Morris M. Auster, Esq.                                      Division of Governmental Affairs

Senior Vice President /                                   MEMORANDUM  IN OPPOSITION

Chief Legislative Counsel


IN ASSEMBLY CODES                                   A. 958 (PAULIN)


AN ACT, to amend the public health law, in relation to retail clinics and limited services clinics

This measure would address perceived concerns regarding the establishment of retail or limited service clinics in New York State.   The bill establishes a regulatory structure for both “retail” clinics and “limited service” clinics. It clarifies a distinction which would exist between a “retail” clinic where space is rented by a health care practitioner within a retail business such as a pharmacy or a store open to the public and a “limited service” clinic owned and operated by a for-profit, publicly traded corporation.  Under the “retail” clinic model, the health care practitioner who pays fair market value for the space he/she rents in a pharmacy or store delivers and receives payment for the care provided in that space.  Under the “limited service” clinic model, the health care practitioner is an employee of the pharmacy or store owned by a for-profit, publicly traded corporation.    However, even in making the distinction between “retail” and “limited service” clinics, would still disrupt the independence of medical decision-making and the integrity of the doctor-patient relationship.  Physicians feel strongly that these models of care delivery, particularly within a potential coporatelw-owned “limited service” clinic, pose a threat to the quality of patient care and to the ability of physician practices to sustain financially.  In our view, “limited service” clinics should not be allowed to propagate in New York. Consequently, MSSNY strongly opposes it and urges its defeat.

Our comments on each aspect of the bill are set forth below:

(1) Regulation of a “retail clinic” where the health care practitioner pays fair market value for space he/she rents in a pharmacy or store and receives payment for the care provided in that space.

The “retail” clinic is very different from a “limited service” clinic.  First and foremost, the “retail clinic” as defined by this proposal is not owned by the retail establishment from which it rents space.  The physician who rents the space controls what occurs in that space and is not an employee of the publicly traded corporation.   He/she, therefore, is in no way beholden to the bottom line of that company as would the healthcare employee located in the for- profit company’s “limited service” clinic.  Any physician practice is regulated through the license of the physician.  The physician is answerable to the Office of Professional Medical Conduct (OPMC) for misconduct or substandard care.

Moreover, any physician practice is regulated through state and federal laws, laws that are not applicable to retail establishments or to publicly traded corporations which prohibit the steering of patients to other products and goods sold in the retail establishment.  We appreciate the effort to deem retail clinics to be a “healthcare provider” for the purposes of title two-D of article two of this chapter, holding them to the self-referral prohibitions which apply under state law to health care practitioners.  However, physicians who rent space in the retail establishment must already comply with title two-D of article two of the public health law.  Consequently, while well intended, we do not believe that such provision is needed.   

While probably unintended, section one of the bill would constrain the services a physician practice may provide when a practice rents space in a facility operated by a publicly traded corporation.  The physician and his or her employees would not

be permitted to provide the full panoply of services authorized by his/her license and scope of practice.  The bill would prohibit the physician practice from monitoring or providing treatment or services over prolonged periods to their patients.  We believe this model is similar to a private physician’s office, with the only difference that the office space is rented proximate to a retail establishment.  As with a private physician’s office, such physician’s own license and reputation is at stake each time they treat a patient.  Unfortunately, this proposal to regulate these arrangements is counterintuitive to the goals of integrated care delivery unless the practice model of the physician’s business is only to provide a limited set of services. 

In addition, the distinguishing factor between a private physician who rents space in a building he/she does not own and a physician who rents space in a retail establishment which he/she does not own and is not employed appears to be the potential for labeling, branding, advertising, or marketing with the name or symbol of the retail business or a business entity.  Further discussion should continue to assure that such labeling or branding is being done in conformance with the standards of professional conduct.

(2) Authorization of a “limited service” clinic where the health care practitioner is an employee of the pharmacy or store owned by a for-profit, publicly traded corporation.

Of greater concern is the express authorization of “convenience care clinics” or “limited service clinics” which currently operate in states outside New York in big-box stores such as Walgreens or retail pharmacies such as CVS.  They are a growing phenomenon across the nation, particularly among upper-class young adults who live within a one-mile radius of the clinic.  Unlike the current rental arrangements we see in New York, these clinics are usually staffed by employed nurse practitioners or physician assistants, and the focus of these corporately-driven efforts is providing episodic treatment for uncomplicated illnesses such as sore throat, skin infections, bladder infections, and flu.  Care delivery is in effect controlled by the corporation, rather than the practitioner delivering the care.  Physicians feel strongly that retail-based “limited service” clinics pose a threat to the quality of patient care and to the ability of physician practices to sustain financially and should not be allowed to propagate in New York.

