Retail Medicine Models:
Lessons Learned
SHSMD
September 4, 2003
Geoff KaufmannGeoff Kaufmann
V.P. Clinical DevelopmentV.P....
What Is “Retail”?
 A NounA Noun
• Selling of goods and services directly to customers -Selling of goods and services dire...
What Is “Retail Medicine”?
 Demand drivenDemand driven
 payor demand in the pastpayor demand in the past
 patient deman...
What Are Examples Of Retail
Medicine?
 Body scans as birthday presentsBody scans as birthday presents
 Drive-through pha...
Is Retail Medicine “Cash
Based”?
 Are we moving toward a 3 tier system of care?Are we moving toward a 3 tier system of ca...
Learning Objectives
1.1. Understand which services are more likely to beUnderstand which services are more likely to be
de...
What Will You Get From Us?
 A decision making framework for hospitals toA decision making framework for hospitals to
use ...
Sales Continuum
 WholesaleWholesale
 DiscountDiscount
 Mainstream RetailMainstream Retail
 Upscale RetailUpscale Retai...
Sales Continuum
WholesaleWholesale DiscountDiscount
MainstreamMainstream
RetailRetail
UpscaleUpscale
RetailRetail Boutique...
Sales Continuum: Grocery Example
 Wholesale:Wholesale: Allen FoodsAllen Foods
 Sells products to grocery storesSells pro...
Sales Continuum: Healthcare
 Wholesale:Wholesale: VendorsVendors
 Sell products to hospitals and GPOsSell products to ho...
Location: Marketing Tactic Or
Retail Strategy??
 Changing the location of a hospital to suburbia without changing theChan...
The New Economy
““Customers and employees will be empowered in newCustomers and employees will be empowered in new
ways..a...
It’s this desire to participate that
drives the retail healthcare
demand
ConvenienceConvenience
TimelinessTimeliness
Co...
“Retail” Puts The Customer In The
Driver’s Seat
Patient Centered Model 1980’sPatient Centered Model 1980’s
PatientPatient
...
Trends Affecting Retail Shift
 Consumer ownership over health care buyingConsumer ownership over health care buying
decis...
Consumer Shifts
 Consumers are sharing the cost of health planConsumers are sharing the cost of health plan
coverage and ...
Consumers As Healthcare Buyers
Are you watching theAre you watching the
advertisements???advertisements???
Examples of Retail Marketing
Technology Enablers Of The Retail Shift
 Easier to useEasier to use
 SaferSafer
 CheaperCheaper
 DisposableDisposable
...
Enabling Technology
 Implantables (spine supports, dissolving chemo,Implantables (spine supports, dissolving chemo,
shunt...
Enabling Technology Examples
 Mobile MRI—the size of a desk chair (arm, leg)Mobile MRI—the size of a desk chair (arm, leg...
Technology Impacts Utilization
 Shifts inpatient to outpatient to…retail?Shifts inpatient to outpatient to…retail?
 Decr...
Specialty Niche Retail Competition
 Plastic surgery centersPlastic surgery centers
 Screening services (Body CT, genetic...
Impact Of Internet On Retail Strategies
 Increasing number of websites for health informationIncreasing number of website...
Examples From Your Markets
 Hospital “hotel” services (meals, rooms)Hospital “hotel” services (meals, rooms)
 Inpatient ...
Solucient Survey: 82% of hospitals offer
off-campus services
6%
6%
6%
9%
9%
15%
24%
24%
26%
26%
26%
29%
44%
47%
59%
0% 10%...
Solucient Survey: 68% say these
services increase pt satisfaction plus…
5.04
5.19
5.35
5.76
5.88
6.03
6.72
7.09
8.06
8.53
...
Solucient Survey: Only 35% saw improved
MD relations, 44% increased market share,
plus…
15%
12%
45%
12%
15%
0%
5%
10%
15%
...
Solucient Survey: Physicians still the
primary partnering strategy
3%
9%
12%
33%
42%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%...
Solucient Survey: Retail marketing
strategies have been limited
21%
21%
38%
47%
56%
56%
79%
0% 10% 20% 30% 40% 50% 60% 70%...
So What Are You Going To Do?
 What clinical services do you want to move to a retailWhat clinical services do you want to...
Anticipate The Future
 ““If you went back 100 years and asked a farmerIf you went back 100 years and asked a farmer
what ...
Decide Where To Go Retail
 Specialties to consider:Specialties to consider:
 Plastic Surgery (aesthetics)Plastic Surgery...
Decide Where To Go Retail
 Services to consider:Services to consider:
 Complementary to IP but uncovered by healthComple...
