Retailers are Exiting Healthcare Part 2: Next Steps for Success
Last week, we discussed the exit from retail primary care by Amazon, Berkshire Hathaway, and Wal-Mart, and the challenges they faced in entering healthcare, particularly primary care and clinic spaces. Today, we want to talk about other paths that future investors can take to drive change, even working hand-in-hand with existing entities, helping all parties begin to disrupt some of healthcare’s business establishment.
First, In general, there’s finding the right path through public perception. Legal restrictions like Certificate of Need have left their mark, even in locations that have since abolished them. This has created a narrow scope of known healthcare providers across most US states. In an industry as based on reputation and trust as healthcare, a new entrant faces a similar circular logic issue to the federal funding point we made last week: You need it to build it.
So, what is the answer for retailers in healthcare?
From a broader strategic perspective, there are key areas where retail healthcare is already present, moving into those spaces and expanding services is definitely one path.
For example, opticians and ophthalmologists are well established by Target and Costco as great, affordable retail care. External investment driving towards ophthalmology wouldn’t be as large of a lift for patients, and specialists are already comfortable in these non-hospital, retail driven spaces as career tracks. The pay is comparable, the hours are better, exactly the model that has driven Scope partner practices to thrive year after year.
A next logical step would be dental care, especially considering the high need, high value option Medicaid is offering for its populations, moving into federal coverage after establishing fee for service populations in settings they’re already comfortable with, this creates a better anchor for that next logical step: adopting other already extant models around NPs and PAs in urgent care and “doc in a box” facilities for more immediate needs. Through these approaches, the way is well-paved to make that final transition to retail primary care through the slow, persistent expansion of services. There is also an additional benefit: a growth approach to strategic partnerships with existing healthcare organizations eager to expand these spaces themselves, driving a force multiplier effect on all involved parties.
Finally, there are less obvious but nonetheless critical areas of opportunity. Home health and patient monitoring, both of which would be capable of leveraging in-development AI and tech solutions. The major technical adoptions of health systems of the last 20 years have been either federally mandated or heavily funded, e.g. ICD-10, meaningful use to drive EMR adoption, etc. Tech companies on the other hand, more aggressively adopt tech solutions. In a race to market share, a willingness to embrace that (well-vetted) newness can be a major tailwind.
For example, home care nurses are often already working with multiple patients a day, if they, or a central hub, could better monitor their patients at a distance throughout the day, it would improve their ability to intercede on unexpected complications, improving quick care for their patients, which in turn would reduce the workload for nurses and drop the cost burden on systems themselves. This would make the business model itself more sustainable (though not without some new challenges as it grew), further supporting revenue to grow into other areas.
The Next Phase in Retail Healthcare
All in, it can’t go without saying: these giant corporations moving into retail primary care made a genuinely valiant effort with a tremendous customer base to facilitate real change for healthcare as a whole. At a point where private equity is under increased scrutiny, they put their own skin in the game, as their own brands, bringing new options to market. This has to be applauded, and anyone who follows in their footsteps owes them real respect. They sought to disrupt the dysfunction, gamesmanship, and politics of healthcare itself (issues anyone reading this are well aware of and no doubt struggling to navigate). They also did so without the luxury of time to navigate those challenges- something often in short supply for companies with responsibilities to shareholders- there was ultimately no choice but to make an exit from the market.
Still, there is a silver lining. AAC is working to navigate those politics and industry influences on behalf of its partner practices and their clients and communities. By innovating from within, especially in the rapidly growing ambulatory space with a deep bench of knowledge, there’s progress. The ability to dedicate time and resources to do the hard work others are avoiding, looking under every rock for ideas and options to thrive is happening. This work enables office-based surgeons (and groups like AAC), to showcase a better path forward as affiliates to payers, health systems, etc. rather than a threat. Finding those gaps and weaknesses and developing real solutions is a tremendous boon to patients, but also leads to enormous cost savings for everyone.
Everyone in healthcare is climbing the same mountain, and while each path can look different, and feel unique, we should feel compelled to find each other and tackle these challenges together. We’ve all found shortcuts and made missteps. Through collaboration and innovation, those within the system of healthcare can put their heads together and share those errors and advantages, driving quality and access to care, reducing costs, and improving quality of life for clinicians. At a future date, if external businesses make a second attempt to move into healthcare, the path up the mountain for everyone will be smoother and faster.
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