Article as originally published in Nov 2018
What if healthcare would be as accessible & convenient as grocery shopping.
People are very satisfied with healthcare organizations. The NPS* of the healthcare industry achieves with a score of 74** the highest score all industries confounded. The loyalty between the healthcare provider and and its customers is indeed very high. However, that does not necessarily mean that the overall customer experience is good (enough). Healthcare still needs to be delivered to the customer in a satisfying way. Inspired by the services offered in other industries, we’ve seen the importance of “the delivery” increase within healthcare as well.
“The two biggest patient expectations are ACCESSIBILITY and CONVENIENCE"
I also touch upon it during my keynote “The Patient is no longer Patient” when stating that the two biggest patients expectations are about ACCESSIBILITY (Patients are tired of waiting and want healthcare to become faster accessible) and CONVENIENCE (Patients want better services when having to deal with something, just like they have in other industries). I agree with Lucien Van Engelen that Healthcare is 80% about processes. Currently many of those processes that (in)directly impact the patients, are not meeting the customer’s expectations in the same way as they experience similar situations in other domains. The “delivery” of healthcare is expected to be better, and this offers opportunities for startups or companies*** that are particularly strong in delivering products or services.
These past years, retail giants played in on the health craze trend and started focusing more on health & wellbeing in their offering. In addition to this strategy, these retail players have recently increased their focus on the larger healthcare market as well: in being one-stop-shops for day-to-day essentials, they also want to put healthcare where the people are. As they are very much specialised in “delivering to the customer” and as they are known for their focus on customer experience, these retail giants are taking giant steps to make (some parts of) healthcare more accessible and more convenient. And even while each of these companies will be facing many regulatory uncertainties or even lacking some specific healthcare expertise at first, their approach surely will complement or potentially disrupt (some parts of) the existing healthcare business with the following strong pillars of their business:
"Retail Giants are taking giant steps to make (some parts of) healthcare more accessible and more convenient. Their approach surely will complement or potentially disrupt (some parts of) the existing healthcare business."
OFFLINE ONE-STOP SHOP
Whether it is to actively shop (or to collect their products bought online), people are going into retail supermarkets at least once a week. Nothing is more convenient than finding pretty much everything in one place. Offering healthcare services and products only adds convenience to the one-stop shop principle and makes healthcare more accessible by simply putting it where the people are.
In 2014, Walmart launched a US-wide event in their stores called “Healthcare begins here”. During one day, it offered their 150 million weekly visitors a guide to a healthier life by offering free access to several preventative services such as blood pressure measurement, immunisation and food advice. Ever since that shift, the retailer mainly known for their low prices changed their slogan into “Save money & live better”. Walmart understands that it has the power to put healthcare where the people are, and currently also offers 4500 pharmacies, 3000 vision clinics, 1000 digital health kiosks, and several urgency clinics in the immediate vicinity of the frequently visited stores.
Femsa Commercio, owner of about 13.000 convenient stores in Latin America has followed a similar strategy to make healthcare more accessible by acquiring several pharmacy chains and retail clinics. It allows them to compete with Alliance Boots, the European retailer and wholesaler owned in part by Walgreens, that possesses 4500 pharmacies across Latin America as well.
Amazon, the world’s biggest online retailer, purchased Whole Foods, the company that brought health food mainstream. Amazon now has 500 brick & mortar grocery stores across the US market allowing them to deliver their online product offering at the same ‘stop’ people are buying fresh and healthy groceries.
Migros, Switzerland’s leading supermarket chain, is also the country’s top fitness provider, with nearly 200,000 members. The wellness movement is firmly in place, and food and fitness, previously separate offerings, are easy pairings for companies that figure out how to approach the mix intelligently. Before doing one’s bi-weekly shopping it is possible to do your work-out conveniently during that one stop.
"Nothing is more convenient than finding pretty much everything in one shop. It simply makes healthcare more accessible by putting it where the people are."
ONLINE SHOP & DELIVERY
Online shopping is widely popular for it offers customers easy access to a wide range of products at any given time & place and have it conveniently delivered at their doorstep. Adding healthcare to the online product mix brings new customer experience to a category of products previously unprivileged of this convenience, ie. prescription drugs and medical devices.
Amazon is known for its customer experience, offering customers an easy mean to order directly online from a wide variety of products and have it delivered right away to you. In buying Pillpack, a US digital Pharmacy, it not only has bought the healthcare distribution infrastructure, it has also extended the online product catalog for its 300 million Amazon clients from the already exclusive OTC health products to as well prescription drugs. In collaboration with Arcadia Group, Amazon will also sell consumer-facing medical devices to turn the e-commerce platform into the online shop for disease management where (also) physicians could immediately order/recommend the right medical devices to be delivered at the patient’s home.
Whilst Amazon is moving into the brick & mortar world, Walmart is moving into e-commerce. Past year, it has achieved its biggest growth numbers via its online marketplace Walmart.com that contains more and more products. The availability of having 4500 pharmacies across the country might also open up opportunities to offer, sell and deliver prescription drugs through the online distribution channel at some point.
"Adding healthcare to the online product mix brings new customer experience to a category of products previously unprivileged of this convenience."
DATA CAPTURE & MANAGEMENT
For years, offline retail giants have been collecting and using consumer data to understand purchasing behavior: How do people navigate through the store; what are consumers consistently buying; what advertisement or promotions work well; … Online retails giants are potentially even stronger capturing data to adapt or personalize it’s offering. In having these online/offline retail giants combining health and wellness data with purchasing patterns, a wealth of integrated data could be captured and analyzed to increase customer experience.
In moving further into healthcare, both Amazon & Walmart are well positioned to capture and analyze health and wellness data via the different products (nutritions, OTC, RX, medical devices) and services (health scans, pharmacy services, …). With their expertise in data management, health data records would allow them to give personalized health management advice to each of their customers (food suggestions, medical device support, wellness products,..) in a convenient, easily accessible way.
