Health System Operated Retail Health System Operated Retail Health ClinicsHealth Clinics
Elements to Consider for Alternative Treatment Centers
Work Shop FacilitatorJohn A. Corpus, FastCare, Bellin Health
Work Shop PresentersKen Berndt, FastCare, Bellin Health
Bruce Shepard, Walmart
December 7, 2009
2
ObjectivesObjectives
• Business philosophy and strategic fit• Strategic assessment of the market• Evaluate partnership, franchise, and co-branding
opportunities• Investment costs and timeframe• Marketing strategies, brand recognition, and patient
education• Price transparency and insurance reimbursement• Consumer satisfaction• Measuring ROI
3
Business Philosophy/Strategic FitBusiness Philosophy/Strategic Fit
Health System Perspective• Access point in the access
platform• Two-way referral model• Maintain continuity-of-care• Maintain the medical home
Retail Host Perspective• Customer’s concern over
cost of and access to the primary care health services – retail clinic low cost of care
• Convenience / one stop shop for customers
• Healthcare spend projected to surpass retail at >$4 billion in about 2017
$2,200,000,000,000
$2,700,000,000,000
$3,200,000,000,000
$3,700,000,000,000
$4,200,000,000,000
$4,700,000,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Retail sales w ith exclusions*
National Health Expenditures
Spending on healthcare in the US is going to surpass spending in retail in the US within the next decade!
4
CAGR Healthcare = 6.7%CAGR Retail = 4.6%
Why Play In Healthcare?Why Play In Healthcare?
5
Strategic Assessment of the Strategic Assessment of the Market: PCP ShortageMarket: PCP Shortage
Health System Perspective• Most markets are impacted
by the PCP shortage– Closed PCP practices– PCPs retiring– More graduates are
specializing– Rural practices are
dwindling– Increased utilization of
mid-levels
Retail Host Perspective• Drives up cost of care –
creates additional demand for higher costs of care such as ED which decreases consumer’s discretionary income
• Before moving forward with retails clinics, health systems should ensure buy-in of medical staff
6
Retail Host Perspective• Quicker time to market.
• Effectiveness and continuity of an integrated care system with electronic connectivity
Strategic Assessment of the Strategic Assessment of the Market: Competitive EnvironmentMarket: Competitive EnvironmentHealth System Perspective• Independent, no health system
connection
• Health System-based
7
Strategic Assessment of the Strategic Assessment of the Market: Regulatory EnvironmentMarket: Regulatory EnvironmentHealth System Perspective• Nurse practitioners
– Limitations by state– Physician oversight
• Physicians Assistants– Limitations by state– Physician oversight
• Physicians– No limitations
Retail Host Perspective• Tobacco and alcohol sold on
premises• Federal Anti-Kickback
statutes / Steerage to pharmacy
• State requirements for licensing of retail clinics
• Some state level medical societies seeking increased supervision levels for mid-level practitioners
8
Evaluating a Partnership ModelEvaluating a Partnership Model
Health System Perspective• Contract
– Length of term
– Ease of termination
• Pros
– Speed/turnkey
– Success factors
– Costs
– Visibility / Exposure of brand
• Cons
– Limitations
– Costs
Retail Host Perspective• Pros
- Sharing of financial risk – could be good or bad
• Cons
- Time to market if host does not partner with a national provider
- Complicates regulatory issues (license, physician supervision)
9
Evaluating a Franchise ModelEvaluating a Franchise Model
Health System Perspective• Contract
– Length of term
– Ease of termination
• Pros
– Speed/turnkey
– Success factors
– Costs
• Cons
– Limitations
– Costs
Retail Host Perspective• Pros
- Brand control / consistency
- Centrality of patient data for convenience of patient and analysis
- Economies of scale / sharing successes
• Cons
- Lack of electronic integration into current healthcare system electronically
- Depending on Franchisor, possible no brand strength locally
10
Evaluating a Co-Branding ModelEvaluating a Co-Branding Model
Health System Perspective• Contract
– Length of term
– Ease of termination
• Pros
– Image
– Brand awareness
• Cons
– Share marketing space
– Co-dependent
Retail Host Perspective• Pros
– Leverages brand of healthcare provider and host
– Allows for consistent look and feel while maintaining integration into local healthcare system
• Cons
– May not require electronic integration from provider to provider
– Host maintains brand risk if care is not top quality
11
Evaluating an Employer ClinicEvaluating an Employer Clinic
Health System Perspective• Contract
– Length of term– Ease of termination
• Pros– Convenience– Integration
• Cons– Access– Menu of services
