Monday, February 25, 2008

Innovation, Wal-mart - Lessons in Retailing from WalMart

Lessons in Retailing from WalMart

WalMart has just announced it will expand its in-store clinics. It will open 400 new clinics by 2010, and it will partner with trusted hospitals in 13 of its new regions. Hospitals will own and operate these 13 new clinics. The clinics will be branded “Clinic at Walmart” and will sport the name of the partnering hospital. The hospitals will provide the nurse practitioners and physician assistants dispensing care, as well as the doctors overseeing them. Walmart will standardize the clinics to achieve a similar look and feel. The clinics will keep similar hours and will post price lists.


Physicians no doubt will respond to this news with ambivalence. Some in physician-short regions may welcome it. Others will see it as unwelcome competition. Others will complain it upsets the continuity of care and threatens the very existence of many primary care physicians who are already in short supply.


I look upon the opening of the new clinics as lessons to be learned from a savvy retailer, already the biggest in the world. In-store clinics are arguably the most significant innovation in health care of the last five years. The move is part of Walmart’s corporate strategy to improve its image of being bad for communities, slackers in providing insurance for its employees, and an unfair competitor to Main Street merchants. Its health care campaign include expansion of health benefits to 70 employees of employees of its $4 prescription drug program, and another step forward in opening access to care and enhancing profitability.


Here are a few lessons physicians might learn from Wal-Mart.


• Price matters. Wal-Mart’s slogan of “We sell for less” has been a smashing success. Some physician groups have taken the clue by opening and owning their own clinics and by lowering overhead in “cash-only” practices.


• Access matters. Longer hours, no waiting and quick patient processing appeals to health consumers. Some physicians have responded with open-scheduling, see patients on the day they call.


• Transparency matters. Patients like to know in advance or at the site of care what things will cost. Some physicians, particularly in cash-only practices, are posting prices in their offices.

• Predictability matters. Consumers like to know what they are in for. Predictability is what successful corporate franchises, and other in-store clinics, like CVS and Minute Clinics, strive for.



• Location and convenience matters. Walmart got its start by placing its stores in rural and suburbs where competitors had not gone and where parking was ample and free.


• Partnering and brand name recognition matter. In any given community, both WalMart and the local hospital are well-known names. Physicians could take a cue here by engaging in joint-ventures with community hospitals.


• Computer systems matter. Wal-Mart has a significant advantage over competitors because of its on-line, real time, all the time computer inventory system. Likewise, most in-store clinics, at Wal-Mart and elsewhere, feature standardized clinical protocol and electronic health records.

Hospitals say doctors have nothing to fear from these clinics. Hospitals claim in-store clinics are simply a way to expand access to care and to their primary care networks. Primary care physicians sometimes respond they fear patients will go to hospitals for follow-up care rather than to their offices. Hospitals say in-store clinics are an opportunity to enter into joint-ventures with hospitals. The AMA and the AAFP say in-store clinics must be investigated and regulated to assure safety and continuity of care. The American Academy of Pediatrics opposes in-store clinics.


One final cautionary lesson: in-store clinics take two to three years to show a profit, and at least seven clinic operators – short on capital – have closed up shop. Success in the retail world, and increasingly in the primary care

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