In March 2020, we had just completed a busy winter season in our four urgent care locations.  Our patient volume was up in each clinic, including our newest.  Our philosophy is that the second winter will decide whether a new clinic will be profitable.  The fourth location was in a city remote from our first three, so I had doubts about it during the first year.  However, by spring break, which typically marks the end of the busy season, the volume was sufficient to make me optimistic about the location’s future.  Then COVID-19 hit.

Six weeks later, the new location was closed, and our entire business was struggling to survive.  The first few months of the pandemic ravaged businesses nationwide due to fear, uncertainty, and stay-at-home orders.  Medical practices are expensive to operate.  Our payroll alone ran around $150,000 every two weeks, and six weeks without patients left us down around a half million dollars.  Closing our slowest location “temporarily” was the fastest way to stop the financial bleeding.  Like any tourniquet, it was a necessary intervention, but the long-term consequences were unknown and would ultimately prove costly.

Volume began picking up in May but was still well below normal.  By the end of June, we were back to breaking even with our three remaining clinics.  One of the Freestanding Emergency Rooms in town had begun using the Abbott rapid COVID test the prior month.  Despite our financial struggles, that first test’s sensitivity of 64.2% for symptomatic persons and 35.8% for asymptomatic persons was too low for us to use in good faith.  Fortunately, our supplier got us the new Sofia tests, whose sensitivity was higher, at the beginning of July.  They were on allocation, being given based on the previous winter’s flu-test volume.  This gave us seven machines since the numbers included the clinic we had just closed.

Because of the slow summer volume, we only needed three machines, one at each open clinic.  I had just read The Goal by Eliyahu Goldratt as part of my MBA program and was thinking about throughput, inventory, and operating expenses.  Urgent Care’s aren’t factories, but there are some business similarities.  There was demand in the community for our product (COVID testing), we had access to inventory (test cartridges), and we had excess capacity (Sofia machines).  I put it all together for a million-dollar idea.

The Idea for COVID Drive-Through

 

Businesses started opening after the lockdown, and people were returning to work.  I wanted to set up a drive-through testing station and apply Goldratt’s principles.  That may seem obvious in retrospect, as mobile testing stations quickly popped up all over the country.  However, as Texas was one of the first states to reopen, and rapid tests were just hitting the market, it was still a novel concept.

One of my partners, our operations director, was about to go on vacation.  She and I didn’t see eye-to-eye on the idea and its implementation.  I usually stay out of the day-to-day operation of the clinics, but I believed we only had a short window of opportunity.  I sat down with our marketing director to come up with a plan.  We gave ourselves a week, as we wanted to have it up and running by the time my partner returned from vacation.  We had five major logistical problems that we needed to solve.

1. We need a mobile structure to house the operation.

I sent my marketing director on a mission.  Her mandate was to find a mobile structure with electricity, enough space to house a few workers to operate the machines, and air conditioning.  We initially looked at purchasing trailers or tiny homes, but nothing was available.  We were also reluctant to buy something we only needed for a limited time when we were in a less-than-ideal financial position.  Since we work in an area dominated by the oil industry, we found an oil field services company that leases small, air-conditioned trailers to oil field companies when they’re on location in a rural area.  The trailers function as a small command sender or a respite from the heat for the workers.  Since the pandemic slowed the oilfield, we secured a trailer for $100 per day delivered to whatever site we could find.

2. We don’t have a place to host the covid drive-through.

We drove around town looking for a place that would suit our needs.  Our two locations in this town would not work as there was insufficient space and no proper ingress and egress for what we had in mind.  We were rejected by several businesses, including a movie theater that would have been perfect.  They obviously weren’t open and had an enormous parking lot on the main road, but we could not get them to agree.  We finally found a church that agreed to let us use their parking lot.  If you’re unfamiliar with Texas, it’s the land of the mega-church, so the parking lot was quite large.  This church had a large full-time staff, a school, and a daycare attached to it.  We agreed to pay them $300.00 daily to use their parking lot and hook up to their electricity.

