The challenges and opportunities of an emerging retail health industry
Over the last several years, the convergence of health and retail has promised to shake up the industry. But as some highly anticipated mergers and start-ups have shown, there’s plenty that can go sideways on the path to perfecting the retail health model and patient experience. Why is it so challenging? Retail health’s unique model is partly to blame: it typically runs lean in terms of both fixed and variable costs of facilities, clinical staff, and offerings. But there’s more to the story. To find ways to take advantage of opportunities in the burgeoning space, it helps to understand the issues that all stakeholders—from providers to patients—face. Let’s take a look at some of these operational challenges and considerations for retailers to bear in mind as they seek to get ahead in retail health.
For the retail health operational model to be truly effective, retailers must follow a more tiered approach, ensuring a strong foundation of core operational drivers while also emphasizing cost reduction efforts where possible. Meanwhile, the emphasis on a lean model requires retailers to develop capabilities that enable greater revenue capture and profitability. For example, retailers often optimize revenue opportunities through product conversion, such as follow-up medical supplies, a prescription at a pharmacy visit (after care clinic visit), or picking up new optical lenses (after optician visit).
Many retailers now want to expand the scope of services to benefit and attract a broader range of customers. For example, they can include a specialty offering such as select imaging scans or advanced blood work, and potentially rotate orthopedic and pain management appointments. Several retailers are exploring dentistry, or even infusion therapy to attract customers looking for both convenience and lower costs, in part due to the facility tax identification number associated with a clinic rather than a hospital or outpatient facility. This creates a win-win scenario for consumers and retailers alike, offering value and amenity to the former and a steady flow and growing base of consumers to the latter. In addition to in-house services, retailers should explore and invest in virtual appointments with health system specialists through the use of telemedicine in areas such as obstetrics; ophthalmology; ear, nose, and throat care; and advanced skin condition treatments.
Some challenges fall into the realm of perception rather than operations, such as customer experience and go-to-market positioning. Brand affiliation can be one of the largest issues facing retail health customers simply because many people have predisposed notions of a retail brand or a preference for big-name health systems. To overcome these in-market perceptions and drive customers to the retail setting, retail health must highlight benefits such as increased accessibility, ties to well-known healthcare organizations, and most importantly, cost savings.
Going forward, retailers and health systems alike need to plan for data sharing capabilities and access limitations. Retail has long been a cornerstone in small communities across America, whether it is a big box store or a local corner drug store. The advantage of the rural setting is the trust that grows with tried-and-true clients, often making the entrance into retail health easier in these underserved areas. When building a brand or looking at initial investment, retail health clinics should focus on higher need areas. Close linkage through API or system access with larger local health systems and direct access to payer data will also be key to gaining the public eye and increasing the use of services.
An interesting dynamic
While there is often an outstanding need for operational optimization across the business, the retail health industry is also rapidly expanding. However, many practices within retail health lack standardization and, more importantly, face issues with scalability. As a result, retail health providers must be cognizant of these upcoming challenges for both providers and patients and work to mitigate them as the industry expands. With technology and data integration comes significant financial and resource investments, as well as partnerships with payers and health systems. And for historically lean organizations, understanding the ROI of these investments needs to be applied through the lens of the consumer experience.
Retail health considerations and opportunities
1. Provider experience
Providers must consider their support model holistically when administering care. For example, providers can integrate the concept of value-add work, address things like having enough digital capabilities and the right technology ecosystems, or ensure that there is a dedicated department to resolve questions and concerns. Similarly, implementing virtual health components such as telehealth, remote care, and consults offer alternatives to those who either do not have direct access or prefer a virtual setting. Furthermore, providers can help streamline day-to-day operations by ensuring there is adequate support staff while also enabling ways to decrease wait times and staff augmentation through technology, like tablet check-ins or mobile payments. Lastly, practicing at the top of license is crucial in order to meet the tasks of physician’s assistants, nurse practitioners, and doctors of pharmacy, which are typically done in a clinic setting.
2. Talent management
Retail health operators need to assess their talent pool, both current and future, to upskill their workforces. This will keep them competitive and ensure that their operating expenditures are as streamlined as possible. For example, an incentive structure for employees, the ability to help pay off medical school loans, or even provide housing stipends in rural areas may attract the right talent. Similarly, an attractive retention and recruiting practice can aid in meeting the needs of current talent while creating a robust pipeline for new hires; implementing schedule optimization training can have a significant bottom-line impact while adding skills to the workforce.
3. Patient experience
For retail providers, patient experience is paramount, even in its differences compared to larger healthcare providers. For example, the operational infrastructure of buildings and facilities do not always allow for a full “hospital” or “clinic” setting, so understanding the differences and limitations while bridging that perception gap is crucial. A solid grounding in adoption rates and usage patterns is key to informing those experiences and delivering on patient expectations. In a highly saturated health and retail market, retailers need to ensure that their offerings are not only competitive but enticing to customers—playing up perks such as partnerships with large employers of universities or bilingual staff.
While these considerations are by no means exhaustive, they provide a starting point for retail health providers to identify obstacles and opportunities, using an enterprise lens to plot a roadmap for success—one that benefits employees, patients, and communities alike.