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

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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

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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!

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CAGR Healthcare = 6.7%CAGR Retail = 4.6%

Why Play In Healthcare?Why Play In Healthcare?

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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

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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

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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

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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)

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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

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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

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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)

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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

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Investment – FranchiseInvestment – Franchise

Health System Perspective• $$$$$s• Break-even• Return on investment• Risk

Retail Host Perspective• $$$$$s• Break-even• Return on investment• Risk

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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

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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

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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

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Timeline – FranchiseTimeline – Franchise

Health System Perspective• Contracting• Construction• Recruiting• Marketing• Operations

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Timeline – Co-BrandingTimeline – Co-Branding

Health System Perspective• Contracting• Construction• Recruiting• Marketing• Operations

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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!

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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

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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

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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

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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

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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

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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)

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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

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QUESTIONSQUESTIONS

QUESTIONSQUESTIONSQUESTIONSQUESTIONSQUESTIONS

QUESTIONSQUESTIONS

QUESTIONSQUESTIONS

QUESTIONS

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THANK YOUTHANK YOU

Ken Berndt

(920) 621-1615

kjbern@bellin.org

John A. Corpus

(920) 217-0366

jacorp@bellin.org

Bruce Shepard

(479) 204-6857

bruce.shepard@wal-mart.com