The managed care obsession with cost control is triggering some intriguing dialogue about whether hospitals and clinics can make retail sales work. Retail considerations inevitably raise the ethical debate about whether patients should pay for a more personal level of care and products.
A few healthcare organizations are test-driving retail opportunities.
- The Mayo Clinic is selling consumer-focused healthcare books and CDs;
- John Hopkins offers a retail health catalogue;
- Sentara Health System is offering healthcare coverage to travelers through a franchised travel program.
And several hospitals offer pricey, highly customized executive health programs to employers willing to pay a premium for VIP checkups and diagnostic evaluations. The Mayo Clinic, Cedars-Sinai Health System in Los Angeles and The David Drew Clinic in Bethesda, Md., are a few examples of this trend.
But what if a hospital took this concept a step further and offered patients a second tier of retail personalized coverage beyond what the typical HMO covers? The MedTrend Group, a Minneapolis-based consulting firm, posed this question last month at the Customer Based Marketing Strategies conference in Phoenix. The response was mixed.
This session focused on how to build successful retail direct-to-consumer business in healthcare. Key examples include:
- retail kiosks in clinics that offer a wide array of products from nutritional supplements to post mastectomy products and private label cosmetics
- American Wholehealth (AW) clinics that use a franchise approach to offering a combination of traditional and alternative care.
AW, run by Marriott and Disney executives, is by far the most aggressive example of clinical retail. These clinics are located in high profile, upscale areas like Chicago's "Magnificent Mile" on Michigan Ave. and Chevy Chase, Md. They target the fee-for-service market. The "store owners" are doctors and the business goal is to achieve $1 million in sales per 1,500 square feet, with the average center at 5,000 square feet.
But retailing at this level requires a dramatic culture shift in how clinics and hospitals think about revenues, says Steven Hillestad, a MedTrend partner. The concerns are understandable and real.
How would doctors handle patient complaints over charges for various service offerings? Some patients would perceive that the best care requires out-of-pocket payments. Hillestad and Maureen Swan, another MedTrend partner, argue that offering retail options is not about different levels of clinical care but providing various levels of service. They offer a compelling analogy with the airline industry. Although most airlines offer both coach and first-class service, passengers don't feel any less safe flying in coach than they would flying first-class. The difference is in the comfort level and convenience, not competence.
(The MedTrend Group, Steve Hillestad, Maureen Swan, 612/943-3903)
Healthcare Retail Ideas
Regardless of which side of the quality vs. convenience arguement you respond to, here are some retail ideas to consider:
- A health 401(K) plan;
- Gold packages of healthcare services customized for executives, women, etc.
- Travel clinics;
- Online catalogues; and
- Alternative supplements/vitamins.
Source: The MedTrend Group