Monday, August 11, 2014

Health Care: You Can Get It Wholesale at Retail

Consumption is the sole end and purpose of all production, and the interest of the producer ought to attended to only so far as it may be necessary to promoting that of the consumer.

Adam Smith (1723-1790), An Inquiry into the Nature and Cause of the Wealth of Nations.

The consumer is king.


This morning I have been reading about Walmart’s expansion into the retail clinic market. By year’s end, there are expected to be over 1000 primary care retail clinics in the U.S. sponsored by Walmart, CVS, Walgreen, and other retail companies. The Advisory Board Company, a Washington. D.C. based consultancy, says these clinics are part of a “Consumer-Oriented Ambulatory Network.”

These activities raise the question: Who is to be King of the Consumer Health Care Mountain? Walmart has a promising start. It is number one in revenue among Fortune 500 companies. It has 1 million employees and 140 million U.S. customers. It has experiences with existing clinics and $4 prescriptions. And it has gotten to where it is by offering a combination of low prices and convenience to consumers.

Now, Walmart is in the process of testing retail clinics in Texas and South Carolina based on the concept of offering nurse practitioner services for $40 to consumers and $4 for employees. For convenience, these clinics will be open from 8Am to 8PM Monday to Friday, 8AM to 5PM on Saturday, and 8AM to 6p on Sunday. Walmart’s message to its huge consumer –base seems to be: You can get your primary care wholesale at our retail prices conveniently while you’re shopping at our thousands of stores.

What can doctors do to counter this retail clinic movement?

• Primary care doctors can expand their practice hours and post their prices in their office and online.

• Primary care doctors can become concierge practitioners, offering same day appointments and 24/7 access by phone or email.

• Primary care doctors can cooperate and coordinate care with specialists and surgeons to offer discounted direct-pay discounts and low-price procedures at ambulatory care centers.

• Primary care doctors can go to work for hospitals, who in turn, can compete with retailers by opening their own retail clinics, offering doctor back-up and engaging in creative partnerships with existing retailer-outlet clinics.

• Primary care doctors can choose to rise above the commercial fray by saying they will not mix business with their profession, and they will not delegate care to non-physicians, a position advocated by Franz Inglefinger, M.D., and and Arnold Relman M.D., two editors, now dead, of the New England Journal of Medicine.

None of these options are easy. All of them, to one degree or another, are disruptive. As Clayton Christensen, MBA, of Harvard Business School and father of the concept of disruption innovation, has repeatedly pointed out, disruption innovation is about lower prices, convenience, and performance of specialized tasks by less specialized personnel. If these less specialized people do not have the answers or if you suffer complications or side-effects, such as a 4 hour erection, you can, as the pharmaceutical companies keep saying in their advertising, “ Go see or ask your doctor.”

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