Decide Where To Go Retail
 Cultural issues to consider:Cultural issues to consider:
 Build in extensive training program...
Do Your Homework
 Analyze market demand by product line, bothAnalyze market demand by product line, both
inpatient and ou...
Get Close To The Customer
 Focus on convenience;Focus on convenience;
 ask them what they want;ask them what they want;
...
Be Credible
 Don’t risk your reputation on marginalDon’t risk your reputation on marginal
technology by overpromising res...
Understand How To Run A Retail
Business
 Focus is on building revenues and generatingFocus is on building revenues and ge...
Marketing In Retail Is Different
 Quick, customer responsive (seasonal discounts,Quick, customer responsive (seasonal dis...
Consider Your Partnering Options
 PhysiciansPhysicians
 FranchisesFranchises
 Local businesses that serve a similarLoca...
Example: Open Off-site Pain
Management Center
 Who is your customer? What will they want?Who is your customer? What will ...
Solucient Survey: Lessons
Learned
 Market research is crucial to assuring success. You have toMarket research is crucial ...
Critical Success Factors for
Retail
 Offering fits local market demand and supplyOffering fits local market demand and su...
Critical Success Factors for
Retail
 Choose the right partnerChoose the right partner
 Need to “share” profitsNeed to “s...
Other Lessons Learned
 Need experience in retail marketing—go buy itNeed experience in retail marketing—go buy it
 Make ...
Questions?
Retail Medicine Models: Lessons Learned
Retail Medicine Models: Lessons Learned
Retail Medicine Models: Lessons Learned
Retail Medicine Models: Lessons Learned
Retail Medicine Models: Lessons Learned
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Retail Medicine Models: Lessons Learned

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  • Current inpatient business with existing payor reimbursement models can achieve 2% margin at best—your revenue won’t change, so all you can do is grow volume or cut cost, which becomes a zero sum game—this is NOT what we are going to talk about
    Revenue gains are only going to come from tapping the “disposable income” businesses, or shifting your business to lower cost settings that also have market appeal that can result in better margins—this is what we mean by RETAIL strategies
  • Location should match your business model. Don’t put a boutique in a warehouse.
    Boutique: Location should be very private, a spa or resort.
    High class. Very specialized.
    Upscale Retail: Location should be prestigious.
    The right side of the tracks
    Mainstream retail: Easily accessible to the mainstream public.
    Easy to find. Good Parking.
    Discount: Often urban or centralized.
    Hard to find. Part of a building complex. Parking difficult or confusing or remote
    Wholesale:
    Cheap property location for warehouse. Good access to transportation and shipping.
  • Hospitals began as a cottage industry that went to mainstream retail.
    Because of cost increases and spread to mass markets, and the overlay of the insurance industry Hospitals have become discount businesses.
    To become mainstream retail, upscale retail or boutiques, hospitals will need to make a shift away from the hospital discount business model and rethink how they operate as a business in retail markets
  • Convenience issues of parking, way-finding, distance from parking to services, ease of driving access, payment options, distance from home etc
    All these variables are a part of the “retail” equation. Issues that hospitals are often inflexible to adapt given existing infrastructure
    Edifice Complex
  • What everybody wants is to have some sense of control or participation in what happens in their life.
    While this has become axiomatic for consumer products (e.g. old Avis Slogan above) it’s the emerging trend for consumption of healthcare services
  • Consumer ownership over health care buying decisions
    More consumers in health plans with incentives to manage the price for services used (BCBS Options Blue)
    Increasing polarization between the extremes of “heavy users”, e.g., seniors, chronic illnesses, cancer, trauma, and the “light users”, e.g., young singles and families opting for low cost health plans and the need to purchase retail
    Increasing co-payments that steer purchasing
    Technology shifts that encourage ambulatory treatment
    Mobile, office based equipment now available
    Outpatient diagnosis and treatment replacing inpatient setting
    Treatments increasingly available without a physician prescription
    Delivery system more fragmented, more consumer choice
    Physicians trying to “cherry pick” high-end services to augment their incomes, opening freestanding specialty centers and hospitals
    Hospitals facing competition from myriad sources: specialty niche players—inpatient and outpatient, drug and device suppliers, retail pharmacies, internet offerings, etc.
