Urgent care franchises gaining acceptance

Premium content from Denver Business Journal - by Ed Sealover
May 27, 2011

With emergency room costs rising and the number of primary care doctors declining, national chains of urgent care centers have stepped in to provide a third option for people seeking health care right away.

These centers quickly gained acceptance. And now, new urgent care-center companies that sell franchises have begun operating.

Just one chain of franchised centers — Doctors Express — has a location in the Denver area. But it will open a second facility around year-end. And industry observers say they expect more franchised urgent-care centers to follow quickly in the Denver area.

Franchised centers have some advantages over chains, in which all of the locations are corporate-owned, said Kevin Hein, who heads up a legal practice on franchised health care at Denver’s office of Faegre & Benson.

The corporate owner shifts the economic risk to the franchisee, but the franchisee gets the benefit of owning and running a practice without having to invest the same kind of capital needed to start an independent business, he said.

“There’s a niche,” Hein said. “There’s a significant market. And as people become more familiar with it and accept it, it will grow. As it becomes harder to see your primary doctor for anything other than a pre-scheduled appointment, this is going to become a standard way to get health care.”

The concept of franchising health care services dates to the 1970s and early 1980s, when companies such as The Medicine Shoppe pharmacy and eye-care specialist Pearle Vision began selling franchises.

In the past 10 years, that concept has grown to include dental care, senior care and now urgent care; Hein estimates there are about 55 health care companies now franchised nationally.

Doctors Express pioneers

Steve Nitchen and Dr. Christopher Prior teamed to open the first Doctors Express in Centennial in May 2010.

Nitchen bought the master franchise rights for Colorado and Wyoming from the Towson, Md.-based company, and Prior bought in as medical director at the first facility.

The concept interested Prior because after two-year stints at two independent Colorado practices, which asked him to make a certain amount of revenue from each patient rather than to think first about their medical needs, he wanted a place he could do it right.

Nitchen handles functions such as human relations, tax payments and legal matters, while Prior sets the rules for patient care for the two other physicians that practice there as well.

Doctors Express, at 8006 E. Arapahoe Road, operates from 8 a.m. to 8 p.m. weekdays and 8 a.m. to 5 p.m. on Saturdays, treating everything from strep throat to broken bones.

It specializes in dealing with families who live in the area, Denver Tech Center hotel guests and people from nearby assisted-living centers, Prior said.

The location is profitable, and clientele has grown to 25 to 30 people per day, Nitchen and Prior said. It supplements its urgent care by offering workers’ compensation testing, corporate travel vaccinations, and pre-employment drug screens and physicals, Nitchen said.

Doctors Express has gained clients because the declining number of primary care physicians has made it harder for a parent to get their child in to see their family doctor when illness arises, making new urgent-care locations more accessible, Prior said.

A second franchisee is expected to open another Doctors Express location in the Denver area within eight months, Nitchen said. Other potential franchisees are considering buying in as well, he said.

Those who do buy in are likely to set up their practices more cheaply and quickly because of the bulk purchasing discounts that come with being part of a national chain, Nitchen said. And with the company supplying standard billing and other office practices, they can concentrate on dealing with patients, he said.

Because of that, both Prior and Nitchen believe it won’t be long before more franchised health care centers pop up around Denver.

“When you’re completely business-run, you can tend to ignore the health care needs. When you’re run completely by medical people, you can ignore the business side,” Prior said. “We combine our business expertise and our medical expertise. ... It’s an attractive model for physicians and businesspeople.”

Hein added that the more people get to know centers such as Doctors Express, the more they’ll be branded like other franchised businesses, such as restaurants or stores. And that will play well in Colorado, he said.

“Between the fact that you’ve got a very comfortable regulatory environment here, you’ve got people who are willing to try things and you’ve got a lot of transplants, I think this branding concept will be very big here,” Hein said. “There’s almost an unlimited market, because people are getting sick all the time or getting hurt all the time.”

Restaurant and Stores closing slowdown

The number of store and restaurant closure announcements fell to nearly 1,800 in the first quarter, from slightly over 2,800 a year ago, marking a 36 percent drop, according to ICSC-PNC Real Estate Research. This roughly 26.6 million square feet of space represents 0.2 percent of the total U.S. retail space and is up 31 percent from first-quarter 2010. Borders, Charming Shoppes and Max Rave, which together account for 40 percent of quarterly closure announcements, announced a combined 666 closings in the first quarter. Borders alone says it expects to shut 226 stores, totaling 5.5 million square feet, 21 percent of total space slated for closure in first-quarter 2011.

Many of the chains that announced closings also said they plan to open stores, reflecting a repositioning trend for economic reasons. GameStop announced 200 store closings and 200 openings, while Big Lots announced 45 closings and 90 openings.

Compiled by the staff of Shopping Centers Today. © May 17, 2011 International Council of Shopping Centers.

Blockbuster purchase creates options

Premium content from Denver Business Journal - by Greg Avery

May 13, 2011

Dish Network surprised many observers by emerging from nowhere to claim fallen video rental empire Blockbuster Inc. at an April 6 bankruptcy auction.

But for those inside the company, the deal capped more than a decade of interest.

That’s how long Douglas County-based Dish Network, the nation’s second-largest satellite TV company, has wanted to be in business with Blockbuster.

