Much has happened since we last sent you an update. Healthcare Retail is fast moving to center stage in the healthcare industry. As we meet with hospitals throughout the country we find more interest in, and excitement for, retail opportunities and new revenue streams.

We have compiled eight years of data - we have interviewed 1,800 healthcare executives, conducted 75 retail feasibility studies, assessed 145 healthcare facilities, and opened 40 stores. And the results are fascinating. Healthcare Retail is proving to be exactly what all of us had predicted: a patient-first, revenue-generating, can't-believe-we-didn't-do-this sooner business strategy.

To that end, I am pleased to introduce our guest columnist for this issue, Preston Gee. Some of you may recognize Preston as an author and industry thought leader on healthcare trends and strategies. Preston shares his insights on the broad theme of retail in healthcare and why the movement is gaining such momentum. We certainly echo his sentiments, and are pleased to bring you information that can help you improve patient satisfaction and increase revenue.

Kind regards,


Mindy Thompson-Banko
President and Founder, Simply Retail, Inc.

HEALTHCARE RETAIL: No Better Time than Now
By Preston Gee

As I view the shifting landscape of the hospital industry, and evaluate the retail model, I am led to this conclusion on the subject of healthcare retail: There has probably never been a better time for hospital executives to consider the evaluation and implementation of retail operations in their strategic arsenal. There are a host of reasons for this assessment, including rising consumerism, decreasing reimbursement, and intensified competition. All these market forces converge to a tipping point of realization that healthcare executives must pursue non-traditional funding sources based on inherent market advantages and proven approaches. Furthermore, as I take an in-depth look at the Simply Retail approach, I am impressed not only by the rapid growth of the model, but by the profound success of those hospitals that have incorporated a retail component into their overarching strategy. Consider some of these statistics from the Simply Retail experience alone:

Retail sales (among Simply Retail clients) range between $600 and $1,000 per square foot. As a point of reference, traditional retail is around $450 per square foot.
The average margin for retail operations (again among Simply Retail clientele) is between 12% and 18%. (Average hospital operating margins range between 1% and 5%).
Investment is relatively low (often less than $2 million and most of that can be capitalized), revenues are high, and ROI is attractive, with breakeven usually within first three years.
Retail represents an excellent source of predictable revenue and higher margins in an increasingly untenable reimbursement environment. Not only is there the opportunity for direct store sales, but retail is a broad-based annuity; a system-wide business venture - with e-commerce, catalog sales, and a wide array of revenue-producing options.
Retail represents a proven way to increase patient satisfaction and enhance physician loyalty, by enriching the overall patient experience and engaging the family in its prime traits of timeliness, convenience, clinical expertise, and follow-on applications of care.
Improving the Patient Experience.
So many times, the focus of discussion relative to healthcare retail focuses on the revenue possibility. As valuable and extensive as that is, the added value to the patient and the patient's family should not be overlooked. As executives with hospitals that have a longer history of retail operations will attest, patients view the value-added retail operations and product offerings as complementary to the care they receive during their stay at the hospital.

The presence of up-scale, professionally-designed, convenience-oriented retail enterprises enhance the overall patient experience. Furthermore, as leading hospitals with a retail presence will note, the retail component serves as an invaluable asset to keep patients aligned with the main medical campus, in a time when the natural gravitational drift is away from the traditional medical campus.

As mentioned above, Simply Retail hospital clients report that the addition of retail on their campus and to their overall delivery system is "complementary in the most favorable way." In essence, the retail component is a natural fit and a welcome addition to the continuum of care and services that patient-centered facilities offer. All these factors underscore why retail applications are in vogue in the healthcare industry, and why it is the newest "new thing" on the radar for strategists and business development executives.

Physicians as Advocates of Healthcare Retail
Retail services not only increase patient and family satisfaction with the overall hospital experience, they have a favorable impact on physician satisfaction as well. Physicians are ultimately interested in the immediate improvement and long-term well-being of their patients. Therefore, it stands to reason that anything that increases patient satisfaction goes a long way with the doctors as well.

Organizations that have robust retail offerings have found that, once exposed to the merits and benefits of retail offerings, physicians are some of the strongest advocates for the concept and for the products. They not only concur with the notion, they readily and consistently inform their patients of the availability of such products and services. Consequently, in a time when hospital executives are scrambling to do anything within their power to increase physician alignment and ensure medical staff loyalty, a retail component becomes a symbiotic avenue for improving relations with one of their most important stakeholder groups.

Retail and Rising Revenue Streams
As noted above - and this cannot be underscored enough - at a time when reimbursement sources, both public and private, are ratcheting down their payments, healthcare retail offers a significant avenue for incremental revenue and improved operating margins. The financial benefit of retail is even more pronounced when one considers the fact that there is no tradeoff or cannibalization with the retail element. In essence, these revenue streams are not only incremental but as experience has shown, synergistic - resulting in even greater revenues from traditional operations, due to increasing perceived value of the overall medical campus.

In that sense then, healthcare retail offers the best of both worlds for healthcare executives; an opportunity to increase patient and physician satisfaction and loyalty, while markedly improving the financial position of the hospital. As the CEO of one of our most successful client hospital systems summed it up, "Simply Retail helped us to see that we can serve our patient far more effectively when we expand our offerings with needed products and services." So what are you waiting for?

Preston Gee is a senior managing director at Phase 2 Consulting in Austin, TX and the author of several books and numerous articles on consumer trends and market-driven strategies in the healthcare field.

RETAIL = PATIENT CARE Are you interested in building support for retail within your hospital? Include your colleagues in the Healthcare Retail discussion. Send Anni Hodroff the name, title, and email address of those you feel would benefit from this information. We’ll send them future issues of The Voice. All names are kept in strict confidence.

Simply Retail, Inc.

227 Colfax Avenue North, Suite 150

Minneapolis, MN 55405

Phone: 612-659-8200
www.simplyretailinc.com