  • Brokers nationally report consumers will switch plans (assuming they have a choice) for 8% premium differences regardless of benefit sets
    Stats re: out-of-pocket spending for healthcare and related services
    Give examples of consumer strategies in healthcare, e.g., direct mail, coupons, gift certificates, package pricing
  • “Smaller” means ambulatory and potentially retail
    Molecular medicine can be done in small labs with genetic markers on mircoarrays- the result is “Personalized Medicine”, drugs and therapies to fit the individual
    Better, faster, more robust imaging
    Swallowable cameras instead of scopes
    Technology often outpaces cultural willingness to adopt e.g. Japanese toilet that does multiple lab tests.
    Advances in technology can make a once specialty product/service controlled by doctors and medicine an OTC retail option.
  • Retail Medicine Models: Lessons Learned

    1. 1. Retail Medicine Models: Lessons Learned SHSMD September 4, 2003 Geoff KaufmannGeoff Kaufmann V.P. Clinical DevelopmentV.P. Clinical Development Center for Diagnostic ImagingCenter for Diagnostic Imaging Janet GuptillJanet Guptill PresidentPresident KM at Work Inc.KM at Work Inc. Steve Pew, PhDSteve Pew, PhD Clinical TransformationClinical Transformation Texas Health ResourcesTexas Health Resources
    2. 2. What Is “Retail”?  A NounA Noun • Selling of goods and services directly to customers -Selling of goods and services directly to customers - • I work inI work in retailretail  An AdverbAn Adverb • Purchased at customer price -Purchased at customer price - • I bought itI bought it retailretail  A VerbA Verb • Selling goods and services –Selling goods and services – • ThisThis retailsretails for $10for $10
    3. 3. What Is “Retail Medicine”?  Demand drivenDemand driven  payor demand in the pastpayor demand in the past  patient demand moving forwardpatient demand moving forward  Consumer focusedConsumer focused  patients increasingly willing to pay for thingspatients increasingly willing to pay for things that their insurance might not coverthat their insurance might not cover  Partnership healthcare modelPartnership healthcare model  Patient, Family, Professionals share knowledgePatient, Family, Professionals share knowledge and decisions about care, and the customer willand decisions about care, and the customer will pay “retail” to have more control of theirpay “retail” to have more control of their healthcare experiencehealthcare experience
    4. 4. What Are Examples Of Retail Medicine?  Body scans as birthday presentsBody scans as birthday presents  Drive-through pharmacies for strep testsDrive-through pharmacies for strep tests  Dermatologist selling “beauty”—botox, facial scrubs, cosmeticsDermatologist selling “beauty”—botox, facial scrubs, cosmetics distributed solely through physician officesdistributed solely through physician offices  On-line doctor consults and appointment scheduling. On-lineOn-line doctor consults and appointment scheduling. On-line pharmaceuticalspharmaceuticals  Massage as an option with physical therapy routineMassage as an option with physical therapy routine  Laser eye surgeryLaser eye surgery  Weight loss/surgical/procedural/behavioralWeight loss/surgical/procedural/behavioral  Body sculpting plastic surgery and other methodsBody sculpting plastic surgery and other methods  Dental cosmetics, whitening, braces for adultsDental cosmetics, whitening, braces for adults  Herbal remedies. Homeopathic remediesHerbal remedies. Homeopathic remedies  Stress testingStress testing  Sonograms of the “baby” in the malls (baby pictures)Sonograms of the “baby” in the malls (baby pictures)  Are you thinkingAre you thinking retailretail??
