Healthcare: Can Retailers Be The Disruptors?

Healthcare: Can Retailers Be The Disruptors?

By Dan Stanek

Let’s face it: going to the doctor is a pain. And not just because you’re there because you feel lousy, or you’re doing your best to avoid feeling lousy.

The reason it’s so frustrating? Most medical practices are designed for them and their processes, not you. The hours are limited and it almost always requires time off from work. There’s tons of repetitive paperwork and lots of waiting. And if you need a prescription filled, off you go to another location. To wait some more. Patients (or customers, as I think of them) are losing their patience.

The recent emergence of retail health clinics is both a direct response to these lousy experiences and an effort to find life in the struggling retail store space.

The first retail health clinic opened in Minnesota in 2001. After a frustrated father — and future Minute Clinic cofounder — experienced a long wait at an urgent care facility to treat his son’s strep throat.

At nearly 1/6th of the total U.S. economy, healthcare is an almost unfathomably huge business. And with a growing customer base of, well, virtually everyone, it should be no surprise that the healthcare industry is growing faster than the entire retail sector. And much faster than in-store retail.

So retailers are starting to make a play for this massive (and essential) share of the American wallet. And in doing so, they’ve set a collision course with traditional medical providers. The first retail clinic opened in 2001, and there are now more than 3,000 clinics in drug stores, supermarkets and big box mass merchandisers. Just three years ago, roughly 15% of consumers had visited a retail clinic; in the past year more than 30% of them had tried it.

They’re increasingly popular with Hispanic consumers, millennials, and households with kids, who are more willing to visit retail store-based clinics not just for emergencies, but as their primary care option. In fact, they often prefer it. Early adopting retailers have become a legitimate provider of healthcare with the exact populations most retailers and CPG brands target.

What’s not to like? They’re often closer to home, offer longer and more flexible hours, and are closer to the products they may need to purchase after a diagnosis. Pricing is not a black box and is usually promoted on signage.

Don’t think for a minute, however, that traditional healthcare providers will allow their patients to be stolen away without a fight. They’re starting to adopt practices long established in retail. They’re addressing the “patient experience”, which shifts the focus from doctor-focused operations to where it matters most: the customer. They’re opening facilities in smaller, more convenient locations, or moving into retail spaces in strip centers and malls (sometimes, ironically, left vacant by retail closures). They’re even creating “chain” medical brands, such as One Medical and Great Expressions (dental care).

This is a battle for a new generation of patients.

The result of these sudden changes is a diverse new healthcare landscape that offers lots of opportunity for both sides of this spectrum — and provides a wealth of choices for the public. Simply put, this is a battle for a new generation of patients.

Leading the Disruption

For minor conditions and “everyday” healthcare, retailers are indeed turning the tables – they’re in the position of being the disruptor, not the disrupted. They are rewriting the rules on how to deliver consumer-centered healthcare that is:

  • Cheaper to build and operate
  • More accessible and convenient

Consumers are comfortable with this new model, foregoing credentials and diplomas on the wall for treatment by nurse practitioners and physician’s assistants.

Retailers have an opportunity to fully integrate these services into their holistic physical and digital shopping experience to become an even greater force.

Keep in mind, this isn’t the first time retailers have disrupted a medical offering – look what LensCrafters, Pearle Vision, and numerous mass retail vision centers did in the optical industry. The current pattern of appending clinics to existing retail units is just the first wave of expansion. Retailers have an opportunity to fully integrate these services into their holistic physical and digital shopping experience to become an even greater force.

The impact of retailers becoming a “primary care” option of choice goes well beyond that business itself. It creates an entirely different dynamic in the consumer/shopper relationship with the store and the retailer’s brand, creating completely new visit patterns, trip drivers and need states. This new relationship provides a unique opportunity for retailers and brands to go to the next level in taking advantage of a huge and growing health opportunity, including the potential to:

  • Create destination or “statement” offerings in health related categories as a key positioning lever
  • Activate health categories adjacent to health services, especially conditions being actively managed (such as allergies, digestion problems, or diabetes) in concert with clinic visits
  • Add new health services and other health categories (a good example is Costco’s expansion and space dedicated to hearing aids)
  • Strengthen the “wellness” offerings in the store (and not just the treatment offerings) to take advantage of the massive attitudinal movement to prevent illness and embrace the lifestyle of wellness (see "A Passion for Wellness")
  • Create new educational and engagement opportunities related to consumer health options

New technologies will further pave the way for change. Diagnostic information from apps and wearables, personal health data, and even remote telehealth services (where specialists offer consultation from a remote location) offer new ways of thinking about the overall consumer experience. All this adds up to new models for providing a unique, personalized experience to each consumer, driving highly engaging health and wellness solutions.

Loyalties are Changing

The idea that patients stick with their physicians for years is outdated. Younger customers have not established firm physician relationships. And because convenience is a growing expectation, customers are more willing than ever to change practices and explore alternative options. A recent study showed that half of all patients would be willing to switch their primary physician, and nearly 70% of those age 18-44.

81% of consumers are dissatisfied with their healthcare experience

As I mentioned, the medical industry will not sit idly by while retailers invade their turf. An epic battle of massive industry players is on the horizon. But right now, this disruption brings immediate opportunity to retailers and their brand partners. I think they’ll agree it’s nice to be on the offense again.

To me, this feels like a tipping point, an opportunity to provide better customer experiences in the health and wellness space, at a time when our population is aging, millennials are establishing families and all ages are expecting more. It’s a battle for a new generation of patients. Time to gear up.

WD Partners has been serving the Health & Wellness market for many years, applying a blend of unique capabilities, thinking and approaches to this growing and evolving sector.

For more information on how WD can assist you with your Health & Wellness strategy please contact:

Dan Stanek
Dan Stanek
Executive Vice President
WD Partners
dan.stanek@wdpartners.com
+1 614 634 7337
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