By Stewart Gandolf
Chief Executive Officer
[First in a series.] Rob Klein, founder and CEO of healthcare marketing research firm, Klein & Partners, inspired our headline and this series of articles. We’ll be speaking with Rob again about this topic and present our conversation as an audio podcast in the near future.
Our neighborhood RiteAid store—just a couple blocks down the street, and one of two in town—just completed a major facelift. A bit of the interior redecoration and changes are cosmetic updates. But the new, BIG impression for the customer is an immersion in convenience…wrapped in a theme of wellness and care.
Of course it’s still a “drug store” in the traditional American fashion of stocking a little of everything, from greeting cards and lipstick to a lineup of As Seen on TV products. Ages ago, the pharmacy biz morphed from simply dispensing drugs to a general merchandise store. Their not-so-secret competitive advantage was then, and still is, customer convenience.
Why doctors should be concerned…
The RiteAid renovation isn’t just for looks. It’s a local taste of the retail world pushing further into the healthcare world. And they’re increasingly good at eroding the market share of local doctors. RiteAid (and several other nationally branded chains) want the consumer to think wellness, prevention and elementary medical services.
Although that benefits the consumer, retail storefronts play heavily on the convenience factor, providing easy access to inoculations and basic health care. And consumers are buying into the concept big time. The retail clinic market—including pharmacies, big box retailers, supermarkets and others—passed the $1 billion marker this year.
The pace of growth has slowed a bit in the past few years, but it’s projected to continue for several reasons. These include:
- Affordable Care Act has redefined the consumer landscape
- Aging population with increased need for healthcare
- Constrained access to care and longer wait times for appointments
- Consumers’ quest for cost-effective and affordable alternatives
- Higher out-of-pocket, co-pays and deductibles
- Shrinking population of primary care physicians
And just to make the picture more confused, some providers are joining the switch to retail. An article by McKesson titled, If You Can’t Beat ‘Em…, points to examples of providers adapting to retail clinic growth:
“Many of the major players in the niche–including retail giants CVS Health and Walgreens–have sought out partnerships with existing healthcare organizations to staff or oversee the clinics.
“Kaiser Permanente, for example, recently announced that it was partnering with retail giant Target to staff clinics in some California stores.
“Still others have decided to compete directly with retail clinics by developing their own walk-in options. Saint Luke’s Internal Medicine, 15-physician group owned by Kansas City-based Saint Luke’s Health System, recently opened three retail clinics at existing physician offices in the Kansas City metro area.”
Convenience is the new currency.
Doctors who are feeling the pinch of the retail invasion of healthcare—and practices that recognize shifting trends in delivery—need to take a page from the retailers’ marketing playbook. There’s simply nothing unique or magical about the level of care that’s available at the corner drugstore. Primary care has significantly stronger and deeper service capabilities.
Retail’s primary point of differentiation is catering to consumer convenience. To remain competitive with retail in attracting and retaining patients—particularly at the non-urgent, “gateway” service level—is to examine, revise and/or eliminate healthcare’s traditional barriers to quick and cost-effective care.
As a marketing cornerstone, convenience for the consumer (patient) is a powerfully attractive point of differentiation. In some deeply rooted practice cultures, the process, not the patient, dominates, and it may take a dramatic reinvention of healthcare’s delivery system to adapt.
It’s clear, however, that retail is learning healthcare faster than healthcare is learning retail. But there seems to be little question that the rules of the game are changing. And for doctors, providers and medical practices to regain a competitive stance on this shifting playing field, consumer convenience is a primary consideration.
[More in this series.] We’ll be speaking with Rob Klein of Klein & Partners as our guest in an upcoming audio podcast. For more than 30 years, Rob has provided research and brand consulting to many leading hospital, system, and health plan brands. A frequent speaker at national healthcare conferences, Rob has served on the boards of the Detroit AMA (president), Chicago AMA (VP research), AHSM, and most recently on the national board of SHSMD.