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.”
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