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For the past several months, the urgent care industry has been abuzz with articles and commentary about how COVID-19 has reshaped visit volume and chief complaint mix across the country. Operators have watched COVID-19 testing nearly subsume their visit volume with barely a hint of traditional cold and flu visits that typically boom this time of year. There has also been a lot of talk about the influence of technology, particularly virtual technology, on traditional urgent care models.

But there are also some more subtle impacts that you don’t hear talked about much.  Marc Anderson, managing director at Belay Group, and a speaker at our annual ConvUrgentCare Strategy Symposium next week, says the characteristics around urgent care deal activity have changed, in some ways fundamentally.

“There has continued to be interest and deal activity in urgent care,” says Mr. Anderson.  “But one observation is we don’t see anywhere near as much activity by the historically entrepreneurial emergency department or primary care physicians opening centers as individual owners.”

If that continues, it represents a fundamental change in terms of the large base of individual owners who have traditionally made up the urgent care ownership community.  Anderson says this phenomenon has led to good opportunity for established brands, or new ones, to improve profitability and grow with less competition. 

“While the barrier to entry is still low, the ‘death by a thousand cuts’ from one-off groups just isn’t happening at the same velocity, or at all, in many markets,” he says.  “And I don’t see it ever coming back.”

Another fundamental change in the industry takes the form of real estate.  Jeremy Adams, managing director at Jones Lang LaSalle, says he is seeing a shift by retail landlords.

“Many retail landlords mainly leased to typical retail tenants in the past,” he says.  “Based on what’s happened in 2020, they are pushing to diversify with medical. To do so, most know they need to treat the deal as a medical tenant and offer a large tenant improvement allowance and stay strong on rental rate.”

Mr. Adams will also be speaking at the symposium next week.  He adds that supply of inventory is increasing, which is creating some opportunities that may not necessarily be obvious.

“Retail landlords are quietly marketing space for lease where their tenants are behind on rent,” he says.  “We’re seeing a fair number of off-market opportunities discovered by our local brokers.  Some dine-in-only restaurants are failing or hanging on by a thread.  So supply is increasing but converting to medical, especially from restaurants, is a big lift.”

Speaking of restaurants, we’ll get direct input at the symposium from Wally Doolin, co-founder of Black Box Intelligence, a pioneer in collecting and aggregating restaurant industry data.  He says the restaurant industry may have lost 10 to 12 percent of total units and we may not be done yet.

“Our data suggests that five percent of our 32,000 restaurants have closed for good,” he says.  “But that number may be closer to 17 percent among independent operators versus chain operators.  Independents make up approximately 50 percent of our industry.”

The curious thing about the urgent care industry is that we have no mechanism to track things like closures, patient volume drop offs or changes in visit types, all of which could have helped during the pandemic.  Mr. Doolin plans to describe how the urgent care industry might create that kind of mechanism based on his experience introducing it to the restaurant industry.

“Our industry is one that has always had a lot of innovation to keep up with consumer evolution in product, service, and experience,” he says.  “But that’s required a platform to share aggregated data.  We have never seen this many closings or this long of a period of depressed revenue.”

Mr. Doolin says the strong brands did quick pivots to capture new channels of revenue.

“From a channel point of view, it was all about how to capture the consumer dollars available by pivoting to dining outside the restaurant.  This required rethinking the guest experience and investing in technology.  But it also required data to guide that rethinking.”

Mr. Doolin says Black Box’s weekly sales and traffic report has always been a standard in the industry, but during Covid they launched a free daily tracker. 

“In a crisis, data is key to decisions,” he says, “and the timing is critical even if it is directional.” 

The ConvUrgentCare Strategy Symposium starts next Monday, March 1.   For more information, including the agenda and registration information, go to the Symposium page of Merchant Medicine’s website.

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