Retail Health: A Point-Counterpoint Discussion

Much energy and investment in recent years have gone into the development of retail health capabilities—placing low-acuity services closer to patients at more convenient hours, often at lower prices. Sometimes these strategies have included partnerships with drugstore and supermarket chains. It’s time now to take stock. Are these efforts essential to any 21st-century health system strategy, or a distraction from what we really should be doing?

Attendees of Sg2’s AMC Summit in April were treated to 2 thoughtfully presented, contrasting viewpoints on retail health. We didn’t set up the agenda as a point-counterpoint, it just happened that way and ended up deepening everyone’s understanding of the opportunities and risks of a retail health strategy. Steve Lipstein, president and CEO of BJC HealthCare (our host for the event in St Louis), went first and presented the case AGAINST; David Olson, chief strategy officer of Froedtert Health in Wisconsin, presented the case FOR.

The Case Against Retail Health
“We would never do that.” This was Lipstein’s reply to his own question about whether BJC would consider partnering with a Walgreen or CVS. His argument begins with the belief that drugstore chains make poor business partners, and that their goals do not align well with health systems’. A drugstore, he contends, is interested in an in-store clinic only to the extent that it will generate prescriptions to be filled. That’s because prescriptions, even as retail drug chains have diversified their offerings, remain their chief driver of revenue per square foot.

Moreover, Lipstein asserts, spending time and energy on retail health would simply be a distraction from BJC’s principal strategy centered on population health. BJC sees population health more as necessity than choice—the inevitable endpoint of intractable Medicare budgetary math that will force policy makers to delegate risk. Based on this conviction, Lipstein’s focus is on amassing the scale and capabilities to successfully manage population-based risk contracts. He sees little play in this strategy for retail health. Drugstore clinics are patronized by low-risk, episodic customers—getting flu shots, seeking prescriptions for their children’s ear infections, treating their bronchitis. Providing more convenient service for seasonal bronchitis sufferers, his argument goes, does little to move the needle on population health metrics or to ensure that BJC can succeed under risk contracts. Let the drugstores have these patients if they want them.

The Case for Retail Health
Froedtert is equally focused on its own population health strategy as a 50% owner of a health plan that is the second-largest Medicare Advantage player in the state of Wisconsin and growing. But, as Olson describes, he sees the tools of retail health as highly complementary to that strategy. To be sure, Froedtert is doing a little bit of everything. It has retail clinic partnerships with CVS and Meijer (the Midwest’s slightly more upscale version of Walmart), in addition to operating its own network of walk-in care clinics. Froedtert’s Workforce Health unit operates on-site clinics among a full variety of employer-focused services. And its “virtual clinic” offers $49 consults via phone or web-based video—more than 1,600 in its first 9 months.

Why all the low-acuity retail activity when the organization is firmly committed to growing “lives under management” and managing per-member-per-month cost trend for those lives? For Froedtert, retail health is not a distraction but a valuable support for its population health strategy. As a specific example, leadership worried about how its health plan’s selective network would disrupt some patients’ primary care physician relationships. Froedtert’s new access options for primary care—retail, worksite and virtual—helped cushion the impact for patients that needed to switch doctors. They were the spoonful of sugar that helped the narrow network medicine go down. As Froedtert takes on more risk for total patient spend, Olson also sees these new access points as tools to keep members in-network and shift care to lower-cost settings.

Which Path Is Right for You?
Two organizations, two accomplished leaders and two very different perspectives on retail health. Lipstein’s wisdom lies in maintaining focus on a core strategy—resisting fads, time-sucking distractions and ill-conceived partnerships. Olson’s wisdom lies in the ability to weave seemingly contradictory threads of activity together in a way that makes for a stronger, more resilient strategy.

Who is right? They both are, of course. But what about retail health? At Sg2, we believe wholeheartedly in the merits of broadening access points across your System of CARE. We also appreciate the risks of scattershot organizational focus in which many great ideas surface but few come to fruition. You get to decide—shaped by your organization’s vision, market context and appetite for pursuing multiple tracks simultaneously–how much emphasis, if any, you’ll give to new channels of retail health in your strategy.

  • Be clear on your purpose. If you pursue a retail health strategy, be crystal clear on why and what goals you hope to advance, rather than just running with the herd.
  • Forge partnerships thoughtfully. Choose well, then be as transparent with your partner as you can about your respective motives, fears and frustrations.
  • Monitor, manage, renegotiate, walk away. Track progress against predefined goals, manage through issues, reconfigure your partnership as needed and don’t hesitate to move on if it’s not working.
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As of February 11, 2016, Vizient, Inc. has completed its purchase of MedAssets Sg2 and spend and clinical resource management segments from Pamplona Capital Management, LLC. MedAssets revenue cycle business will continue to operate as a wholly-owned subsidiary of Pamplona Capital Management LLP.

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