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The future of urgent care: Patient, provider, investor & payer perspectives

Patients love the convenience of urgent care, providers love the clinical aspects and flexibility, investors love the growth opportunities, but when will payer recognition and staffing levels catch up?

Physician entrepreneurs, patients and private equity firms have embraced the urgent care center model to meet healthcare consumer demand for convenient, quick and cost-effective care. The market has more than doubled in the past four years, valued as a $38.5 billion industry in 2021, up from $15 billion in 2017.1

Urgent care growth is reflected in higher patient volumes, with an estimated 8.5 million new patients to urgent care facilities in 2021, but a restrictive reimbursement landscape, complex coding changes and a per-patient revenue model threaten profitability.2

We had the opportunity to speak with Lou Ellen Horwitz, chief executive officer of the Urgent Care Association (UCA), about the future of urgent care. She discussed the trends driving growth, challenges facing urgent care management and her advice to those planning to open a new urgent care clinic.

This is the first in a two-part series of articles featuring insights from Horwitz on the urgent care market.

How urgent care became today's healthcare industry superstar

Urgent care centers provide tremendous value to the communities they serve. These facilities enable patients to undergo medical evaluations, treatment and diagnostic services in a single setting as an alternative to high-cost hospital emergency departments (ED).

There are now more than 10,000 urgent care centers across the U.S.3 Horwitz attributes much of the market's success to how these centers have met a previously unmet need in healthcare – convenient, flexible, affordable care.

"We were the first to offer healthcare in a consumer-focused way and that really resonates with patients," said Horwitz. "A patient can walk through the door and get a fairly broad scope of care whenever they need it. Urgent care centers caught on to the fact very quickly that patients really like being put first from both a quality and service standpoint."

The provider appeal of urgent care

Horwitz says care providers also have found the urgent care setting attractive because of its combination of clinically interesting cases, flexible hours and the opportunity for greater involvement in the business side of care delivery.

"Emergency physicians commonly transition from hospital emergency departments to urgent care centers because they can treat the cases they enjoy treating in a less stressful environment on a relatively consistent schedule," said Horwitz. "I've seen family medicine physicians enter urgent care for the opportunity to provide care beyond chronic disease management because you never know what will walk through the door."

The patient appeal of urgent care

Individuals classified as Millennials (born 1981-1996) and Generation Z (born 1997-2012) make up the largest single patient group utilizing these centers and driving urgent care growth. The gender split is approximately 50/50 for those who identify as male or female. Most of these young patients have commercial health insurance, either from their employer or a parent's employer.

At the other end of the generational spectrum, Horwitz said only 8-9% of Medicare patients seek care at urgent care clinics even though most clinics accept Medicare insurance. Although, she sees this changing as patients who've been using urgent care sites over the past two decades age and continue to rely on this model of healthcare delivery.

"I believe we will see the patient aging trend continue," said Horwitz. "People are staying active longer, working longer and therefore need convenient care access. These are busy individuals who get sick or hurt versus someone needing long term care or urgent care management."

The investor appeal of urgent care

Urgent care growth shows no signs of slowing down. Investment management company Colliers estimates there have been at least 30 private equity (PE) urgent care acquisitions over the past 10 years involving nearly 900 locations.3 Horwitz acknowledges that PE investments have added business acumen to the industry and helped sustain its growth, but the UCA is currently examining whether this has placed more pressure on clinics for financial results.

"We're looking back 10 years to assess how these investments have shaped our industry in any unanticipated ways, good or bad," she explained. "If we find that there have been negative aspects, such as acuity degradation, then we must decide how to combat it."

How COVID-19 contributed to urgent care growth

When most healthcare facilities shut down or restricted patient care during the early days of the COVID-19 pandemic, urgent care centers were there to fill the void, and patients have continued to seek care there. By the end of 2020, the average number of patients per clinic per day was 58% higher than the three-year average.4 In 2022, visit volumes remain high, up 43% from pre-COVID levels in 2019.5

"The pandemic generated a tailwind in that it introduced so many new people to urgent care," said Horwitz. "This good experience has turned into long-term relationships as patients return to urgent care centers for repeat visits."

Challenges to urgent care growth

At first glance, urgent care industry growth appears unstoppable, meeting the needs of stakeholders at a time when the market is demanding healthcare delivery reform. But sometimes success presents its own challenges and roadblocks, as Horwitz explains.

Labor shortages

While the COVID-19 pandemic served as a catalyst for growth, urgent care has also faced setbacks as well. One is the clinician labor shortage, particularly the lack of qualified medical assistants. And the problem isn't going away soon. The Healthcare Financial Management Association (HFMA) reports that within the next five years, the U.S. will be short about 3.2 million lower-wage healthcare workers such as medical assistants, home health aides and nursing assistants.6

"In the past, urgent care centers have employed medical assistants as clinical support staff, but in recent years and more so during the pandemic, other facilities began to recognize their value in low-to-mid acuity care delivery and the competition has become fierce," said Horwitz. "That's one of our biggest challenges to growth now. We can build new centers, but may not have enough qualified individuals to staff them."

The payer problem

Factors that make urgent care clinics so popular among patients – their convenience and efficiency in care delivery – have turned out to be a double-edged sword for the industry.

As the UCA stated in its recent position paper, "payer contracts oftentimes restrict the scope of practice of urgent care centers (UCCs) and deny payment for wellness and other services not directly deemed an illness or injury."7

"Visits to urgent care clinics skyrocketed (double/triple volumes) during the pandemic because they were the sole places patients could go," said Horwitz. "One of our biggest concerns post-pandemic is payers downgrading how we're compensated because our volumes rose so drastically. We're already seeing these changes in payer policy, particularly in the Northeast."

To bolster support for fair payer compensation, Horwitz and the UCA are developing a national standard for the scope of services required to bill as an urgent care center.

"We believe this standard will help us better make those arguments. This, coupled with promoting increased awareness of urgent care's role in emergency preparedness and response. During the pandemic, we showed how we were able to maintain a high level of readiness, like ERs, but unlike ERs we do not currently receive federal funding," Horowitz said.

Advice to urgent care entrepreneurs

When asked for her advice to individuals and groups who plan to open new urgent care centers, Horwitz responded, "Do your homework. That's the most important advice I can give. A lot of people look at the growth in urgent care and think it's like opening a frozen yogurt store. But there's a tremendous amount of regulation, and the healthcare payment structure is far different from retail. Patients don't pay before they leave, and it takes a long time to be reimbursed. Doing well in this industry requires a ton of dedication, an entrepreneurial mindset and gumption."

Her advice to entrepreneurs is to speak with current urgent care clinic owners and operators to understand the nuances of the industry, noting how the UCA can help facilitate these conversations.

"Come and ask us and let us introduce you to people already doing it, talk to those people and really get a sense of what it takes before you throw $1 million at your first location."

Next up in this series: The second article in this two-part series featuring insights from Horwitz explores factors impacting the future of urgent care management, including service expansion, opportunities in primary care, specialization and caring for underserved populations. Horwitz also shares UCA's new strategies for supporting future growth and success in the industry. Read article >


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