Sanford Health Embraces Retail Weight Loss

A nonprofit health system has developed a nonprofit subsidiary to challenge well-established, well-run, for-profit players for a piece of the hyper-competitive $60 billion weight-loss industry.

In September 2012 I wrote a column addressing a report that showed that obesity is particularly rampant in rural America, afflicting an estimated 40% of the population. I suggested then that it was time for healthcare providers and nontraditional sources to take up proactive measures to address the epidemic.

While I was writing, Sanford Health was doing.

In October 2012 the nation's largest nonprofit rural healthcare system launched the first of its Profile by Sanford weight loss clinics in Sioux Falls, SD. Since then clinics have opened in Minnesota and the Dakotas and this week Profile by Sanford opens its ninth "retail" weight loss center in Brookings, SD, a town of about 23,000 souls located 190 miles due east of Pierre.

Nate Malloy, COO at Profile by Sanford, says the health system hopes to have about 30 locations operational by this time next year and "100+ locations operating in most of the United States" within the next three to five years.

Profile by Sanford is not particularly innovative, and that is not a bad thing. The program uses a combination of well-established practices that other weight loss programs have been using successfully for years, such as face-to-face individualized meetings with coaches to set and keep weight loss goals, meal plans, and using wireless technology to monitor progress.

"We focus on three core areas; nutrition, activity and lifestyle," Malloy says. "Every member that comes into the program receives an individualized plan with each of those core areas."

While the weight loss product itself is tried and tested, Profile by Sanford represents a new dynamic in healthcare. Every day new players from non-healthcare backgrounds enter the nearly $3 trillion healthcare sector to tap into services that for decades have been the domain of traditional providers such as hospitals and physicians.

Private equity firms are buying hospitals. Drugstore-based walk-in clinics are sprouting like mushrooms. This churn is good. It shakes complacent traditional providers and forces them to reevaluate how they deliver care and how much they charge.

Profile by Sanford turns that model on its ear. A nonprofit health system has developed a nonprofit subsidiary to challenge well-established, well-run, for-profit players for a piece of the hyper-competitive $60 billion weight-loss industry.

This is a great idea on many levels.

First, we know that overweight and obesity are still particularly acute in rural areas, and the associated health problems are well known. Sanford Health is the nation's largest rural healthcare system, and it sees and treats the dire consequences first hand. Developing weight loss programs are a logical response born from experience.

Second, as we move toward population health and value-based care, health systems will have a vested interest in making sure the people they serve are eating properly and exercising sufficiently to proactively mitigate obesity-related illnesses.

Third, a successful weight-loss program is an excellent way to build brand value and customer loyalty. There are few things more personal and challenging that trying to lose weight. It is something that most people in this country confront in their lives. Clients of Profiles by Sanford who embrace a structured weight-loss regimen likely will succeed, and they will remember the people who helped transform their lives.

Fourth, weight loss clinics provide an excellent route for traditional providers to enter retail healthcare. These store-front operations do not require a lot of capital investment or high-salaried personnel. And they provide a great way for traditional providers to promote their brand beyond the walls of the hospitals.

Sanford Plays up Retail Angle

"We have taken an approach that I would call a combination of retail in a clinical setting," Malloy says. "We are locating mostly in more retail environments, primarily neighborhood-type settings near the grocery store, those types of locations. Part of it is convenient access for our members. Not everybody wants to go into a hospital or clinic for all services."

Malloy was quick to provide price points. There is a $300 annual membership fee, and new members are given a scale that measures weight, body fat percentage, bone density, and hydration. The "meal replacement products" cost $40 to $80 a week.

That sounds a bit pricey in a town such as Brookings, SD, where the median annual householdincome is about $41,500. Malloy contends it's a good value. "We believe this is something that will do well in a community like Brookings," he says. "There are some interesting statistics on the average American diet and how much people spend each week and our costs are very much in line with that."

No health plans cover Profiles. However, Malloy says the annual membership fee is cut in half if clients are referred by physicians. In addition, Profiles cultivates employer partner programs that allow employees to purchase meal replacement products at a 20% discount. "The majority of our members are activated through employer partner programs," Malloy says.

As Profiles nears its second anniversary, Malloy says it's able to measure success.

"We have been operating a little more than 18 months and we've grown from 50 members at that time to more than 5,000 members now," Malloy says. "We are seeing a lot of members stick with the program not just for one year but to stay engage in a second year after they'd lost the weight in what we call our sustained phase. We are seeing over 33% of our members renewed for an additional year to stay with the program which I think is great."