    5. 5. Is Retail Medicine “Cash Based”?  Are we moving toward a 3 tier system of care?Are we moving toward a 3 tier system of care?  Shift from “entitlement to excess”—”right vs.Shift from “entitlement to excess”—”right vs. privilege” levels of careprivilege” levels of care 1.1. What the governmental payors cover (theWhat the governmental payors cover (the basics)basics) 2.2. What the commercial payors cover (benefitsWhat the commercial payors cover (benefits vary)vary) 3.3. What people will buy that isn’t covered at allWhat people will buy that isn’t covered at all  Perhaps “Retail Medicine” is trying to selectivelyPerhaps “Retail Medicine” is trying to selectively grow in areas where greater net margins aregrow in areas where greater net margins are possible…possible… FOLLOW THE MONEYFOLLOW THE MONEY
    6. 6. Learning Objectives 1.1. Understand which services are more likely to beUnderstand which services are more likely to be delivered in a retail modeldelivered in a retail model 2.2. Share lessons learned from hospitals that haveShare lessons learned from hospitals that have incorporated retail models into their businessincorporated retail models into their business 3. Learn a process for transforming key services3. Learn a process for transforming key services into a retail delivery modelinto a retail delivery model
    7. 7. What Will You Get From Us?  A decision making framework for hospitals toA decision making framework for hospitals to use when considering entering the retailuse when considering entering the retail marketmarket  Lessons learned from hospital providers thatLessons learned from hospital providers that have made these shiftshave made these shifts  Critical success factors for a retail medicineCritical success factors for a retail medicine modelmodel  Tools for managing and measuringTools for managing and measuring successful transitionssuccessful transitions
    8. 8. Sales Continuum  WholesaleWholesale  DiscountDiscount  Mainstream RetailMainstream Retail  Upscale RetailUpscale Retail  BoutiqueBoutique
    9. 9. Sales Continuum WholesaleWholesale DiscountDiscount MainstreamMainstream RetailRetail UpscaleUpscale RetailRetail BoutiqueBoutique WarehouseWarehouse Focus onFocus on DistributionDistribution InstitutionalInstitutional HVACHVAC WarehouseWarehouse Arranged forArranged for convenience ofconvenience of handlershandlers Little if anyLittle if any service exceptservice except minimumminimum required byrequired by lawlaw Large buildingLarge building strategicallystrategically located inlocated in shopping areashopping area CustomerCustomer FriendlyFriendly Service is asService is as important asimportant as product qualityproduct quality Brand NamesBrand Names ConvenienceConvenience ExceptionalExceptional facilityfacility Spa-likeSpa-like atmosphereatmosphere PrivacyPrivacy CustomCustom ServiceService PersonalPersonal ServiceService AmenitiesAmenities UpsellsUpsells SingleSingle specialtyspecialty serviceservice Focus onFocus on highest qualityhighest quality HighestHighest personalpersonal serviceservice PersonalPersonal relationshiprelationship with customerwith customer RepeatRepeat businessbusiness
    10. 10. Sales Continuum: Grocery Example  Wholesale:Wholesale: Allen FoodsAllen Foods  Sells products to grocery storesSells products to grocery stores  Discount:Discount: Costco, Sam’s ClubCostco, Sam’s Club  Sells products to public in volume but at a reduced priceSells products to public in volume but at a reduced price  Mainstream RetailMainstream Retail:: Albertsons, KrogerAlbertsons, Kroger  National chain that sells products to public at standard pricesNational chain that sells products to public at standard prices  Upscale Retail:Upscale Retail: Central Market, Whole FoodsCentral Market, Whole Foods  Offers specialty products to the public at premium pricesOffers specialty products to the public at premium prices  Provides exceptional service, has reputation for outstanding serviceProvides exceptional service, has reputation for outstanding service  Boutique:Boutique: Omaha SteaksOmaha Steaks  Offers specialty products to the public within a particular category atOffers specialty products to the public within a particular category at premium pricespremium prices
    11. 11. Sales Continuum: Healthcare  Wholesale:Wholesale: VendorsVendors  Sell products to hospitals and GPOsSell products to hospitals and GPOs  Discount:Discount: HospitalsHospitals  Provide services for Medicare, Medicaid, HMO, PPO participants atProvide services for Medicare, Medicaid, HMO, PPO participants at discount pricesdiscount prices  Mainstream Retail:Mainstream Retail: Pharmacies, Urgent Care CentersPharmacies, Urgent Care Centers  Offer standard services to customers at standard retail pricesOffer standard services to customers at standard retail prices  i.e. Services for customers who do not need “larger volumes”i.e. Services for customers who do not need “larger volumes”  Upscale Retail:Upscale Retail: Specialty Clinics/Hospitals, Menningers, ATCs (Betty Ford),Specialty Clinics/Hospitals, Menningers, ATCs (Betty Ford), MayoMayo  Provide specialty services at premium pricesProvide specialty services at premium prices  Possess a reputation for premium care, customer service, or experiencePossess a reputation for premium care, customer service, or experience  Boutique:Boutique: Cosmetic/Plastics, Dermatology, Laser Eye, Weight LossCosmetic/Plastics, Dermatology, Laser Eye, Weight Loss  Offers specialty services to the public within a particular category atOffers specialty services to the public within a particular category at premium pricespremium prices
