We all remember it. During the pandemic, everyone had to immediately learn how to “consume” life in decentralized forms. We instantly saw increased digital engagement as society tried to figure out 4th grade homeroom Zoom calls, Instacart timeslots, and Fortnite, etc. Unfortunately, healthcare also witnessed frantic changes to budget and scheduling, baffling grief, and clinician burnout.
In response, healthcare built a digital foundation to support this new decentralized world, and they had to do it in a system where most healthcare providers were operating in single digit margins, evolving regulations, and Ransomware as a Service.
While healthcare providers continue to adapt to this new world, asking rudimentary questions about strategy, extending care and patient engagement, retail is strengthening their competitive approach to healthcare. Retail has the potential to cause a paradigm shift in a system historically fee-based, reactive, and resistant to change.
Retail understands how consumers interpret value. They have the payment systems to optimize revenue and drive engagement across all demographics. The model is built on repeat and more predictable. While Covid was certainly fuel injection for healthcare to move on value-based care, retail is pulling up in a luxury car with a license plate that says “Click Here.” I’m joking, but when we think about the shift ahead, it will be filled with clever, personalized, consumption focused ads designed to encourage everyone to care about their health and wellness. The myriad of offers and benefits will be made cheaper, and in some cases free, in conjunction with subscription services like Amazon health that engage users holistically. This methodology is key as healthcare patients are evolving into healthcare consumers.
In this blog series, I will address the 5 key acceleration areas I believe clinical retail is going to impact over the next fiscal year that will fundamentally change the healthcare vertical. In healthcare, doctors address illnesses by understanding the symptoms. Everything that I’m about to list are symptoms of the same systemic fee-based healthcare “sickness” model, so in describing the changes, what follows is a “prescription” of sorts for clinical retail.
Prescription #1 – “From Sickness to Wellness”
Consider the difference between someone who decides to train for a single 5k vs someone who wants to continually run the rest of their life. The first instance would most likely involve preparatory learning, purchases, and a tactical plan to finish the 5K race with a hard deadline. The second instance would involve evolving knowledge, repeat purchases, upgrades, consumer loyalty, and a component of enjoyment that is the underpinning of longevity.
This is a perfect example of how retail and healthcare will treat patients differently. Healthcare has historically helped patients get past sickness (e.g. the common cold/flu) or heal an injury (e.g. lacerations/breaks), but rarely does the provider also implement a plan to remain healthy through preventative maintenance or best practices. Retail, by contrast, “checks in” on the consumer at regular intervals and has an existing model that encourages consumers to maximize their happiness through sustained buying practices over time.
Let’s consider the way that the two industries have historically operated. Healthcare has historically operated as a “fee for service” model, where the healthcare is delivered to the insured and the cost of care is not always aligned with the value delivered. This isn’t an indictment of our valiant healthcare workers but the problem is one of scale, and access to care is one of the 5 Social Determinants of health. So the quality of, and access to healthcare, is literally one of the metrics we use as a population to determine quality of life. Having a fee based system has led to ever-increasing costs and barriers to access, both of which have a causal relationship to the kind of “front line services” healthcare patients encounter.
Here are a couple of examples:
Patient 1: An uninsured person living in rural Arkansas who develops a toothache. The nearest dentist is a 15 minute drive away and the pharmacy is a 5 minute drive away. The uninsured person implements a system of pain management using over the counter remedies until they become a patient because the condition has progressed and the trip to the front line dentist costs more than if the patient had addressed the symptom earlier and programmatically.
Patient 2: An insured person living in the suburbs of Atlanta develops a toothache. The person calls their HR advisor and that person coordinates a visit to the nearest in-network Dentist 5 miles from the patient’s home. The patient avoids any progression in the condition, and the visit reveals an opportunity to leverage their employer offered health spending account to fix an additional cosmetic issue. The patient not only received care, but also had the perception of an “upgrade” in value from their employer.
Why didn’t Patient 1 go in for treatment sooner? According to the American Dental Association, the #1 reason patients don’t go to the dentist is the cost. What’s lamentably ironic is that the Dental industry long ago developed low, fixed, or sliding fees based on a patient’s ability to pay. When you add in the modernization of payment options presented by Care Credit, then it becomes clear that Healthcare could achieve better outcomes if patients were more knowledgeable and the costs were more transparent.
Retail of course charges a fee for services provided, but can use its knowledge to change the patients listed above into “consumers.” Why? Because retail functions much more cyclically, and driving that kind of engagement requires that the consumer have full transparency of the cost and the value. Healthcare should be just as transparent about their costs as retail.
In transforming patients into consumers of care, retail can help healthcare to modernize its practices the way that many organizations have shifted from capex to opex. The result would be a marked change in healthcare as a social determinant of health, as consumers can stop minor problems from becoming major ones through better maintenance. In the process, the consumer values the company and ultimately their wellness journey more, and will become more committed to consistency based on the value of the outcome as opposed to a fear of the cost.
History has shown that retailers are more than capable of influencing culture and behavior, and the current shift from a fee-based service to value-based care will be one of the most dramatic changes to healthcare since the introduction of the Electronic Medical Record. How traditional healthcare providers, pharmacies, and retail health organizations compete within the emerging market depends on strategic thinking around the data, people, and processes that need to be modernized in order to receive a “clean bill of health.”
Stay tuned for part two of this series: The Real Cost of Healthcare.
