Gyroscopic Investing

http://blogs.hbr.org/2013/12/why-retail ... alth-care/

The disappointing performance of retail clinics can be attributed to some perversities in regulations and reimbursement in the current health care system. First, the expectation based on the disruptive innovation model was that traditional providers would view the simple acute problems treated at retail clinics as low-margin services they would give up. However, due to a disconnect between reimbursement and actual costs of care, these incumbent providers view simple acute problems as high-margin work that offsets the losses from caring for more complex problems.

Second, these clinics are often staffed by nurse practitioners. But regulatory limitations on nursing scope of practice, which vary significantly from state to state, and regulation that fixes reimbursement to nurse practitioners at 85% of physician reimbursement for providing the same care, have impeded more rapid expansion of retail clinics.

Third, due to antiquated payment models, Medicaid plans that serve the poor have been reluctant to cover care in retail clinics and therefore shun the very market segment that may benefit the most from the convenience of retail clinics. Ultimately, as long as the U.S. health care system is driven by an administered payment schedule that bears little relation to the actual cost of care and allows some services to offset the costs of others, this system will always be prone to market irrationalities.