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Retail Medicine Syncs with High-Deductible Health Plans

 |  By John Commins  
   February 25, 2014

The rise of high-deductible health plans means more consumers will have healthcare coverage that mainly provides protection against catastrophic injury or illness. As these plans become more common, pharmacy chains and big box retailers are taking a greater interest in expanding their healthcare provider capacities.

Some analysts believe that the greatest fundamental changes to traditional healthcare delivery will come from without, not from within.

The rise of high-deductible health plans means more consumers will be on the hook for much of their medical costs, with their coverage mainly providing protection against catastrophic injury or illness. As these high-deductible plans become more common, traditional retailers such as CVS Caremark, are taking a greater interest in expanding their healthcare provider capacities.


See Also: Behind Retailers' Healthcare Strategies, Operational Know-How


In Part 1 of an interview, analysts Vaughn Kauffman, Health Industries Principal at PwC and Ceci Connolly, the Managing Director of PwC's Health Research Institute, discussed their views on what we might see in the coming months and years as retail businesses carve out a larger role for themselves in healthcare delivery. The following is an edited transcript.

HLM: Why do you believe that retail medicine is a potential game changer for care delivery?

Kauffman: Consumers will continue to look for cost of care, convenience and price as they bear more of the costs. Whether it be the pharmacist or other retail channels, we think that because of the evolving healthcare economies, there are roles that these retailers and pharmacy organizations will play in delivering care. We also think about the scope of healthcare beyond the traditional patient setting and around the whole spectrum of health and healthcare and fitness and how that plays into the equation.

That is opening up more opportunities for retailers. Everybody is trying to figure out how to engage the consumer differently. Healthcare models should be putting the consumer at the center of the system as opposed to having them running around through a fragmented environment. Because of that, organizations are trying to figure out how to better engage with consumers and obviously retailers have a great way of doing that, whether it's because of their physical footprint with their storefront or even through their e-commerce presence.

HLM: Do traditional providers understand that retails could pose significant competition?

Connolly: We think this is powerful and we are on the verge of a significant turning point for healthcare and as Vaughn says it's with the consumer at the center. You mentioned the impact of being on high-deductible plans. We are seeing that every day. We're also seeing that employers are trying to be savvy about getting value and they're trying to teach their employees to be much better about shopping for value in healthcare.

To the question about traditional players in the health industry, we see it running the gamut right now. There are some very innovative leading edge companies in the health industry that are using Facebook and [other] social media to connect with their customers.

They are starting to push out price information because they know that transparency is important to consumers. They are using their data analytics to push population health. But there are many other providers that are frankly just trying to keep up quarter-to-quarter right now and they are still a little stuck in the fee-for-service model. They are going to have to find a way to make this transition or there is the risk they may get left behind.

HLM: What advantages do traditional retailers have over traditional medicine with consumer-driven healthcare?

Kauffman: There are some very distinct advantages for retailers. Their business model has evolved in understanding the wants and needs of consumers. Traditional healthcare organizations, outside of maybe the physician relationship with patients, are still trying to figure out their relationship with the consumer. In fact, the definition of customers is changing from what use to always be thought of as the employer as the customer to the individual as a consumer of healthcare.

There is a distinct advantage that retailers have with brand recognition and trust of the brand. You know what you get when you walk into a certain retailer. It is not that same way in healthcare and a lot of traditional companies in healthcare recognize that. We are seeing roles being formed at the senior level such as chief experience officers.

They are hiring outside of the industry, particularly in the hospitality industry. The focus is on the customer that other industries' business models have been anchored on. The convenience factor is an advantage as well. How often do you walk into a retailer on a given week versus walking into a hospital setting?

The ability to capture the hearts and minds of consumers is much easier for retailers because of the frequency that people walk in, and I don't want to discount the e-commerce presence that organization have. The interactions are much more frequent. Once you get a captive audience there is an ability to drive that engagement to another level.

HLM: Are you saying that brand loyalty will become more important with consumer-driven care?

Connolly: Brand loyalty is significant and it is something that has been a challenge for healthcare companies. We know from our survey data, that insurers in particular and pharmaceutical companies rate pretty low on the popularity and loyalty scale. Individual doctors do better. But even when you start talking about hospitals there are a lot of mixed feelings by consumers.

Consumers tell us over and over again that they are willing to switch if either they have a bad experience at one place or they find that they can get the same quality care at a lower cost somewhere and one other thing on the convenience. The average diabetic will see their pharmacist perhaps 30 times a year and they will see their doctor three times a year.

You have that ongoing relationship and every time you walk into a pharmacy or a big retail store, you will also probably pick up your test strips and you might pick up some food and do some other shopping and the idea that it is all there is another aspect of the convenience.

Part 2 will be published Wednesday.

 

 

 

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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