UPDATE:CVS Shuts 90 MinuteClinics For The Season,Citing Demand

CVS Caremark Corp. (CVS) has placed about 16% of its retail MinuteClinic locations on a seasonal schedule, closing their doors for the time being, while keeping other drugstore clinics open in those markets, a company spokeswoman said Monday.

MinuteClinic, the largest operator of retail clinics in the U.S., is making the move "to align with consumer demand," said CVS Caremark spokeswoman Carolyn Castel. The company now has about 460 clinics in operation, excluding those now closed for the season, she said.

The move has implications for the retail clinic industry, which enters a slow season in the spring, and may be a sign of increased pressure wrought by the economic recession.

Some 90 MinuteClinics started operating on a seasonal schedule earlier this month, while the company extended weekend hours in certain other clinics, said Castel. The company will reopen the stores for the next flu season or other seasonal needs, she said. MinuteClinic has not exited any market.

"This is the first time they've ever done such a thing," said industry consultant Tom Charland, chief executive of Merchant Medicine LLC, who noted in a report on his web site earlier Monday that MinuteClinic had removed 89 clinics from the list on its site since last week while adding two new ones. Nine states are most affected, notably California and Florida, according to Charland.

This will mark the first time MinuteClinic has placed clinics on a seasonal basis, "if indeed that turns out to be true" and the company reopens those clinics later, he said in an interview. Until now, MinuteClinics operated seven days a week, all year, he said.

"For those in the industry, the nagging problem is what to do with the extra capacity we have in the off season, and unless that problem gets solved this industry will continue to have a major structural weakness," Charland said. He had noted on his blog earlier this month that growth in the retail clinic industry has almost come to a halt this year.

Charland sees a larger economic dimension to MinuteClinic's move.

"I would imagine that this isn't just about we're going into the off-season. That cash preservation is something that we're seeing cross-industry," he said. CVS' Castel couldn't immediately be reached later to comment on whether cash preservation played a part in the move.

Castel noted that MinuteClinic continues to open new clinics in Massachusetts.

"MinuteClinic will be continuing to serve all of the communities in which we operate while maintaining convenient access to care," said Castel. Nearly all the seasonal clinic locations are within 10 miles of another MinuteClinic location and more than half are within five miles, so access has been affected only minimally, she said.

Walgreen Co. (WAG) said Monday it has no plans to place its Take Care Clinics on a seasonal schedule. The drug store chain and CVS competitor operates more than 700 retail and work site health centers, nearly 340 of which are retail.

"We feel more convinced than ever that retail clinics are a critical part of the solution for health care in the United States," Take Care Health Systems Chief Executive Peter Miller said in an interview.

"People are sick all year 'round," with a need for accessible, high-quality, affordable health care, he said. "If you close clinics people are going to think of you as a seasonal business. We are not a cough and cold business."

The "mature" Take Care Clinics are now two-and-a-half years old, and the company expects a majority of those sites to break even within two to three years of opening, Miller said, adding that some of the stores are profitable now. Take Care is focused on introducing services that are nonseasonal or not on the same seasonal pattern as cough and cold products, including a new vaccination offering and health evaluations, and plans to start infusion injections, hypertension screening and stabilization and wound care, and to expand skin care in the future.

-By Dinah Wisenberg Brin, Dow Jones Newswires

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