In New York State, section 2801-a(4)(e) provides as follows:  “No hospital shall be approved for establishment which would be operated by a corporation any of the stock of which is owned by another corporation or a limited liability company if any of its corporate members’ stock is owned by another corporation.”  The definition of a hospital in New York State would include a diagnostic and treatment center such as the limited service clinic proposed by this initiative.  The only for-profit corporations/limited liability companies that are currently permitted to operate hospitals are corporations/companies owned by individuals.   A very limited exception was enacted in 2007 to enable publicly traded companies to participate in the operation of dialysis facilities.  This was advanced, however, only after significant study over several years by the NYS Department of Health and the State Hospital Review and Planning Council and Public Health Council.  This recommendation was expressly limited to dialysis facilities based on the unique characteristics of the service, including:

•   Chronic renal dialysis is a discrete, definable outpatient service, which varies little in how and when it is prescribed and administered;

•   Virtually all those who receive chronic dialysis suffer from a common diagnosis (end-stage renal disease);

•   Chronic renal dialysis is the only service supported by a federally-guaranteed insurance program of coverage based on dialysis; and

•   The continued decline in real terms of federal payment for dialysis required an alternative to the state’s prohibition on publicly traded corporations in this area if access to care is to be ensured over the longer term.

We submit that none of the indicia, which existed to support the limited exception to prohibitions against ownership of hospitals as that term has been defined or would be defined under this proposal, exist to support similar treatment for retail clinics operated by publicly traded corporations.

Unlike primary care physician practices, “limited service” clinics provide just one primary care function:  first-contact care.  We are concerned that limited service clinics will harm continuity of care.  Data from one study demonstrate that patients who visited retail clinics subsequently had less first-contact care and less continuity of care with primary care physicians (“Retail  

Clinic Visits and Receipt of Primary Care” [Reid 2012]).  Another study found it noteworthy that “a large fraction of patients at retail (or as defined in the proposal; “limited service”) clinics continued to report that they did not have a primary care

physician”  (“Visits To Retail Clinics Grew Fourfold From 2007 To 2009 Although Their Share Of Overall Outpatient Visits Remains Low” [Mehrotra and Lave 2012]). 

While convenient to their clientele, “limited service” clinics are not the most appropriate venue through which to provide care for the chronically ill, elderly, and pediatric population.  Individuals with chronic conditions taking multiple medications which could have harmful interactions with medications prescribed for acute conditions require the type of care coordination found in a private physician practice, not at a “limited service” clinic.  Similarly, the health needs of the elderly are complex, and because “limited service” clinics focus on episodic care, “limited service” clinics are not an appropriate site of care for the elderly.  Moreover, children are not adults and shouldn’t be treated episodically.  Treatment for even a minor condition enables the pediatrician to catch up on immunizations, identify undetected illness, discuss any problems with obesity or mental health, and enhance their bond with the child and family.  The proposal would allow children over the age of two to be treated at such clinics.

As noted above, any physician practice is regulated through the license of the physician and state and federal laws which are not applicable to publicly traded corporations.  These laws prohibit the steering of patients to other products and goods sold in the retail establishment.  While we appreciate that the proposal would deem a “limited service” clinic to be a “healthcare provider” for the purposes of title two-D of article two of this chapter, we are not convinced that state stark law prohibitions will be enforceable against a for-profit company incorporated in a state outside of New York State.  Moreover, since the health care provider in a “limited service” is employed by the corporate entity, he/she is beholden to the bottom line of that company.  While we are pleased that language has been added to require signage that indicates that prescriptions and over-the-counter supplies may be purchased from any business and do not need to be purchased on-site, there is nothing that would prohibit such purchases. 

 “Limited service” model of care delivery could lead to increased fragmentation of care and to the erosion of patient relationships with primary care physicians.  This fragmentation could lead to missed diagnoses and missed opportunities for preventive services.

High quality of care requires ongoing care coordination among providers, necessitating a transfer of information to primary care providers after a patient has been seen at a limited service clinic.  Providing a patient with a printed record of the visit is not adequate to assure that the information reaches the primary care provider. 

It is significant that in 2008, more than twenty physician groups or hospital chains operated retail clinics, including Mayo Clinic and Geisinger Health Systems.  Each retail clinic is linked to (a) primary care practice(s).   In this integrated model, the retail clinic is the extension of the Patient Centered Medical Home (PCMH).  This type of model would enable the PCMH to offer extended hours and convenience for the patients served by the PCMH.  This model is far preferable to the limited service clinic model advanced as part of this proposal, which allows of the provision of episodic care for services more commonly provided in urgent care or ER, but at a lower price-point.  Rather than only considering the cost of care, our developing system of care must at its core retain the care coordination and integrative structures of PCMH.

We must also be mindful that the establishment “limited service” clinics may threaten the financial viability of primary care physician practices in the community.  This will cause physician practices in certain areas to close or to be sold to large hospital systems, displacing their patients and their employees and further destabilizing the health care delivery system in that community.  We strongly urge that you reject this proposal.

We recognize and respect the goal to level the playing field for anyone wishing to deliver only a limited set of services in a retail establishment.  In our opinion, however, convenience care as described under section two of the bill as it relates to “limited service” clinics is not necessarily the standard of care which the state should promote.  While we do appreciate that language has been inserted to require that “limited service” clinics must demonstrate to the public health and health planning council a commitment to operate “limited service” clinics in medically underserved areas of the state, this is not the corporate model followed by these entities in other states.  They tend to establish clinics in affluent communities which are already well

served in terms of the number of primary care practitioners.  Instead, the state should expend more resources to attract and retain physicians and other health care professionals to meet the needs of the urban and rural underserved communities.

Respectfully, the Medical Society continues to oppose this initiative on the basis that it will irrevocably damage the care delivery system and, most importantly, the quality of care practiced in the State of New York.

                                                                                          Respectfully submitted,                                                                                    


2/6/17 – Oppose