    12. 12. Location: Marketing Tactic Or Retail Strategy??  Changing the location of a hospital to suburbia without changing theChanging the location of a hospital to suburbia without changing the delivery/business model is simply a marketing/location tactic.delivery/business model is simply a marketing/location tactic.  Operating in a new location using institutional delivery methods,Operating in a new location using institutional delivery methods, institutional pricing, and providing little service is really just the sameinstitutional pricing, and providing little service is really just the same snow but a different drift. It does not make retail medicine.snow but a different drift. It does not make retail medicine.  Retail medicine is a different business model and care delivery modelRetail medicine is a different business model and care delivery model than traditional hospital medicine.than traditional hospital medicine.  To enter the retail medicine market, hospitals must think in aTo enter the retail medicine market, hospitals must think in a completely different way and conduct business in a completelycompletely different way and conduct business in a completely different manner.different manner. Retail Medicine-What it isn’tRetail Medicine-What it isn’t Retail Medicine-What it isRetail Medicine-What it is
    13. 13. The New Economy ““Customers and employees will be empowered in newCustomers and employees will be empowered in new ways..and essentially calling the shots”ways..and essentially calling the shots” ““Information is free, Insight is not.”Information is free, Insight is not.” ““The biggest problem for senior executives will be facingThe biggest problem for senior executives will be facing the fact that they are no longer in charge…thethe fact that they are no longer in charge…the customer is”customer is” ““No competitive advantage is sustainable. We wil haveNo competitive advantage is sustainable. We wil have to continually create new competitive advantages”to continually create new competitive advantages” C.K. Prahalad, Professor of BusinessC.K. Prahalad, Professor of Business Administration,Administration, Michigan Business School,Michigan Business School, Consumer-Centric ViewsConsumer-Centric Views
    14. 14. It’s this desire to participate that drives the retail healthcare demand ConvenienceConvenience TimelinessTimeliness Cost/payment optionsCost/payment options Weighed against other purchase options e.g. aWeighed against other purchase options e.g. a vacation in the tropicsvacation in the tropics A collaborative care modelA collaborative care model
    15. 15. “Retail” Puts The Customer In The Driver’s Seat Patient Centered Model 1980’sPatient Centered Model 1980’s PatientPatient FamilyFamily CaregiversCaregivers KnowledgeKnowledge Collaborative Model of HealthcareCollaborative Model of Healthcare The FUTUREThe FUTURE Traditional Healthcare Model 1900’sTraditional Healthcare Model 1900’s Customer Service Model 2000’sCustomer Service Model 2000’s Copyright: The Center for Collaborative Health and Patient Advocacy 2003Copyright: The Center for Collaborative Health and Patient Advocacy 2003
    16. 16. Trends Affecting Retail Shift  Consumer ownership over health care buyingConsumer ownership over health care buying decisionsdecisions  Technology shifts that encourage ambulatoryTechnology shifts that encourage ambulatory treatmenttreatment  Delivery system more fragmented, more consumerDelivery system more fragmented, more consumer choicechoice
    17. 17. Consumer Shifts  Consumers are sharing the cost of health planConsumers are sharing the cost of health plan coverage and more consciously deciding how tocoverage and more consciously deciding how to spend health care dollars (benefit sets, medicalspend health care dollars (benefit sets, medical spending accts, deductibles, other out of pocket)spending accts, deductibles, other out of pocket)  Consumers are creating medical savings accts withConsumers are creating medical savings accts with pre-tax dollars to create disposable income forpre-tax dollars to create disposable income for health care serviceshealth care services  Consumers are seeing that they can buy healthConsumers are seeing that they can buy health care services without going through physicianscare services without going through physicians  More information and direct services are availableMore information and direct services are available on the interneton the internet
    18. 18. Consumers As Healthcare Buyers Are you watching theAre you watching the advertisements???advertisements???
