(From Physician Executive, January/February 2008)
[If you run primary-care clinics or practices, multi-specialty
practices, or even fully-staffed, full-service urgent care clinics, you
are or will soon be in direct competition with the largest and most
efficient corporations in the world running retail care operations.]
There is little question that the big word in healthcare in the coming few years will be “competition.” We are being pushed into it by the enormous expense of medicine, its inconvenience and inefficiency, and growing transparency about how effective our services are and how much they actually cost. Especially in the United States, urban China, Singapore, and other economies that have adopted versions of “consumer-directed healthcare,” patients (as voters and consumers) have a growing sense of “skin in the game.” The times are compelling us to be “better faster cheaper” at what we do, in ways that are measurable, demonstrable, and marketable.
In this, we find ourselves increasingly in direct competition in our own towns, and with other organizations elsewhere in our national systems, as well as across the globe.
Until recently the most obvious such competition was at the high end: hospitals competing with cancer centers such as M.D. Anderson and Fred Hutchinson; with major brand names like Mayo, Johns Hopkins, or Harvard; or with centers in India, Singapore, or South Africa charging one third or one tenth as much for major operations. Now, however, competition is erupting in a far more challenging form in the day-to-day primary care world of coughs, colds, and flu; the cut finger and the broken toe; routine physicals and preventive tests. Urgent and retail care clinics are popping as stand-alones, in drug-stores such as CVS, Rite-Aid, and Walgreen’s, in “big-box” retailers such as Wal Mart and Target, and in grocery chains such as Winn-Dixie and Publix. Retail-care companies are popping up like mushrooms (including Interfit Health, CVS/Caremark’s subsidiary MinuteCare, Winn-Dixie’s Wellspot Medical Clinics, and Revolution Health (the brainchild of AOL founder Steve Case). Rick Scott, the architect of 1990s phenomenon Columbia-HCA, characterized by some of its founders as “the Wal-Mart of healthcare,” is back with his new venture Solantic, a retail healthcare company building clinics in, yes, Wal-Marts.
The growth plans of this segment of the industry are ambitious to the point of astonishing. Walgreen’s Take Care Health Systems intends to have 400 clinics open by the end of 2008, and they are far from alone. Wal-Mart, the largest retailer in history, is aiming to become North America’s top health care provider. According to an unnamed source in an August 17 article in the Wall Street Journal, the goal is 2000 in-store clinics within the next five years. Taking the expansion plans of all the companies together, they plan to open an estimated 10,000 sites in the United States by 2010. Only Canada seems to be noticeably holding back from the rush so far. Even the U.K.’s National Health Service is shifting some care into clinics in such retail chains as Boots and Tesco; while in India, the Bangalore-based Manipal Education and Medical Group (MEMG) has announced that it is investing some US$70 million to build more than 50 retail health care centers.
The use of lower-cost clinicians (often nurses or nurse practitioners rather than doctors) and stringent cost control allows these retail clinics to keep the cost for a typical office visit in the U.S. under $45, less than half of the average cost of a primary care office visit, or a fifth (at most) of a visit to an emergency department. At the same time, the stringent use of appropriate technologies and standardized practice guidelines aims to keep the quality high and both costs and variability low.
If you run primary-care clinics or practices, multi-specialty practices, or even fully-staffed, full-service urgent care clinics, you are or will soon be in direct competition with the largest and most efficient corporations in the world running retail care operations. If you run a hospital or hospital system, you may feel that this competition does not effect you, but it does. It could seriously interfere with the stream of patients to your emergency room or urgent care clinic; it could constrict the referrals and admissions that are your lifeblood; and it could imperil the businesses of the physicians that now provide those referrals and admissions.
10 ways to compete
But how can you compete? Here are the ten ways.
1) Transform: First, transform any existing services you have that compete directly in this market, such as emergency rooms, walk-in clinics, and primary care practices. Extend hours into evenings and weekends. Streamline the intake and payment procedures to make them as quick and easy as possible. Streamline the medical procedures as much as possible using new technologies, clinician-assisting software, and guidelines to raise quality standards while minimizing the time it takes for the patient or the clinician. Standardize and package common services as “products,” and post and advertise their prices. Give warrantees. AtlantiCare clinics boast a simple one: 24 to 48 hours after your office visit, they will call you to see how you are doing. If you are not feeling better, they invite you back – this time it’s on the house.
2) Out-compete: Next, outcompete the no-frills retail services by offering a few “frills,” creating market niches with such things as old-fashioned on-demand physician house calls and hand-holding “concierge care.”
3) Cooperate: Engage in “coopetition” by working with retail centers whenever possible, providing staffing, consulting, lab work, imaging, or other services, and (in the best of worlds) making it easy and quick for them to refer.
4) Compete: On your own or as joint ventures with affiliated doctors, start your own retail care centers.
5) Hone: Use “lean manufacturing” techniques to hone every process in the value chains of both these new ventures and your existing services, from siting to equipment to supplies to staffing. Most traditional ways of doing medicine have never been subjected to close scrutiny as to what is both most effective and most cost-effective. It is possible to wring cost out of most medical procedures and sites while making them both more humane and less expensive.
6) Brand: It is likely that, as an established medical presence in the community, your brand is more trusted in medical matters than Wal-Mart, Target, or Publix. To compete effectively, you must both strengthen and exploit that brand. Strengthen it by getting your quality up and wait times and cost down. Exploit it by marketing those strengths, wrapped in the long-term trust the community has for your institution.
7) Market: Deepen your marketing by emphasizing long-term, person-to-person trust and word of mouth in the community. Hand-written follow-up notes from your clinicians can have an amazing bonding effect on patients. When a patient makes a comment like, “That didn’t hurt a bit,” or “Wow, I got right in to see you,” the clinician can press a card into their hand and say something like, “You know, we really get most of our patients by word-of-mouth. Why don’t you keep this card so that you can send your friends when they have a problem.” Work with the schools, giving tours on career day. Contact summer camps and give them a package price for all their physicals. Give educational programs for first responders such as police, fire, and rescue departments. Offer a discount package deal to local major employers for worker’s compensation cases. Work your community ties strongly.
8) One-stop: Make your retail operations into true “one-stop shops,” turning the staffs into concierges armed with information about a wide array of services that you offer – or that other professional organizations offer. Someone walking in with a worker’s compensation injury may need medical attention, but they may also need not only follow-up physical therapy and occupational therapy, but behavioral health care as well.
9) Complement: If it is consistent with your organization’s medical philosophy, network your retail operations with such complementary practitioners as physical therapists, massage therapists, chiropractors, and acupuncturists. Patients often spend a fair amount of their own money on such practitioners as the first line of healthcare. Imagine that any potential patient walking into one of your retail clinics could feel that, by entering this portal, they can access a full range of options.
10) Bootcamp: Finally, see your retail operations as a school in the art of competition. All of your operations will need to become more responsive to the “value equation,” which is the common question that we all ask when we shop for anything: “How good is it? How can we tell? How much does it cost?” This is true not only in the U.S. and other medical economies influenced by the new “consumer-directed” payment modes, but even in Canada and other such countries, where your “customer” is not only the patient and the referring physician, but also regional health authorities, the health ministry, the political parties, and the voting public. You can use the retail experience to teach your whole organization how to become better faster cheaper, more precise, more standardized, more measurable and measured – not only more marketable and more financially successful, but more effective, convenient and inexpensive for your customers.