“You hang around the hoop long enough and something will bounce your way,” said Stanton Dodge, Dish Network’s general counsel.

Dish Network (Nasdaq: DISH) spent about $320 million buying Blockbuster after a crippling bankruptcy forced the Dallas-based company to close hundred of its stores. The deal closed April 26.

Eleven years ago, Dish Network tried to negotiate in-store promotion space and other marketing pacts with Blockbuster, but lost out when Blockbuster made a marketing partnership with its rival, El Segundo, Calif.-based DirecTV.

Buying Blockbuster became the most likely way for Dish to partner with the company. Doing so would’ve been more expensive during the years when Blockbuster dominated movie rentals.

But the cost wouldn’t necessarily have stopped Dish Network from weighing a deal.

Under the leadership of CEO and Chairman Charlie Ergen, Dish Network constantly is exploring mergers and acquisitions. Even when deals can’t be struck, there’s information and perspective to be gained, Dodge said.

“We’re not the kind of company where we assume we’re the smartest at everything,” Dodge said. “You learn something every time.”

What about the stores?

Since the bankruptcy auction in New York City, business and media press coverage has speculated about what Dish Network will do with Blockbuster’s 1,700 remaining stores, online movie-streaming business and automated rental kiosks found in big cities.

The satellite broadcaster’s executives sound confident a lot can and will be done.

Blockbuster’s bankruptcy put it into what Dodge called “a death spiral” — studios weren’t willing to offer it the hottest titles on credit, which meant fewer enticing titles to rent out — and that eroded Blockbuster’s business even more.

“We’re buying an asset that’s in need of resuscitation,” said Tom Cullen, executive vice president of Dish Network’s sales, marketing and programming. “... but Blockbuster is a powerful brand.”

Combining Blockbuster’s stores, online streaming, mail rentals and on-street kiosks with Dish Network’s satellite service gives the combined company more ways to get movies to viewers than any competitor.

Blockbuster again has money to reach movie-rights deals with the six biggest Hollywood studios.

On May 18, Dish Network will start offering new U.S. customers three months of Blockbuster’s DVD rental by mail, which normally costs $11.99 a month or more.

In large cities — where the major telecoms and cable companies dominate — the combination of Blockbuster stores, on-street kiosks and by-mail DVD rental could win business from consumers that Dish Network hasn’t attracted to satellite service.

Blockbuster has hundreds of stores in Great Britain and Mexico, where Dish Network doesn’t offer TV and where the DVD rental business has remained stronger than in the United States.

New hope for future follows purchase

Dish Network’s purchase rejuvenated Blockbuster store employees, who think the deal will reverse the brand’s decline, said Bryan Morrow, who manages Blockbuster stores nationwide.

“There’s a lot of passionate people in Dallas — people like me, who love blue and gold — and we’re excited to see this happen,” said Morrow, attending a May 6 Dish Network trade show in Denver. “The opportunity is amazing ... And it’s better than the alternative.”

The Blockbuster purchase came on the heels of Dish Network buying DBSD, a satellite company with valuable broadcast spectrum. That deal valued DBSD at $1.5 billion.

Earlier this year, Dish Network bought Denver-based Liberty Bell telecom for an undisclosed amount. Dish Network plans to start offering landline broadband services in Colorado through Liberty Bell next month.

EchoStar, Dish Network’s sister company, is buying Germantown, Md.-based Hughes Communications in a transaction worth $2 billion. Hughes provides thousands of rural households with satellite Internet access and manages payment transactions for thousands of businesses via satellite.

Ergen, co-founder and chairman of both Dish and EchoStar, recently likened his company’s strategy to the TV comedy “Seinfeld.”

The show had multiple story lines running in parallel until late in the show, then they all came together and made sense. His companies’ acquisitions should be viewed that way, too, Ergen suggested.

Cullen echoes that, saying it’s too soon to know exactly how Blockbuster and the new pieces of Dish Network will work together.

“We’re in minute four of this episode,” Cullen said.

Dish Network is trying to stay ahead of consumers’ changing media consumption, which is “clearly a march toward more digital and wireless technologies,” he said.

With Ergen being Dish Network’s controlling shareholder, the company is run with a long-term vision, not emphasizing quarterly financial results that satisfy Wall Street, Cullen said.

“Fortunately, we’re financially strong,” Cullen said. “We’re placing some bets on where we think [the market] is going to be. We want to be here in 10, 15 years.”

SuperTarget likely to anchor Tamarac Square

Unless there is serious objection from neighborhood groups, the redeveloped Tamarac Square on East Hampden Avenue will likely be home to a SuperTarget as the mall’s main anchor. According to Denver’s department of community planning and development, Tamarac’s owner, Developers Diversified Realty in Ohio, has had a “concept meeting” with the city to build a new Target. “They are tearing down the main portion of the mall for the Target,” said Nancy Kuhn, deputy communications director for Mayor Guillermo “Bill” Vidal. “The other buildings on the site are remaining.” Target spokeswoman Sarah Bakken confirmed that the Minneapolis-based mega-retailer is “exploring an opportunity to bring a new Target store to the Tamarac Square area.” The next meeting among the developer, Denver’s planning department and the public will be from 6 to 7:30 tonight at Tamarac. Representatives from Developers Diversified are supposed to provide information on the redevelopment of the specialty center during the meeting, according to City Councilwoman Peggy Lehmann.