Healthcare Financial News

In a preliminary review of the biannual report The Fiscal Survey of States, officials from the National Governors Association (NGA) and the National Association of State Budget Officers (NASBO) forecasted continued fiscal difficulties for states for most of the next decade.

In FY09, states were forced to reduce General Fund expenditures by 4.8 percent and are expected to reduce FY10 General Fund expenditures by at least 4.0 percent, marking the first time that state spending has declined in back-to-back years. As state revenue collections historically lag any national economic recovery, state revenues will remain depressed throughout FY10 and likely into FY11 and FY12, according to the report.

The weakening of state fiscal conditions is reflected in the $250 billion in budget gaps faced by states between FY09 and FY11. Of the $250 billion, states closed $72.7 billion in budget gaps during FY09 and $113.1 billion before the enactment of their FY10 budgets to bring them into balance with drastically declining revenues.

"These are the worst numbers we’ve ever seen in the decades of putting together this report," said NASBO Executive Director Scott D. Pattison in a news release. "States have been forced to lay off and furlough employees, raise taxes, drain rainy day funds and sharply cut state spending in ways that impact every part of state government."

Despite the recession, overall growth of the heathcare retail clinic market has increased approximately 15 percent in the past two years, according to a new report released today by the Deloitte Center for Health Solutions. Retail clinic market growth, however, will likely slow to 10-15 percent from 2010 through 2012 and will accelerate above 30 percent from 2013-2014, according to the report.

Retail Clinics:Update and Implications suggests that four factors will likely contribute to the sector’s growth:

• Increased use and satisfaction by consumers
• Increased use and acceptance by commercial health plans and large employers
• Increased services provided through the retail medicine model
• Increased demand for preventive and primary health care services as a result of health reform and consumer demand

According to the report and Deloitte’s 2009 Survey of Health Care Consumers, 33 percent of consumers indicate they are willing to use a retail clinic, especially younger and middle-aged working adults. Moreover, 30 percent of respondents are likely to use a retail clinic if it would cost them 50 percent less than seeing their physician.

Most retail clinics currently operate in retail pharmacy settings (82 percent), or as a department or wholly owned subsidiary of the host organization, such as a grocery store (12 percent) or big-box discount store (6 percent). Notably, 2009 has seen increased activity by acute care organizations entering retail medicine via contractual arrangements with drug store and grocery chains.