The health care industry is in the midst of a transformative change in how care is packaged, delivered and managed, and high-volume retailers, pharmacy chains and grocery stores are building new business alliances to capitalize on an evolving health care consumer market.
The convergence of health care providers, life sciences companies, and retailers with pharmacies is helping to reshape the industry. It’s not just about responding to market demand and generating new revenues, although that’s an important piece. It is the idea of making health care more convenient, more accessible, simpler and in many cases more affordable for the consumer. The common denominator is opportunity, and for all participants in the retail space, the opportunities are abundant.
Retailers, seeing the opportunity to provide expanded treatments to consumers – such as tapping into Medicare Part B funding to generate revenue in elder care – are moving to form relationships directly with hospital systems and other providers.
Partnerships are developing in new and in some cases quite novel ways. Recently, a leading Midwest health care system announced it would take over control of a network of clinics currently housed in and operated by one of the major national pharmacy chains, rebranding the clinics under its own name.
Another global pharmacy enterprise has unveiled plans to partner with two national organizations dedicated to advancing multi-cultural nursing populations across the United States.
The growth of retail clinics staffed by nurse practitioners conducting screenings and providing medical treatments is a key trend, but some facilities are moving toward other, more elaborate onsite features – for example, infusion, with alliances between large pharmacies and leading pharmaceutical companies designed for the treatment of diabetes and other debilitating illnesses.
A study commissioned by the Robert Wood Johnson Foundation a few years ago determined that the appetite for retail health clinics is strong, potentially reaching tens of millions each week. Key industry players have been moving to plant their flag in the new health care landscape. Retailers are also learning the lessons of business sectors where developing such partnerships have shown success, such as the hospitality industry, where cross-industry alliances are becoming commonplace. In this example, the retailer is learning how to build loyalty programs that stick.
Retail is expanding in new and exciting ways, but balancing the risks with entry into these new health care markets is an overarching concern. Retailers need to weigh these risks and understand the obstacles as they venture into the health care space. Compliance is a critical issue facing entrants into this new health care space. They could face a new raft of tough regulations that focus on health care service and medical product distribution, disposal and maintenance. Third-party vendor engagement and different and often complex payment schedules in health care can pose challenges for traditional retailers to overcome.
Customer privacy and data security are of paramount concern; nowhere is that as pronounced as in the area of health care information. It’s been suggested that personal health information (PHI) is 20 times more valuable on the ‘dark web’ than any other kind of personal information, so the incentive for theft and online mischief is substantial.
Ultimately, it comes down to patient safety and security. Dispensing the wrong drugs on a prescription could lead to serious illness, or worse. In such cases, litigation and reputational damage are just the beginning. It could be “game over” for the business.
So retailers have to ask themselves some important questions: do they have the physical space necessary, and access to support staff, to dive deeper into the health and wellness space (e.g., launch and maintain a health clinic)? Should they contract with a name brand as a strategy to attract additional foot traffic to their business?
Most importantly, does the opportunity justify the commitment and investment? In the long run, the answer to that question is likely to be ‘yes.’