    19. 19. Examples of Retail Marketing
    20. 20. Technology Enablers Of The Retail Shift  Easier to useEasier to use  SaferSafer  CheaperCheaper  DisposableDisposable  More widely availableMore widely available  Internet makes is easier to promoteInternet makes is easier to promote
    21. 21. Enabling Technology  Implantables (spine supports, dissolving chemo,Implantables (spine supports, dissolving chemo, shunts and pumps, organ stimulators, monitors)shunts and pumps, organ stimulators, monitors) for at home treatmentfor at home treatment  Minimally invasive surgery; robotic surgeryMinimally invasive surgery; robotic surgery  Ultrasound replacing selective surgeries forUltrasound replacing selective surgeries for breast cancer, uterine fibroids and prostatebreast cancer, uterine fibroids and prostate cancer; Imaging replacing procedurescancer; Imaging replacing procedures (colonography)(colonography)  Portable, digital patient recordsPortable, digital patient records  Drugs replacing treatment (heart conditions)Drugs replacing treatment (heart conditions)  The promise of gene therapyThe promise of gene therapy
    22. 22. Enabling Technology Examples  Mobile MRI—the size of a desk chair (arm, leg)Mobile MRI—the size of a desk chair (arm, leg)  Swallowable camerasSwallowable cameras  Laparoscopic proceduresLaparoscopic procedures  Botox treatmentsBotox treatments  Early pregnancy testingEarly pregnancy testing  Defibs in airplanes, factories (AEDs)Defibs in airplanes, factories (AEDs)  Blood sugar testing pens or strips (non-invasive)Blood sugar testing pens or strips (non-invasive)
    23. 23. Technology Impacts Utilization  Shifts inpatient to outpatient to…retail?Shifts inpatient to outpatient to…retail?  Decreases intensity of serviceDecreases intensity of service  Creates new demandCreates new demand  Focuses on earlier detectionFocuses on earlier detection  Decreases the time required for careDecreases the time required for care  CAD assists providers in looking forCAD assists providers in looking for pathologypathology  Turf battles will erupt between physiciansTurf battles will erupt between physicians
    24. 24. Specialty Niche Retail Competition  Plastic surgery centersPlastic surgery centers  Screening services (Body CT, genetic testing,Screening services (Body CT, genetic testing, chiropractic evals.,chiropractic evals.,  OTC drugs (allergy, Viagra, internet ordering)OTC drugs (allergy, Viagra, internet ordering)  Health clubs/massage/spa servicesHealth clubs/massage/spa services  Complementary/integrative providersComplementary/integrative providers  Drug store “providers” (urgent care, mammo)Drug store “providers” (urgent care, mammo)
    25. 25. Impact Of Internet On Retail Strategies  Increasing number of websites for health informationIncreasing number of websites for health information and adviceand advice  More physician on-line consultsMore physician on-line consults  On-line pharmacies with minimal physicianOn-line pharmacies with minimal physician involvementinvolvement  Sites for second opinions (“get 3 medical opinionsSites for second opinions (“get 3 medical opinions anonymously for $14.95”)anonymously for $14.95”)  Report cards that compare provider cost and qualityReport cards that compare provider cost and quality scoresscores
    26. 26. Examples From Your Markets  Hospital “hotel” services (meals, rooms)Hospital “hotel” services (meals, rooms)  Inpatient Brand Identity extended to retailInpatient Brand Identity extended to retail  Brand restaurants in hospitalsBrand restaurants in hospitals  ““Scan vans”Scan vans”  Lasic centersLasic centers  ““Personal” physicians for annual feesPersonal” physicians for annual fees  DTC medical device marketingDTC medical device marketing  GNC and other supplement storesGNC and other supplement stores  E-health sites and storesE-health sites and stores
    27. 27. Solucient Survey: 82% of hospitals offer off-campus services 6% 6% 6% 9% 9% 15% 24% 24% 26% 26% 26% 29% 44% 47% 59% 0% 10% 20% 30% 40% 50% 60% Laser center Retail pharmacy Health resource center Clinical trials program Sports medicine/rehab clinic Specialty hospital Spa or health club Integrative providers (massage, accupuncture, etc.) "Health-plex" mix of outpatient services Reference lab Mental health clinic Durable medical equipment (DME) and supplies Urgent care center Diagnostic imaging center Ambulatory surgery center
    28. 28. Solucient Survey: 68% say these services increase pt satisfaction plus… 5.04 5.19 5.35 5.76 5.88 6.03 6.72 7.09 8.06 8.53 8.87 0 1 2 3 4 5 6 7 8 9 Average Score Higher level of control for the physicians Response to payer or employer demands Higher quality setting Response to the same services offered by a key competitor Convenience for the physicians Opportunity to partner w ith key physicians Less costly setting More efficient operating model Opportunity to capture new revenue sources Opportunity to serve new markets Convenience for the patients
    29. 29. Solucient Survey: Only 35% saw improved MD relations, 44% increased market share, plus… 15% 12% 45% 12% 15% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Lost money Broke even Incremental increase in margin Substantial increase in margin Unknow n
    30. 30. Solucient Survey: Physicians still the primary partnering strategy 3% 9% 12% 33% 42% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Fully ow ned by physicians Partnership w ith health care company Management agreement Fully ow ned by hospital Joint venture w ith physicians
    31. 31. Solucient Survey: Retail marketing strategies have been limited 21% 21% 38% 47% 56% 56% 79% 0% 10% 20% 30% 40% 50% 60% 70% 80% Marketing in physician offices TV Customer new sletter Radio Direct-to-consumer Web-based promotion Print
    32. 32. So What Are You Going To Do?  What clinical services do you want to move to a retailWhat clinical services do you want to move to a retail setting?setting?  What are your options for delivering these services inWhat are your options for delivering these services in a retail model?a retail model?  How much has “retail medicine” already begun inHow much has “retail medicine” already begun in your market?your market?  What do you want your retail position to be—aWhat do you want your retail position to be—a leader, a follower, or a non-player?leader, a follower, or a non-player?  How will you have to reinvent yourself to go fromHow will you have to reinvent yourself to go from a discount hospital to a retail provider?a discount hospital to a retail provider?
