Behind Retailers' Healthcare Strategies, Operational Know-How
These are big technology companies, these are telecommunications, retailers. They are making investments because they feel that there is a great deal of opportunity in healthcare right now. Not only is healthcare about 15% of GDP and growing, but you start adding on the wellness industry, which is another few hundred billion dollars, and they see opportunities and money to be made.
HLM: What is retail medicine going to look like in five years?
Kauffman: As long as the consumer continues to bear more of the risk of the cost of healthcare, this is something that is going to move forward and should not be viewed as a fad. The retail and technology players will continue to look at ways to steal revenue from traditional players because they are looking at their own challenges to try to grow.
There are going to be a lot of companies trying and the ones that succeed are those that within their own organizations have the clout to help steer the ship in a particular way. If healthcare is viewed as a side project for one of these large retailers or technology organizations it is likely not going to survive under core business pressures.
HLM: With so many traditional providers complaining about tightening margins, why are retailers so eager to get into the sector?
Connolly: Healthcare is a sector that has not made any notable productivity gains in years, if not decades. The smart players outside of healthcare are looking at this and thinking 'we have been through a similar journey in our own core business and we are pretty smart about efficiency and productivity and standardization and using digital technology and getting closer to the customers,' so they believe that they can bring those lessons from elsewhere and really change the way that care is delivered and paid for in this country. It is going to be a fascinating journey to watch to see if that gamble makes sense.
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