Retail physician services have largely failed to make good on their promises, but it’s too soon to give up on big box healthcare companies entirely.

Here are three ways companies such as VillageMD and Oak Street Health can achieve their potential.

By Duane Lisowski

Retail physician groups like VillageMD and Oak Street Health have shown promise in transforming healthcare by integrating primary care services into retail settings, such as pharmacies. This approach offers significant benefits, including improved convenience and accessibility for consumers, comprehensive and preventive care, and reduced strain on hospitals and emergency rooms. Providers in these settings enjoy more patient-focused roles with less administrative burden, and insurance companies benefit from cost reductions due to value-based care models. However, despite these advantages, retail physician services? have faced significant challenges, struggling to scale sustainably, meet patient needs, and retain staff. Even CVS, arguably the most successful with a dominant market share, has been forced to scale back its clinics. Meanwhile, in Q1 of 2024 Walgreens Boots Alliance, the primary investor in VillageMD recorded a $6 billion loss; and Walmart has closed all 51 of its health care centers in six states.

Still, it’s too soon to give up on big box healthcare services altogether. These companies have the potential to make a major positive impact in the healthcare space by scaling slowly, focusing more on patient experience, and investing in the healthcare workforce, I believe that if these companies make these changes they can fulfill their potential and their promises.

Scale more slowly

While revenue growth is key to success for any for-profit enterprise, rapid expansion can often lead to operational inefficiencies and inflated costs. These issues are exacerbated in a healthcare setting, where both stakes and expenditures are high. A 2022 analysis found large provider groups often face significant operational challenges due to rapid expansion. This has been evident in the cases of companies such as VillageMD, which saw operational costs increase substantially during periods of rapid growth.

While quick scaling may increase a company’s market presence, the consequences may ultimately lead to significant losses. When Oak Street Health opened many new clinics within a short time span in an attempt to supercharge growth, the expansion stretched its resources and outpaced its ability to offer consistent, high-quality care. When organizations struggle to cover operating costs, the quality of their services suffers, eroding the customer experience in a sector where trust is paramount.

While it may seem counterintuitive to those familiar with a traditional startup mentality, the solution is slowing down. Companies should implement a phased strategy that allows for gradual scaling. Pilot programs that test new locations ahead of a full rollout can help avoid overextension. This strategy will help organizations address operational issues promptly, before they can be replicated across the business model and cause exponential damage.

Adopt transparency and put the patient first

Inconsistency rarely inspires trust. By rising rapidly only to pull back in a rash of closures, big box healthcare companies have created uncertainty and distrust among consumers and investors. Distrust is bad for business; current patients are less likely to return, and new patients are harder to attract. Oak Street Health’s clinic closures have severely undermined the market share the company may have gained through quick scaling.

To regain the precious commodity of customer trust, organizations must approach care as more than a business. One of the most immediate things companies can do to address the fallout from clinic closures is provide transparency about the reasons behind them, and clear information about steps being taken to ensure stability and continuity. Healthcare is a vital part of a community’s framework, so companies should maintain open lines of communication with local stakeholders, demonstrating a desire to listen and a move to more transparent operations and decision-making.

Consistency is also key on an individual level. While the pace and variability of the clinic setting can make it challenging to maintain patient-provider relationships, personalized care can build trust. Longer consultation times, for example, ?ingrain quality over quantity as a core value. If a patient needs to transition to a new clinic or provider—whether or not they remain in a company’s network—they should receive robust support. Such approaches are also shown to improve health outcomes.

Measuring a clinic’s performance based on the number of clients served (in line with traditional medical business practices) fails to assess the quality of the care provided—and therefore fails to truly reflect the performance of a clinic itself. Rapid growth can make it challenging for companies to implement effective performance metrics, as was the case for VillageMD, but meaningful measurements are key to better business practices. Measuring patient health improvement and satisfaction, rather than just the number of visits, can drive better care quality. Companies should develop comprehensive metrics that align with value-based principles to ensure high-quality, efficient care.

Invest in programs to retain and attract clinical talent

Rapid closures also create distrust and demoralization among current and prospective staff. The healthcare field is already facing a worker burnout crisis, and the lack of support in this newly developing sub-sector exacerbates staffing issues. A report by the American Medical Group Association highlighted that large, for-profit provider groups face significant challenges in retaining clinical staff due to burnout and job dissatisfaction, with turnover rates as high as 30%. High staff turnover rates also create increased recruitment and training costs, exacerbating companies’ profitability struggles.

The competitive nature of the healthcare industry makes it challenging to attract and retain staff. For the burgeoning big box healthcare sector, competition from well-established hospitals and traditional private practices creates even more pressure. Organizations can attract—and keep—top talent by offering competitive compensation, a supportive work environment, and mentorship and professional development opportunities. Big box companies are already working to revolutionize the patient experience in healthcare. If they expand their vision to improve the experience of clinical staff as well, they may retain staff and improve job satisfaction.

Don’t count big box healthcare companies out

Change is hard for patients and providers alike. Big box healthcare providers buck the established traditions of care, and can often be perceived as impersonal and profit-driven. Surveys have shown that patient satisfaction is generally lower among clients of corporate-run clinics compared to smaller, independent practices, due to a perceived lack of personalized care. This means companies like Oak Street Health and Walgreens’ VillageMD must work harder to overcome some consumers’ preconceived notions.

However, understanding the narratives they’re up against can help these companies identify key priorities better. Offering care that is both personal and personable isn’t an option anymore, it’s a necessity for sustainable business practices. Prioritizing controlled growth over rapid scaling can give big box healthcare companies time to invest in both patients and staff, leading to better outcomes across the board.