The Impact of Retail Clinics on Cost, Utilization and Welfare

Retail Clinics are a recent and growing health care delivery organization offering low cost, convenient access to the simple treatment of low acuity conditions. We examine the impact of retail clinics on cost and utilization using a comprehensive health insurance administrative database representing millions of American insured consumers. We address the potential endogeneity of retail clinic utilization using both fixed effects and an instrumental variable strategy where distance to the clinic after it has opened is used to instrument for retail clinic use. We find that for those patients who visited retail clinics cost were reduced by $347. Importantly, we find no evidence that quality of care provided by retail clinics is lower than that received in physician offices. Our welfare estimates indicate that the removal of retail clinics would reduce welfare by approximately $433 million annually. JEL Classification: I1