3. The Texas Summer Heat.

While the trailer we procured was air-conditioned, workers would have to be outside in the summer sun to swab patients in their cars (or big trucks, since this is Texas).  We would need tents to block out the sun, a way to hold them down in the howling winds, and a way to keep everyone reasonably cool.  We purchased tents, several large coolers to fill with ice and cold drinks, wearable cold packs, sunscreen, and several industrial-size fans.  Oh yeah, and lots of hand sanitizer.

4. Staff.

Our other clinics were back to a somewhat normal summer volume, so we didn’t have a lot of spare staff.  Unfortunately, the clinic we closed was quite remote from the others so that we couldn’t rehire its staff.  We needed a registration clerk, someone to swab, someone inside the trailer to run the machines, and a “runner” to help anywhere that was required.  We cross-trained everyone so that we could rotate people in and out of the air-conditioned trailer.  Our regular employees were allowed to work extra at the drive-through, we pulled a few of our back-office staff out of the office, and hired a couple of college students home for the summer.  The marketer and I would also be there to help.

COVID testing

5. How do we operate a mobile testing station?

We knew we needed to keep people in their cars while waiting for the test results.  We hoped there would be a line of traffic, and we also needed to keep everyone masked and socially distanced.  The testing had to comply with CLIA-waived rules.  We needed a registration system, a mobile payment system, and a mechanism to give patients their results on paper, as many would require proof of a negative test to return to work.  Traffic cones were laid out in the parking lot to direct traffic.  We decided on a cash-only system since we were running out of time, which was expeditious but presented the typical problems that come with cash.  Opening day came before we finalized every detail, but we assumed we would have time to work out the kinks while volume ramped up.

Opening Day

We obtained permission from the city to open as a satellite clinic and opened on Monday, July 6.  I arrived early to help set things up and hoped we hadn’t done all this work for nothing.  We hadn’t had a chance to advertise much on such short notice, but we put a notice on our website and purchased some radio ads.  The runtime on each machine was 15 minutes, so with four machines running at maximum capacity, we could theoretically push 16 cars per hour through the drive-through.  Obviously, this wasn’t realistic, but it gave us an efficiency target to shoot for.  If everything worked perfectly, we could see 192 patients in 12 hours.

We saw over 100 patients on the first day.  It was slightly organized chaos.  The trailer’s air conditioner wasn’t strong enough to keep it cool, with the door continuously being opened and closed.  The Sofia machines overheated.  The industrial-sized fans made all the registration paperwork blow away.  We didn’t have enough staff, and it was terribly hot outside, but we survived.  We figured things out as we went along, made adjustments, and it got (slightly) better each day that week.

drive-thru COVID testing

By the time my partner returned from vacation, I was able to hand her the keys to a functioning drive-through COVID testing station and a sizeable envelope of cash.  She said thank you, then promptly changed every process I had created, making everything run more efficiently.  There is a reason she’s in charge of operations, and I’m not.  However, I felt a wonderful sense of pride in what we had accomplished in two weeks.  We had proven the concept.

The Results

Let’s do some business math.  Our fixed costs were $400 per day for the trailer, electricity, and parking lot rentals.  We had five people working most of the time at an average of $25 per hour for 12 hours, or $1,500 per day.  Add another $100 per day for water, drinks, and incidentals, and our fixed costs were $2,000 per day.  Each test cost us $37 and our EMR costs roughly $4 per patient.  We charged $150, leaving $109 profit per test.  Therefore, we needed to see 18.3 patients per day to break even.  We averaged 67 per day in July and August.

After a few months, the church reopened and wanted their parking lot back.  We ended up changing locations three times over the seven months that we were open.  We stopped staying open on weekends as the volume was significantly lower, and it gave our staff a break.  Local nursing homes asked us to test their patients on a regular basis at a significantly discounted rate, allowing us to give back to the community while making a small profit.

As the pandemic wore on, restrictions eased, and people were less willing to pay cash for testing.  We had a large spike in COVID cases, causing people to return to the urgent care clinics for symptomatic testing using their insurance.  The clinic volume rose to the point that we needed two Sofia machines at each clinic, while the volume at the drive-through dwindled in January and early February.  When it came time for us to move again, we decided to shut it down.  In total, we saw 13,022 patients in just over seven months.

