In recent years, the retail industry has been colliding with the healthcare industry. Some call it the retail revolution.
This revolution has been characterized by the rapid advance of large retailers into and across healthcare delivery and technology. Driven in large part by healthcare’s move toward consumerism and patient experience, the revolution also is powered by technology innovation – as well as how providers and patients have been responding to the pandemic.
Laura Kreofsky is vice president of strategy at Pivot Point Consulting, a healthcare advisory company that works with provider organizations. She has been a keen observer of the retail revolution and the impact it is having on healthcare.
We interviewed Kreofsky to get an idea of the pros and cons of retail’s entry into healthcare, the revolution’s impact on hospitals and health systems, her belief that provider organizations must execute on digital strategy to compete, and what healthcare CIOs should be doing today.
Q. Who is leading the retail revolution in healthcare, and what are the revolution’s pros and cons?
A. The revolution is being led by four entities: Amazon, CVS, Walgreens and Walmart. While there are significant similarities in their business strategies, each of these has unique capabilities and targets and it’s going to be fascinating to watch how the landscape evolves and who emerges as the market leader or leaders.
Regarding the pros and cons of this shift, the answer to that question depends on your vantage point. It’s obviously challenging for traditional care delivery organizations – not only are there new competitors, but they are delivering care in places and with resource models largely foreign in traditional models.
For patients and consumers, the emergence of retail healthcare brings convenience and improved access, at a reasonable cost. These factors alone may ultimately lead to better outcomes in many cases.
However, it does require a paradigm shift – one we’re seeing in other industries and areas of our lives. If you think back 20-plus years ago, the patient/physician relationship was sacrosanct.
While this may still hold true for specialty care and chronic conditions, most of us are willing to see – in person or virtually – any provider qualified to diagnose and treat minor and routine conditions. We’ve embraced this in other areas of our lives, from taxi services to banking. So why not healthcare?
And finally, for Amazon, CVS, Walgreens and Walmart, and a host of other players in this market, the retail revolution offers them an entry point into the biggest industry in the world, leveraging their core service competencies, geography and technology.
Q. How is the retail revolution affecting hospitals and health systems today?
A. My favorite line from Ernest Hemingway’s The Sun Also Rises is when Bill, one of the main characters, asks, “How did you go bankrupt,” to which his friend replies, “Gradually, then suddenly.” That’s what’s happening to hospitals and health systems today regarding market share shifts and consumerism.
None of this is new: Small-scale storefront healthcare has been around for 15 years, and I wrote my first article on patient experience/consumerism 10 years ago, when I recognized it would be a wave of the future.
However, for more than 10 years, most health systems have been focused on: growth and market positioning vis-a-vis other health systems; optimizing the EHR; and the impact of meaningful use, the Affordable Care Act, the 21s Century Cures Act, and, on top of that, the pandemic. And during these years, the retail leaders were building capabilities to capitalize on the promise of commercialized healthcare.
The net result is hospitals and health systems are caught behind the eight-ball on this transformation – in terms of geographic convenience, advanced supply chain, right-sized/skilled staffing and marketing. These would have been daunting challenges even without the pandemic and massive exodus of healthcare frontline staff. Now the threat is even greater.
Interestingly enough, the “Great Resignation” of hospital and health system staff may actually fuel the retail revolution. Bedside nurses and clinical staff may migrate to assumedly lower stress retail work settings, and IT analysts and developers may find careers in these dynamic and disruptive spaces.
Q. You suggest the retail revolution is heightening the need for health systems to execute on digital strategy and offer a frictionless, end-to-end patient experience that will be a differentiator and competitive advantage over the convenience of retail healthcare. Please elaborate on what you think health systems need to do.
A. Health systems need to move from a defensive position to a proactive one where they have competencies or inherent competitive advantage to leverage. Here are three key areas to focus on.
First, access. Provider organizations need to make care highly accessible – and via self-service. Capitalizing on the full capabilities of the patient portal is table stakes. More needs to be done at the digital front door – the social and web presence needs to be optimized.
Everything from find-a-doc to real-time telehealth to service algorithms need to be integrated and seamless. Remember, in the retail world, it takes but a few clicks to find a care site that is close to home, open, provides the services sought, and has capacity. Provider organizations need to meet – or surpass – that “before the door” experience for consumers.
Second, back-end support. Much as we admire Amazon for its business capabilities and the frictionless experience it generally offers, things can go awry with an order or return. And when they do, it generally takes an act of Congress to remedy. I’m not picking on Amazon, rather just reflecting on how they’ve normalized so many retail processes – when things go wrong, it’s often a real challenge to find the right service agent/channel for remedy.
Healthcare providers can provide a more personalized back-end service experience – through their web presence, a contact center, and a culture that emphasizes committed and customer services.
It’s the difference between going into a grocery store and asking where the baking soda is – in one store you’re told “in aisle 15 or 16 I think” and in another you’re walked over to the specific spot in the right aisle to find the product. Which service experience draws you back?
And third, comprehensive care. Health systems are just that – systems that can provide a depth and breadth of services that retail providers don’t. Tackling the access and services components of the care experience described above will help enable stickiness and longitudinal services.
From there, building out – through internal services or the right mix of community-based specialty and social service providers – the capability to provide a complete continuum of care tailored to the needs of target populations will be a differentiator for provider organizations.
Q. On this note, what should CIOs and other health IT leaders at provider organizations be doing today?
A. From a health IT/digital standpoint, CIOs really need to be in lockstep with their strategy, marketing and growth teams. They also need to be thinking far beyond the EHR and clinic/hospital-based delivery. It’s important for CIOs and other health IT leaders to work collaboratively with their current vendors – and explore new vendors and technologies.
Staying apprised of what’s happening in the digital experience, app, AI and start-up space is essential. Attending healthcare industry events is a great way to do this – don’t delegate it down to operational directors. They are fulfilling their essential roles as operators. CIOs and other strategic leaders need to keep their eyes on the horizon.
As noted, traditional health systems are behind the curve in responding to the market shift. CIOs and other leaders will have to be more visionary and be willing to explore partnerships and platforms at a scale and speed that just two or three years ago seemed unimaginable.