AFC Clinics to Expand in Tennessee

March 18, 2010

American Family Care is planning four new clinics in the Nashville market in the coming year, marking the first expansion into a non-Alabama market for the Birmingham-based company.President Randy Johansen said Nashville was chosen because the recession hasn’t battered the Tennessee city as badly as some other markets.

Despite the worst economic climate since the Great Depression, American Family hasn’t slowed its growth plans. It opened five locations in 2009 and is aiming to add up to 12 more in the next year. American Family currently has 23 clinics.

Johansen said American Family hopes to open its first of four planned Nashville locations by the end of this year. He said American Family’s financial footing gives it access to capital even during the recession. American Family spends up to $2 million when it constructs freestanding clinics, Johansen said.

“Health care isn’t immune to the recession, but it is protected to a certain extent,” Johansen said. “We had set ourselves up so that when opportunity started for growth it didn’t matter that the recession hit.”

Expansion opportunities hinge on financing availability in this economy, industry experts said. American Family’s growth potential is more in line with a fast-food restaurant than a hospital, according to University of Georgia public health professor David Bradford.

Bradford said urgent care providers’ bottom lines depend on “low intensity care” such as treating upper respiratory infections and colds. The cost for care isn’t nearly as great as full-service hospitals which require a variety of high-dollar equipment and personnel to operate it, he said.

Growth possibilities are greater for urgent care operations because of the clientele and startup costs, Bradford said. The key is access to capital, he said.

“They’ve found a business model that works with sufficient cash flow to expand,” Bradford said. “This is a model that may be more like a McDonald’s for expansion than like a hospital. It’s a much more straight forward mechanism for providing care.”

Demand for cold and non-life threatening injury treatment remains constant regardless of the economy, Urgent Care Association of America Executive Director Lou Ellen Horwitz said. Horwitz said her industry has seen steady growth the past two years even as the national economy declined.

“Everyone gets sick and has minor injuries, irrespective of the economy,” Horwitz said.

“In addition, with many people losing their insurance coverage, they are looking for quality health care that they can access if they absolutely need to and can easily pay cash for.”

Nashville is the most logical choice for American Family’s first clinic outside Alabama, Johansen said. He said its proximity to Birmingham and demographics make it a prime expansion spot.

Johansen said the company is close to signing a lease for its first Nashville location and hopes to have four more sites identified and ready to build on later this year.

“It is convenient because it’s just straight up Interstate 65,” Johansen said. “It was a natural fit for us.”

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