    33. 33. Anticipate The Future  ““If you went back 100 years and asked a farmerIf you went back 100 years and asked a farmer what he wanted he would likely tell you hewhat he wanted he would likely tell you he wanted a bigger horse that ate fewer oats.wanted a bigger horse that ate fewer oats. He would not tell you he wanted a tractor.”He would not tell you he wanted a tractor.” • CEO Hewlett PackardCEO Hewlett Packard  Find out what’s on the technological cuttingFind out what’s on the technological cutting edge…invest in future technology…beat theedge…invest in future technology…beat the customer to the market…but not by too much.customer to the market…but not by too much. Don’t be an also ran in the retail businessDon’t be an also ran in the retail business
    34. 34. Decide Where To Go Retail  Specialties to consider:Specialties to consider:  Plastic Surgery (aesthetics)Plastic Surgery (aesthetics)  Dermatology (chemical peals, dermabration,Dermatology (chemical peals, dermabration, permanent makeup)permanent makeup)  Emergency Medicine (24-hour free-standing ERs)Emergency Medicine (24-hour free-standing ERs)  Urology (impotence)Urology (impotence)  Occupational Medicine (work hardening)Occupational Medicine (work hardening)  Podiatry (orthotic and running clinics)Podiatry (orthotic and running clinics)  Dental (smile appeal)Dental (smile appeal)  Ophthalmology (lasic)Ophthalmology (lasic)  Anesthesia and Radiology (pain management)Anesthesia and Radiology (pain management)
    35. 35. Decide Where To Go Retail  Services to consider:Services to consider:  Complementary to IP but uncovered by healthComplementary to IP but uncovered by health plansplans  MDs won’t/can’t provide in their officesMDs won’t/can’t provide in their offices  Support but don’t compete with MDsSupport but don’t compete with MDs  Easy, cheap technologyEasy, cheap technology  Chronic conditions: diabetes, pain, arthritis,Chronic conditions: diabetes, pain, arthritis, heart diseaseheart disease  Diagnostic services: imaging, labDiagnostic services: imaging, lab  Don’t overlook the obvious: flowers, gifts, foodDon’t overlook the obvious: flowers, gifts, food
    36. 36. Decide Where To Go Retail  Cultural issues to consider:Cultural issues to consider:  Build in extensive training program: how toBuild in extensive training program: how to cross-sell, customer service, accepting paymentcross-sell, customer service, accepting payment  Utilize contracted, part-time, and tempUtilize contracted, part-time, and temp positions; may require HR policies separatepositions; may require HR policies separate from the hospitalfrom the hospital  Choose an entrepreneurial manager; createChoose an entrepreneurial manager; create incentives for both individual and teamincentives for both individual and team performanceperformance  Have dedicated marketing supportHave dedicated marketing support
    37. 37. Do Your Homework  Analyze market demand by product line, bothAnalyze market demand by product line, both inpatient and outpatient, assess the competition,inpatient and outpatient, assess the competition, calculate physician supply for related specialtiescalculate physician supply for related specialties  Interview physicians in the market, ask aboutInterview physicians in the market, ask about referral patterns, ascertain revenue potential ofreferral patterns, ascertain revenue potential of alternative retail strategiesalternative retail strategies  Estimate potential impact on inpatient businessEstimate potential impact on inpatient business and reactive strategies requiredand reactive strategies required  Figure out organizational structure, operatingFigure out organizational structure, operating policies, etc.; don’t “hospitalize” the servicepolicies, etc.; don’t “hospitalize” the service
    38. 38. Get Close To The Customer  Focus on convenience;Focus on convenience;  ask them what they want;ask them what they want;  survey regularly;survey regularly;  analyze current customer baseanalyze current customer base  InnovateInnovate  Understand how to cross-sell relatedUnderstand how to cross-sell related servicesservices
    39. 39. Be Credible  Don’t risk your reputation on marginalDon’t risk your reputation on marginal technology by overpromising results thattechnology by overpromising results that are not yet proven.are not yet proven.  E.g.. “Virtual” colonoscopyE.g.. “Virtual” colonoscopy  Penis enlargementPenis enlargement  Hypnotic breast enhancementHypnotic breast enhancement  etcetc
    40. 40. Understand How To Run A Retail Business  Focus is on building revenues and generatingFocus is on building revenues and generating add-on salesadd-on sales  Less focus on how to do what you are alreadyLess focus on how to do what you are already doing cheaperdoing cheaper  Need HR policies and culture distinctly differentNeed HR policies and culture distinctly different from the hospital; emphasize both individual andfrom the hospital; emphasize both individual and team sales successteam sales success  Local “ownership” is criticalLocal “ownership” is critical  Ability to make quick decisions is also criticalAbility to make quick decisions is also critical
