Another Retail Strategy for Healthcare

In healthcare real estate, a retail strategy is most often referred to as the locating of healthcare services in buildings near grocery stores, shopping malls, and other high-traffic. The notion is mentioned time and time again by health system executives as well as healthcare real estate professionals when talking about providing healthcare services in convenient locales for patients.

But what about the much older and proven strategy of putting retail services into healthcare facilities, including those in retail locations?

The idea, which is still alive and well, is perhaps more important than ever, according to Gary Paquin, executive vice president of consulting for Paquin Healthcare Cos. The Florida-based consulting firm provides a number of services to healthcare clients, including retail business plans.

During a recent webinar, Paquin said providers should have, or least be thinking about, a plan to engage patients and consumers with a retail healthcare strategy.

So what is “retail healthcare?” It can be thought of as “anything not reimbursable,” he explained. It can also include goods and services that are either related or complementary to the healthcare services being offered in a facility.

The shops selling such items can be gift shops, health stores, pharmacies and DMEs – on-site stores that sell “durable medical equipment” for home healthcare. DMEs can include everything from artificial limbs to wheelchairs.

Such retail facilities can be located in hospitals, outpatient facilities, and fitness and wellness centers, Paquin noted.

In this era of shrinking revenues and rising costs, providers need to have such a retail strategy because they can't afford to leave money on the table, he added. A strong retail healthcare program can add as much as $50 million per year to the bottom line for an average health system, and it can, in a way, build patient loyalty through branding of certain products, he said.

Selling goods of all kinds certainly makes plenty of sense for a health system today, according to Paquin, in large part because consumers are becoming more empowered and are spending more of their own money on healthcare as well as healthcare-related items.

Most patients prefer healthcare solutions with a contemporary look and feel, and as a result want their healthcare-related stores to reflect this. Rather than dowdy old gift shops, today's consumers expect a “marketplace” more akin to the look of a Starbuck's or a nice hotel, Paquin noted. Beyond gifts, such shops sell convenience and wellness products. Some even have consumer loyalty cards, “just like Barnes & Noble,” he said.

Over the past seven years or so, more than 400 hospitals have completed retail business plans with Paquin. The company also recently opened its 25th store in conjunction with a hospital system. The wellness store, which is located at Kaleida Health's Buffalo, NY General Medical Center, offers products such as medical supplies, employee uniforms, shoes, bariatric products, and orthopedic products.

Murray Wolf is the founder and Publisher of Healthcare Real Estate Insights™, the nation's first and only publication totally dedicated to covering news and trends in healthcare real estate development, financing and investment. For more information, please visit www.HREInsights.com.