Three years ago, National Medical Enterprises had hopes that its 18 emergency medical clinics would produce profits as quickly as they provided treatment for walk-in patients suffering from ailments such as sprains, cuts and the flu.
But in 1985, Los Angeles-based NME found itself bailing out of the business as the clinics proved to be both a marketing and a financial flop. By the end of that year, NME had sold all but five of its original 18 facilities. It now owns just two clinics, both in Modesto, Calif.
"The business was not profitable for us, nor did it seem to benefit our hospitals by any material amount," said Paul J. Russell, the firm's vice president for corporate communications. "What we found is that primary care is best left to doctors. Our strength is in hospitals."
Free-standing emergency health-care clinics, which have been dubbed "docs in a box" by critics who view the centers as the medical equivalent of fast food, may themselves need some urgent care these days.
Clinics advertising extended hours and specializing in urgent care first began sprouting up in shopping centers, along suburban thoroughfares and in other heavily traveled areas about a decade ago.
But now they face cutthroat competition and are being besieged by reform-minded health activists and state lawmakers who believe that some clinics are ill-equipped to deal with true medical emergencies. As a result, the facilities are having to change their focus to survive.
"There's a shakeout that's been going on in the industry," said Larry Frisk, vice president for corporate development of MedStop, a Dallas-based franchiser of ambulatory care clinics. "The industry will be very different in the future, . . . less dependent on walk-in patients and more focused on managed care."
Adds Kenneth S. Abramowitz, a health-care analyst at Sanford C. Bernstein & Co.: "You are seeing a leveling off of growth and consolidation in the industry. Some are doing well in some places . . . but most of the big companies are cutting back."
The largest operator of clinics, Humana Inc., lost more than $40 million operating its 175 clinics in the fiscal year that ended Aug. 31. In an effort to cut its losses, the company has sold 46 clinics and hopes to sell 70 more before the end of the year, said Gary Meller, Humana's chief operating officer of health services.
Pearle Health Service Inc., the Dallas-based operator of Pearle Vision Center, also has its Primacare emergency centers on the block, according to James Beymon, the company's treasurer. Beymon says that the 13 centers are profitable but that the company wants to get out of the business "to concentrate on the optical market."
American Medical International, in Beverly Hills, dissolved its ambulatory services division in 1985. Company officials declined to comment, but AMI's annual report indicated that the action was part of efforts to eliminate unprofitable units.
Even though millions of Americans used one of the nation's 2,700 urgent care clinics last year, such facilities are being forced by competition and government regulation to change their focus from treating mostly walk-in cases.
Clinics are affiliating with health maintenance organizations and signing contracts with employers to provide physical checkups and other routine care as well as to treat workers injured on the job. Meanwhile, big chain operators, such as NME, have turned over some of their clinics to the physicians who worked there.
Today, many walk-in clinics have become almost indistinguishable from ordinary physician group practices--a development that has prompted some experts to wonder why clinic operators could not foresee that there wasn't much room for them in the health care market.
"The whole urgent-care movement doesn't make a lot of sense when you look at it closely," said Henry Lubow, chief executive officer of Ambulatory Medical Management, a Los Angeles chain that specializes in treating workers.
"In most areas of the country you already have a significant oversupply of physicians and medical services," Lubow noted. "If you then create urgent-care facilities, . . . you can't possibly make any money."
It was hoped that the clinics would fill a niche by being patterned after fast-food restaurants. Clinics often used names that emphasized quick or emergency care, such as Doctors Urgent Care in Charleston, W.Va.; Emergency Medicine Associates in Olney, Md., and NME's former Instant Care Medical Center on Del Amo Boulevard in Compton.
But while the clinics boasted of being fast, economical and convenient, some critics argued that people with life-threatening emergencies might be misled by clinics' labeling themselves "emergency" facilities.