by -- October 15, 2014
As trends like consumerism bring together Retail and Healthcare industries, Point B is excited to feature co-authored posts like this one with Calvin Cheng, Retail and Consumer Products Principal, and Rob Riffle, Healthcare Senior Associate.
The world’s largest retailer, Walmart, recently shared its plans to be the “Number One Healthcare Provider in the Industry.” Wait, what? The number one retailer wants to be number one in healthcare? Why would Walmart enter the realm of healthcare payors, and what could the convergence of retail and healthcare mean for both healthcare payors and providers?
That is a bold goal, even for a retailer like Walmart and their partner DirectHealth.com. Walmart’s latest program, Healthcare Begins Here, is an interesting example of a retailer and payor working together to address an unmet consumer need, while at the same time improving the experience for selecting and purchasing health insurance. Starting on October 10th, licensed agents of DirectHealth.com will be made available onsite in Walmart stores to help Walmart customers select healthcare plans. By providing a physical, commercial location where customers can buy health insurance (rather than through an intimidating and impersonal digital exchange), Walmart can also gain valuable consumer insight into the decision process for consumers as they select health plans. Moreover, this same effort could also help identify patterns impacting specific shopping behaviors for those who do select health plans
Convergence on Consumerism
One area where retail and healthcare is converging is in the area of “Consumerism,” or customer-centricity. By increasing the emphasis on the customer experience, and by broadening the definition of how to deliver value, customer-centric leadership can re-imagine their business and operating models from the inside-out. This can be intimidating for healthcare companies that have not traditionally placed great focus on the “patient/member experience.” However, if they can overcome their trepidation, these same healthcare companies can benefit from what retailers have done to enhance and personalize interactions with customers.
For example, many common challenges are faced by both industries, including the decreasing reliance on physical locations. The rise in remote care (such as Teledoc) alternatives and increases in high-deductible, consumer-directed plans, make it increasingly likely that the industry will see a decline in the volume of hospital visits. This expected decline in patient traffic is changing the way hospitals operate, including re-evaluating and redesigning hospital floor plans. Companies like CBRE, a commercial real estate firm, are helping hospitals like Pardee Memorial Hospital rethink their layout by using analytics and demographics segmentation similar to those used by retailers like Home Depot and Starbucks. “We took a retail approach to this, [and] the key is for healthcare organizations to get out of their ‘hospital-centric comfort zones,’” said Curtis Skolnick, a CBRE managing director.
Not Everybody is On Board
Not all healthcare companies share the same enthusiasm to adapt and make adjustments to improve their level of customer-centricity. The time and costs of recasting themselves runs up against the traditional focus many payors and providers put on cost reduction. While such thinking is not entirely surprising in an increasingly competitive industry, a strategy that dogmatically prioritizes financial stakeholders at the expense of the consumer experience does carry its own form of risk. Taking a narrow view on cost reduction recently backfired for one large healthcare payor, whose customer satisfaction ratings plummeted when they did not consider the patient/member experience throughout their cost reduction efforts.
This is an exciting time in healthcare, with widespread changes that present new opportunities, but also challenges – many of which are unique to healthcare. Those healthcare companies who can meet expectations in their patient/member experience will differentiate themselves, just as we have seen in retail. For healthcare, this is especially important as healthcare begins to place greater emphasis on outcomes.
When talking about customer-centricity and healthcare, I remember the answer from Harry Greenspun, Senior Advisor, in Deloitte’s Center for Health Solutions, when he was asked “What does the future of healthcare look like?” Harry’s response was, “It will look like every other industry that we know, and the customer will come first.”