Walmart has recently filed a patent for a connected shopping cart handle that can detect heart rate, palm temperature, grip force, and walking speed. Many of its’ stores already contain a digital health kiosk where consumers can complete a non-invasive biometric screening that includes key health indicators, such as weight, blood pressure, BMI and pulse. But this new patent would allow for passive biometric measuring which allows consumers to conveniently have their health tracked, discover possible risk factors, and easily access health solutions exactly in that store.
Amazon’s Echo often is used to actively create lists with errands, as users actively mentioning the errands to the Echo device. However, recent patents filed by Amazon would allow a device like an Amazon Echo to passively listen not just for the user's words, but for things like tone of voice — which could include fatigue, frustration, or stress — and even things like coughs and sniffles. This might prompt the device to recommend remedies and have it conveniently delivered within the day.
"In having these online/offline retail giants combining health and wellness data with customer purchasing patterns, a wealth of integrated data could be captured and analyzed to increase customer experience."
Not only do retail giants possess a pile of different type of informations & insights that truly make insurance companies jealous, retail giants also have easy access to a large group of employees and an even larger group of returning visitors. This information and reach could allow them to know pretty darn well what insurance products to create and make accessible in the stores.
Early 2018, Amazon announced it will be teaming up with Berkshire Hathaway and JPMorgan Chase to create joint solutions to reduce the health care spending of the more than 1,2 million employees and their families. This diverse group of people (socioeconomic status, geography, and age, among other factors) could be helpful when searching for solutions that work for specific use cases (e.g. chronic disease management) and population demands (e.g. pharmaceutical delivery). This diverse group of people is certainly helping them in creating the right health insurance products. As stated in the Amazon-JPM-Berkshire partnership announcement, the companies want to build an independent healthcare company “free from profit-making incentives and constraints”, making it sound like a social security type of insurance.
Meanwhile Walmart struck up preliminary talks to acquire insurer Humana. The news could foretell the combination of pharmacies and insurance under a single corporate umbrella. With 1,5 million employees Walmart is the second largest employer in the U.S. (second only to the federal government). This company size creates the ability to streamline health care costs for its own employees via smart health insurance plans. This could save Walmart money overall while also attracting prospective employees with its health insurance option for workers. Along the way, Walmart will certainly learn from its successes and failures internally, before also offering insurance products to its 150 million weekly visitors.
"Retail Giants know pretty darn well what insurance products to create and make accessible in the stores."
Being able to reach a large consumer base, puts Retail Giants in the position to create economies of scale at many different levels, none the least when negotiating with producers such pharmaceutical or medical suppliers. With their broad distribution channels, Retail Giants might be able to exclude over time the value-extracting middle men within the healthcare value chain. At the consumer side, Retailers can start combining offerings, such as combining food with devices and Rx medications for a particular disease management.
Typically, Amazon introduces a customer-friendly service with a user and customer experience superior to that of its competition. This allows the company to build economies of scale, network effects, and leverage for negotiating with other parties (e.g. health organisations, pharmaceutical companies,..). Then, it invests in upfront fixed costs (f.e. healthcare specific distribution channels) that allow it to function better and provide an outsourced version of these services to its partners (wholesales, pharmaceutical companies,..) allowing Amazon to infiltrate the value chain deeper. We could even imagine Amazon taking over packaging, tracking & transportation from pharmaceutical companies and potentially cut out the middle men that are taking margins but aren’t adding a lot of value to the products and services (more than three entities are involved in bringing a drug from manufacturer to patient, and each party takes a percentage of the profit along the way). Any such margins within the value chain is an opportunity for Amazon to disrupt and outperform.
"In moving deeper into the health market, Retail Giants, specialized in 'delivering' products and services to the customer, will answer the biggest expectations of the healthcare industry: ACCESSIBILITY and CONVENIENCE."
Through a wide network of offline stores and a very strong online presence, retail giants will make healthcare products and services conveniently accessible in their one-stop shops. These products and services might range from food suggestions to OTC products, from prescription medication to medical devices. But eventually they might as well offer insurance products & services that will already be accessible for their own employees.
Convenience will not only be materialised because everything is available in one place. Retail Giants master the skill to capture, analyse and manage data to improve customer experience. They are well positioned to radically improve the customer experience with delivery of those healthcare products & services, and offer customers similar experiences as in other industries today.
Of course, the road to a full one-stop shop for healthcare products and services will be build in different phases. However, the intentions and actions by these Retail Giants indicate a clear direction that surely will influence the healthcare and retail business as a whole. Have a look at slogans of retailers**** and see for yourself how they are increasingly focusing on living healthy.
Are you a retailer, an online merchant, a hospital, a pharmacy or an insurance company?
Do you want to know more about the impact this might have on your business?
Feel free to reach out via https://www.linkedin.com/in/christophejauquet/
* Net Promoter Score (NPS) is a management tool that can be used to gauge the loyalty of a firm's customer relationships. It serves as an alternative to traditional customer satisfaction research and claims to be correlated with revenue growth and loyalty. NPS has been widely adopted with more than two thirds of Fortune 1000 companies using the metric. The tool aims to measure the loyalty that exists between a provider and a customer.
** https://npsbenchmarks.com/industry/healthcare from November 2018
*** This article focuses on one particular type of companies that will “deliver healthcare to the customer”, namely Retail giants like Amazon, Walmart in the US & Femsa in Latin America.
**** Sainsbury (live well for less); Aldi (Spend a little, live a lot); The co-operative (Here for you for life); Safeway (Ingredients for life); Dash in (Life... Made better); Hy-Vee Food stores (Making lives easier, healthier, happier)