    41. 41. Marketing In Retail Is Different  Quick, customer responsive (seasonal discounts,Quick, customer responsive (seasonal discounts, competitor reaction, reflects local market attitudecompetitor reaction, reflects local market attitude and happenings)and happenings)  More salesy than a typical hospitalMore salesy than a typical hospital  Think carefully about branding decision; hospitalThink carefully about branding decision; hospital or independentor independent  Utilize local market data on marketingUtilize local market data on marketing effectiveness: radio, billboards, direct mail,effectiveness: radio, billboards, direct mail, newspapers, magazines, etc.newspapers, magazines, etc.  Remember to sell to the intangibles—how peopleRemember to sell to the intangibles—how people will feel about themselves as a result of using yourwill feel about themselves as a result of using your serviceservice
    42. 42. Consider Your Partnering Options  PhysiciansPhysicians  FranchisesFranchises  Local businesses that serve a similarLocal businesses that serve a similar customercustomer  Technology companiesTechnology companies  Related services companiesRelated services companies
    43. 43. Example: Open Off-site Pain Management Center  Who is your customer? What will they want?Who is your customer? What will they want?  What services would you offer?What services would you offer?  What would differentiate you from yourWhat would differentiate you from your competitors?competitors?  How will you market?How will you market?  How would you go about setting up theHow would you go about setting up the program?program?  How would you “sell” your approach to theHow would you “sell” your approach to the hospital?hospital?
    44. 44. Solucient Survey: Lessons Learned  Market research is crucial to assuring success. You have toMarket research is crucial to assuring success. You have to understand how the customer wants to receive services.understand how the customer wants to receive services.  Need to be more aggressive in market promotion.Need to be more aggressive in market promotion.  It has been very difficult to integrate these services with ourIt has been very difficult to integrate these services with our campus based …services from many perspectives:campus based …services from many perspectives: integration/continuum of care, uniform Human Resources,integration/continuum of care, uniform Human Resources, Administrative and Billing practices, etc.Administrative and Billing practices, etc.  These things take time to grow. Also, market surveys don'tThese things take time to grow. Also, market surveys don't always tell the whole story.always tell the whole story.  Market assessment is vital. Physicians play a strong impactMarket assessment is vital. Physicians play a strong impact and can't be ignored. Physician ownership/commitmentand can't be ignored. Physician ownership/commitment critical.critical.  Address operational and patient satisfaction issuesAddress operational and patient satisfaction issues continually.continually.
    45. 45. Critical Success Factors for Retail  Offering fits local market demand and supplyOffering fits local market demand and supply characteristicscharacteristics  Business is incredibly attuned to consumerBusiness is incredibly attuned to consumer preferencespreferences  Retail brand and model is separate fromRetail brand and model is separate from hospital culture yet consistent in its valueshospital culture yet consistent in its values  Partnering approach matches the marketPartnering approach matches the market strategystrategy
    46. 46. Critical Success Factors for Retail  Choose the right partnerChoose the right partner  Need to “share” profitsNeed to “share” profits  May need to walk away from inpatient bricksMay need to walk away from inpatient bricks and mortar investmentand mortar investment  Work through legal complexities and costsWork through legal complexities and costs  Adequately address operational risksAdequately address operational risks  Have a back-up plan for unwinding at anyHave a back-up plan for unwinding at any
    47. 47. Other Lessons Learned  Need experience in retail marketing—go buy itNeed experience in retail marketing—go buy it  Make sure you don’t under fund the marketingMake sure you don’t under fund the marketing efforteffort  Invest in consumer surveys, customer usageInvest in consumer surveys, customer usage analysis, and continual market recognizanceanalysis, and continual market recognizance  Be flexible and innovative; respond to marketBe flexible and innovative; respond to market dynamics instantlydynamics instantly  Run it like you personally own it—or give peopleRun it like you personally own it—or give people incentives to do soincentives to do so  Don’t confuse “partner” and “customer”Don’t confuse “partner” and “customer” designationsdesignations
    48. 48. Questions?

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