Retail Host Perspective• Improve access and lower
cost• ERISA considerations –
(Employee Retirement Income Security Act of 1974)
12
Investment – PartnershipInvestment – Partnership
Health System Perspective• $$$$$s• Break-even• Return on investment• Risk
Retail Host Perspective• $$$$$s
– Capital– Variance in rental rate
• Break-even• Return on investment• Risk
13
Investment – FranchiseInvestment – Franchise
Health System Perspective• $$$$$s• Break-even• Return on investment• Risk
Retail Host Perspective• $$$$$s• Break-even• Return on investment• Risk
14
Investment – Co-BrandingInvestment – Co-Branding
Health System Perspective• $$$$$s• Break-even• Return on investment• Risk
Retail Host Perspective• $$$$$s• Break-even• Return on investment• Risk
15
Investment – Employer ClinicInvestment – Employer Clinic
Health System Perspective• $$$$$s• Break-even• Return on investment• Risk
Retail Host Perspective• $$$$$s• Break-even• Return on investment• Risk
16
Timeline – PartnershipTimeline – Partnership
Health System Perspective• Contracting• Construction• Recruiting• Marketing• Operations
Retail Host Perspective• Same timeline for both
parties• Identifying space in store for
clinic• Time up front to vet potential
partner• Start up would be longer due
to internal approval – higher risk than other models
17
Timeline – FranchiseTimeline – Franchise
Health System Perspective• Contracting• Construction• Recruiting• Marketing• Operations
18
Timeline – Co-BrandingTimeline – Co-Branding
Health System Perspective• Contracting• Construction• Recruiting• Marketing• Operations
19
Marketing StrategiesMarketing Strategies
Health System Perspective• Leverage retailer and health
system brands• Mass market• Physician referrals• Employers• Grassroots• Overmarket vs undermarket
Retail Host Perspective• Must consider hosts
solicitation policy• Depending on model, anti-
kickback may regulate what parties can/can not do
• Leverage relationship with store and regional management
• Market, market, market – do not assume location will provide success!
20
Brand RecognitionBrand Recognition
Health System Perspective• Building the brand• Leverage the health system
brand
Retail Host Perspective• Co-Branding leverages both
brands• Brand recognition is
important to credibility of clinic
• Consistency of brand / look and feel important among numerous operators
21
Patient EducationPatient Education
Health System Perspective• Consumers are thirsty for
health information• Leverage health system
resources– Dietician– Nutritionist
Retail Host Perspective• Key component of the model
/ convenient location for patient
• Could utilize products in store to make education visual
• Key component to decreasing cost of healthcare
22
Price TransparencyPrice Transparency
Health System Perspective• Transparency is important to
the consumer• Obama administration
supports transparency
Retail Host Perspective• Very important to host – key
to retail industry and expected by retail consumers!
• Improves credibility of host and provider – most healthcare consumers not use to transparency in price for health services
23
Insurance ReimbursementInsurance Reimbursement
Health System Perspective• Billing vs. not billing• Billing with cash upfront• Co-pays• Deductibles• Self-insured direct
contracting
Retail Host Perspective• Accepting insurance upon
opening seems to impact consumer adoption and satisfaction
• Host specific / model specific for requirements
24
Consumer SatisfactionConsumer Satisfaction
Health System Perspective• Satisfaction at 95-98%• Usually better than primary
care• Must keep promise of
Convenience– Access– No appointment
Retail Host Perspective• Provision of quality care /
collection of data varies• Convenience – provider
maintain model integrity for quick visits
• Broad base of services
25
Measuring ROIMeasuring ROI
Health System Perspective• Break-even• Downstream revenue• New patients
– Primary care– Health system
Retail Host Perspective• Variance between market
rate rent and fair market value
• Consumer response• Desire for increased sales
and consumer traffic• One stop shop for basic
health services / products (channel agnostic)
26
Objectives RevisitedObjectives Revisited
• Business philosophy and strategic fit• Strategic assessment of the market• Evaluate partnership, franchise, and co-branding
opportunities• Investment costs and timeframe• Marketing strategies, brand recognition, and patient
education• Price transparency and insurance reimbursement• Consumer satisfaction• Measuring ROI
27
QUESTIONSQUESTIONS
QUESTIONSQUESTIONSQUESTIONSQUESTIONSQUESTIONS
QUESTIONSQUESTIONS
QUESTIONSQUESTIONS
QUESTIONS
28
THANK YOUTHANK YOU
Ken Berndt
(920) 621-1615
John A. Corpus
(920) 217-0366
Bruce Shepard
(479) 204-6857