Our profit margin declined as time went on.  We heavily discounted testing for the nursing home contracts, and our expenses rose as we kept changing locations.  Ultimately, we made a total profit of just over a million dollars on the COVID drive-through.

You might wonder why we didn’t open more mobile testing stations if ours was so profitable.  First, there was a limited supply of testing material.  Tests were on allocation, and we never knew how many we would receive.  We spent two years receiving a crash course in inventory management.  On more than one occasion, the government bought all the tests across the country, leaving us without a shipment for that period.  Next, we tried.  We opened a second location at a college parking lot in a neighboring town.  By that point, everyone was more organized, and the local governments and hospitals had also started doing drive-through testing.  We were open for a month and decided it wasn’t worth the hassle.

Finally, my partner rightfully wanted to keep our focus on our urgent care clinics.  By the winter of 2020, volumes were at record levels in urgent care clinics across the country.  Testing was the new shiny object, but urgent care was our bread and butter.  With the massively increased volume, fluctuating restrictions, staffing concerns, and supply shortages, it was a challenging enough time without running a separate business arm.

Lessons Learned from the COVID Drive-through

I learned many valuable lessons from my experience with the COVID drive-through testing station, but I think three stand out and are broadly applicable to other business ventures.

1. Speed Matters

“Move fast and break things” was Mark Zuckerberg’s famous motto during the early days of Facebook.  His idea for rapid innovation in design and management processes became a mantra for an entire era of Internet companies.  This style has fallen out of favor, but the need for speed in business is still desirable.  Being first to market really mattered in this case.  In months, hospitals, other urgent care facilities, and national companies started setting up COVID testing stations everywhere.  This was a moment in time that needed to be captured, or it would be lost.  Our ability to make fast decisions, move quickly, and get open within a week allowed us to take advantage of the opportunity.

2. Perfection is the Enemy of Done

The concept of a “minimum viable product” is more applicable to software than patient care.  When dealing with people’s health, it’s best to be sure before putting out a product or service.  However, there was no precedent for the COVID-19 pandemic.  There were no best practices to follow as the government was essentially making it up as they went along.  It’s hard to wait for things to be perfect when you don’t know what that means.  Our first week in the drive-through business was an example of minimum viable product come to life, but we started and made adjustments when information or regulations changed.  If we had waited until every process was perfect, we would have never opened.

This lesson has translated to other aspects of my life, including this blog.  I’m a cautious writer who will review and edit the same post 20 times, obsessing over every word choice.  If I hadn’t learned this lesson through the drive-through, Business is the Best Medicine wouldn’t exist because nothing would ever be good enough for me to publish.  Even now, I still change words and phrases even after publication.  Our self-imposed publication deadlines have been good for me, as it challenges me to do the best I can and then let it go.

3. Carpe Diem 

Opportunity is not a lengthy visitor.  In times of tumult and uncertainty, those who can survey the playing field and act boldly have the advantage.  This is true in business and investing.  When things looked bleakest during the pandemic, there was money to be made investing in the stock market and in business.  There is a saying in Emergency Medicine that the only thing we are paid to do is make decisions.  You can’t be indecisive when someone’s life is on the line.  My partner undoubtedly would have done a better job opening the mobile testing station than I did.  But the situation called for decisive action, which happens to be my specialty.  This doesn’t mean all my decisions are optimal, but overthinking can lead to analysis paralysis.  Sometimes, you must seize the day.

Conclusion

I hope you enjoyed this story.  The COVID testing station was a shining light for us during a difficult time.  The pandemic brought unprecedented challenges to healthcare, but it also revealed our best as medical professionals – hard work, courage, sacrifice, and selflessness.  The same was true for our business.  When things were at their lowest point, it brought out our entrepreneurial best.

I’d like to say that all my business projects have been this successful, but remember my cryptic reference to the temporary closure of our newest clinic proving costly?  Now that you’ve heard how we made a million dollars during the pandemic, stay tuned for my article on how we lost a million dollars on an ill-fated attempt at expansion, coming soon to Business is the Best Medicine.  Thanks for reading.