American Development Partners, a private equity and real estate firm, will invest $1 billion in American Family Care to expand American Family Care’s franchises.
American Family Care is the largest operator of urgent care centers. The new deal is expected to add another 300 American Family Care urgent care locations. The company currently has more than 180 clinics.
Reuters reported that American Development Partners will finance acquisition and development of land for the new centers, as well as buy equipment and provide working capital. The company will collect lease payments from the franchises in return.
The deal could have large implications for outpatient services in urgent care centers and cut into nearby emergency departments (EDs) and outpatient services. The $1 billion will more than double American Family Care’s locations and will mean the company will soon expand well beyond its 600 in-network physicians.
American Family Care sees nearly 3 million patients per year. There are now more than 2,300 care clinics in the U.S. that are spread across 43 states and Washington, D.C., according to the Convenient Care Association (CCA).
Payers view clinics as lower cost options to ED care, but there are doubters. A study published last year in the Annals of Emergency Medicine found that retail clinics "have not been associated with a meaningful reduction in low-acuity ED visits."
Meanwhile, in an attempt to contain costs and cut ED visits, Anthem Blue Cross Blue Shield is no longer covering ED services it deems unnecessary in Missouri, Kentucky and Georgia. Anthem began the policy in Kentucky in 2015 and said the payer has not denied many unnecessary ED claims.
Hospitals are also looking to invest more in outpatient services. Some hospitals are even looking at former retail spaces as locations to open new outpatient facilities.