QUESTION: In The Voice, you mentioned a 12% - 18% net margin. What kind of investment is required to achieve that financial success?
MINDY: Healthcare Retail is about turning existing traffic into cash-and-carry spending. As with any new business, this requires an investment up-front. We’re seeing, on average, healthcare systems investing about $1.7 million initially with a return on investment in year 3- that’s for a Retail System with an average of eight stores. Our first client, by the way, will be operating 36 stores on their campus by 2006. I realize that kind of investment isn’t for every one, which is why we’re very selective about the clients we pick. We want to set up organizations to be successful. The Healthcare Retail movement is about believing that retail is an annuity - it’s a long-term initiative requiring a strong commitment by senior leadership.

Q: Can you explain that a bit more...
MINDY: Today, there’s a different level of understanding about Healthcare Retail. The industry now sees retail as an annuity with an enormous potential for diversification. First, it starts with the brick and mortar stores. Once that basic retail infrastructure is set, you can then offer everything from retail services to e-commerce to catalogs - you can roll out retail through multiple channels. Retail has many arms and legs, depending on how far you want to take it.

Q: You mentioned there’s little or no resistance to the idea of retail today?
MINDY: In the past seven years, we’ve seen a major evolution in how the clinical world views retailing. Retail is now seen as a major value to the patient experience. The industry always knew that people had life-long health issues, such as chronic disease, diabetes or depression. Lifestyle choices, in regards to nutrition, exercise and education, have also taken on greater importance. What’s different today is the acceptance of products in the cycle of care. Providing a cancer patient, for instance, with products that give comfort is an extension of care. Products aren’t a luxury; they’re really a need. That’s a huge shift in how patients are treated. Healthcare facilities aren’t being built today without also thinking about retail.

Q: Are healthcare systems introducing retail earlier in their expansion process?
MINDY: Yes, absolutely. A lot of healthcare systems are mini-cities. Not only do they need mission-focused concepts like an Oncology Store, Mom & Baby Store or Rehab Store, but they also need convenience products. Some facilities are so large it’s hard to get a bottle of water from one end of the facility to the other. So, yes, retail is on the radar. What’s difficult for many healthcare organizations is to figure out where to start. Retail is not healthcare’s core expertise. So there’s still a lot of education required about building a Retail System and other operational aspects. We call it the’ science of retail’. What’s different today is that systems are looking for this information; they’re asking questions.

Q: And creating a Retail System is critical?
MINDY: A Retail System looks at the entire healthcare campus. It’s the complete opposite of what healthcare has done up to this point. Many hospitals have failed with retail, on their own, because they’ve created silos - a little retail here or there. A Retail System pulls all the cash-and-carry retail together, creating a business infrastructure that allows for economies of scale and measurements. Phase 1 for anyone doing Healthcare Retail is building that infrastructure... getting leadership commitment from the board level, gaining the support of physicians and the front line staff, making sure their facilities are ready to rock ‘n roll... it’s all part of the Retail System. Set up that infrastructure and everything is easier.

Q: What have you seen that’s been really creative around Healthcare Retail?
MINDY: Some healthcare systems have established joint ventures with their physician groups. These groups actually invest in retail, and share the profit. They’re equity partners. That’s been a tremendously innovative way to get everyone involved. There used to be a negative us - them attitude in some hospitals, where administrators and physicians weren’t working together. Retail creates a common bond - providing extended care for the patient while generating revenues for multiple parties.

Q: Have you seen competition within Healthcare Retail?
MINDY: As the movement evolves, it breeds competition. What worries me about any competition is the level of retail expertise. Anyone who jumps into Healthcare Retail, claiming to know what they’re doing and then fails, could destroy the movement... because everyone is watching. The bottom line is... you need to choose a team with lots of experience.

Q: What about customers? Are they responding well to retail?
MINDY: We know for a fact that providing products on site has been directly linked to patient satisfaction. We’ve spoken with a few healthcare organizations who conducted surveys and found that patient satisfaction measurements increased due to retail.

Q: Are the ‘right’ products essential to building that satisfaction?
MINDY: Definitely. Healthcare systems are trying to customize themselves to their patient populations - whether that’s low income, affluent, more seniors, a large mom/baby base. Recently, we’ve been working with a healthcare system that has a big Armenian population. With the right demographic information, indicating cultural preferences in style, tastes, colors, price points, etc., a product assortment can be customized to perfectly fit the different audiences. It’s all about learning how different types of people spend money and why. From a standpoint of Simply Retail, we’re really excited about a new service we’re launching called Simply Products. It’s a pre-qualified product and vendor resource. I think it’s one of the greatest values in our tool kit. We’ll be talking more about Simply Products in 2006.

Q: Any other changes for Simply Retail going into 2006?
MINDY: Based on the need we heard from healthcare CEOs and CFOs, Simply Retail has put together a formal management services agreement. Essentially, Simply Retail will take on managing the operational aspect of a hospital healthcare system. It allows an organization to still own the rights of their Retail System but outsource the day-to-day operations. It’s a major evolution for us - but one, we believe, addresses the needs of healthcare.

Q: You talked about retail expertise. Who is the Simply Retail team?
MINDY: It’s an incredible group. I think, collectively, we have around 125+ years of retail experience. We’ll be re-launching our website soon with pictures and bios of each person. This team knows retail. We’ve all been in the trenches, literally setting up sales plans, designing stores and fixtures, tracking inventory, sourcing and buying products, and selling to customers. We have the retail expertise - and know how to apply it to healthcare. That’s my mantra for 2006: Retail expertise is essential for retail success.