people use these centers as primary care, rather than developing relationships with PCPs. Somebody like myself, I don't have a chronic illness. I'm young. If I need to see a doctor, I just go to an urgent care center. I haven't developed a PCP relationship. It probably adds to the cost of primary care."

While the general consensus among health plan executives was that it remains unclear whether urgent care centers produce overall cost savings, they appeared optimistic about UCCs' potential as a cost-effective substitute for EDs. As evidence of their confidence that UCCs can help contain costs, some health plans attempt to steer patients from EDs toward UCCs or PCPs through patient education and benefit structures that include higher copayments for ED visits compared to UCC visits.

As noted earlier, some health plans have partnered with or purchased urgent care centers. For example, Blue Cross Blue Shield of North Carolina has invested in FastMed Urgent Care to support the chain's expansion of clinic locations throughout the state. Similarly, a Jacksonville health plan respondent said, "Everyone is trying to reduce medical expense while getting members to receive care in the most appropriate setting. [I would say that] 30 percent of patients that go to the ED could receive care in a less acute setting. If we can't get a member to engage with their primary care physician, [our urgent care centers are] probably the next best step."

Looking Ahead

The more convenient access provided by urgent care centers may become increasingly appealing to patients and health systems in the years ahead. Indeed, several key factors — coverage expansions under health reform, a growing population, and an aging population — are expected to heighten the demand for primary care capacity. One recent study projected that the United States would require 52,000 additional primary care physicians by 2025.6 Given that many UCCs are staffed by primary care clinicians drawn from the existing physician supply, urgent care centers are unlikely to alleviate PCP shortages. However, if primary care practices become more congested, stop accepting new patients, or experience longer appointment-wait times, UCCs could expand as an attractive alternative for patients. Additionally, as more uninsured individuals gain subsidized private coverage under health reform, UCCs might become a viable option for those encountering difficulty finding or establishing a relationship with a PCP.

The potential for urgent care centers to produce cost savings could be broadened by making UCCs more accessible to low-income patients, many of whom presently have no viable alternative to EDs. While independent UCCs may see limited financial incentive to enter underserved areas and treat Medicaid and uninsured patients, hospitals, which stand to benefit financially, may be more inclined to add UCCs as a means of decreasing ED utilization. Alternatively, if Medicaid managed care plans can justify higher reimbursement rates for UCCs as a method of controlling ED use, independent UCCs may be more willing to participate in Medicaid and serve areas with large Medicaid populations.

Growth in hospital ownership of or affiliation with UCCs may increase the degree to which UCCs become integrated with other care settings and deliver coordinated care. This could transform the role that urgent care plays — UCCs could become more capable of treating patients with more complex conditions if they can communicate with patients' regular primary care providers through electronic health records. Furthermore, as more health plans and hospitals purchase or partner with UCC chains, there could be opportunities to incorporate UCCs into new care delivery models, such as accountable care organizations (ACOs) — groups of providers that agree to be accountable for the quality, cost, and overall care of a defined patient population. To the extent that UCCs can redirect nonemergency care needs from EDs, they could provide an option that ACOs might consider cost effective.

Notes

1. Urgent Care Association of America, The Case for Urgent Care, Naperville, Ill. (Sept. 1, 2011).

2. Weinick, Robin M., and Renée M. Betancourt, No Appointment Needed: The Resurgence of Urgent Care Centers in the United States, California HealthCare Foundation, Oakland, Calif. (September 2007).

3. O'Malley, Ann S., "After-Hours Access to Primary Care Practices Linked with Lower Emergency Department Use and Less Unmet Medical Need," Health Affairs, Vol. 32, No. 1 (January 2013).

4. Mehrotra, Ateev, et al., "Comparing Costs and Quality of Care at Retail Clinics with that of Other Medical Settings for 3 Common Illnesses," Annals of Internal Medicine, Vol. 151, No. 5 (September 2009).

5. Weinick, Robin M., Rachel M. Burns, and Ateev Mehrotra, "Many Emergency Department Visits Could Be Managed At Urgent Care Centers And Retail Clinics," Health Affairs, Vol. 29, No. 9 (September 2010).

6. Petterson, Stephen M., et al., "Projecting U.S. Primary Care Physician Workforce Needs: 2010-2025," Annals of Family Medicine, Vol. 10, No. 6 (November/December 2012).

Data Source

This study examined the impact of urgent care centers on access, coordination, and overall costs of care in six communities — Detroit; Jacksonville, Fla.; Minneapolis; Phoenix; Raleigh-Durham, N.C.; and San Francisco. The communities were selected based on their high concentration of urgent care centers and represent different levels of provider integration. Two-person research teams conducted 30 telephone interviews with urgent care center executives and directors, hospital-based emergency department directors, and health plan network managers between May and November 2012. Interview notes were transcribed and jointly reviewed for quality and validation purposes. The study also utilized administrative data from the Urgent Care Association of America to identify urgent care centers currently operating in the six study sites. Urgent care centers in Detroit and Minneapolis were further categorized by the authors according to ownership arrangements, and their addresses were mapped using geocoding software.

Funding Acknowledgement

This Research Brief was funded by the National Institute for Health Care Reform. The Institute is a 501(c)(3) nonprofit, nonpartisan organization established by the International Union, UAW; Chrysler Group LLC; Ford Motor Company; and General Motors. The Institute contracts with the Center for Studying Health System Change (HSC) to conduct health policy research and analyses to improve the organization, financing, and delivery of health care in the United States.

Sources and Further Reading

Urgent Care Association of America (UCAOA) — Industry data on urgent care center growth, ownership patterns, and utilization trends referenced throughout this study.

CMS: Emergency Medical Treatment and Labor Act (EMTALA) — Federal requirements for emergency departments to screen and stabilize patients, and how these obligations differ from urgent care center regulations.

Health Affairs: ED Visits Manageable at Urgent Care Centers — Weinick, Burns, and Mehrotra on the proportion of emergency department visits that could be treated at urgent care centers and retail clinics.

AHRQ National Healthcare Quality and Disparities Reports — Federal data on emergency department utilization, primary care access, and disparities in health care delivery across populations.

KFF: Health Reform — Analysis of Affordable Care Act coverage expansions and their projected impact on primary care and emergency department capacity.