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Consumers will decide the winners and losers of retail health

Retail health is getting more attention from entrepreneurs and investors, as consumers become activists in purchasing our goods and services.

bigstock-health-care-costs-crossword-30297854The following post originally appears in Pulse Weekly, a weekly take on the industry from Paul Keckley and the Navigant Healthcare Center for Research and Policy.

Death and taxes are certain. Add a third: increasing out-of-pocket costs for healthcare.

According to the Bureau of Labor Statistics, for the period of 2012-2014 (the latest for which data is available), income before taxes increased 1.9 percent and overall consumer spending increased 4.0 percent. But in the same period, total spending for healthcare increased 20.6 percent, and for the 65 percent with private health insurance, premiums increased 39.1 percent. The combination of the economic recovery and deflated gas prices (-11 percent) helped to offset the impact, but the fact remains that healthcare cost increases hit household budgets harder than anything else, with no end in sight. Little wonder, retail health is getting more attention from entrepreneurs and investors, as consumers become activists in purchasing our goods and services.

Getting arms around the scale of scope of retail health is tough. There appear to be nine major zones of activity that capture the full range of retail health activity:

Two of these zones involve household financing of their own healthcare (examples: 20 million who purchase individual insurance plans; bank loans that cover much of the 10.7 million cosmetic procedures annually; and payment services that finance medical debt for the 43 million households that have problems paying their medical bills).Two zones involve conventional healthcare products and services that circumvent traditional physician-driven treatment recommendations (examples: the 2015 retail clinics; the 15 million who see chiropractors annually; and preference-driven tests and procedures that consumers increasingly demand).

Four zones that involve lifestyle and wellness programs and products (examples: the $24 billion fitness industry that employs 279,000 trainers; the $9 billion spent on probiotics and $34 billion spent on organic foods; and the 76 million adults who use some form of complementary/alternative medicine (examples: yoga, and herbal medications and vitamins).

And one zone that involves diagnostic exams funded directly by individuals such as EPT tests and self-paid body scans accessible in retail pharmacies.
The connective tissue that fuels these activities is digital—the social networks, online shopping services, smart phones and other devices that empower individuals to compare and purchase the products and services they prefer. More than two-thirds of the population are regular users of digital health offerings to assist in their decision-making.

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Arguably, in traditional healthcare, retail health does not get its share of attention. It is rare that hospital boards include the full scope of retail health in their strategic planning. Data about retail clinics and the individual insurance market is usually considered, but the competitive landscape is usually defined as hospital vs. hospital, and “patients” are referenced rather than “consumers.”

Insurers know the distinction between the two: they serve members who pay hefty premiums for services they hope they’ll not need. Drug manufacturers spend $5 billion annually on advertising to encourage consumers to “tell your doctor” and even medical device companies are promoting their brands to consumers via ads. Industry analysis says 19 percent of total healthcare spending is out of pocket, and it’s growing. (3) Meanwhile, consumers are engaging more directly and readily accepting new models and modalities shunned, in many cases, by traditional providers.

The most significant challenge facing healthcare is its runaway costs. Increasingly, consumers are bearing the brunt of these, and they’re using their purchasing power to transform how care is defined, delivered and financed to address costs. They’re fueling the growth of retail health and rewarding organizations that seize on these opportunities. Traditionalists in healthcare must heed the warning “we never did it that way before” and take a fresh look at retail health.

Photo: BigStock Photos

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