Health care is the new retail

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Moving any tenant has its pros and cons, however, moving a medical tenant can generate a totally separate set of issues.Moving any tenant has its pros and cons, however, moving a medical tenant can generate a totally separate set of issues.
Chad Pinnell Managing Director, Healthcare Solutions, JLL, Columbus, Ohio
Chad Pinnell
Managing Director, Healthcare Solutions, JLL, Columbus, Ohio

In today’s ultracompetitive health care, Affordable Care Act landscape, patients expect providers to deliver care on demand and in a manner that’s more convenient for them. Whether it be calling around for same-day appointments, searching for walk-in care, finding an emergency department with a “fast track,” or requesting house calls or telehealth options, patients are behaving more like “health care shoppers.”

Jason Clark Managing Director, Healthcare Solutions, JLL, Los Angeles
Jason Clark
Managing Director, Healthcare Solutions, JLL, Los Angeles

For the first time, we are seeing patients shop around for the cost, quality and convenience they desire. And, it begs the question, “If patients are behaving more like consumers, shouldn’t providers be behaving more like retailers?”

The notion of hospitals and health systems adopting a retail strategy is not entirely new. Many have been doing it for years through partnerships with traditional retailers like pharmacies and grocery stores, but that is only the start. A comprehensive retail strategy that addresses the consumer mindset looks at everything from patient mix to service-line offerings and even extends well into brand reputation and physical locations.

Early adopters are reaping the benefits of building a strong brand, developing loyal “customers” and enhancing access to care, something retail has down to a science. While it has been slower to catch on in health care, we are seeing hospitals and health systems moving toward this approach. One of the more visible signs is the way providers are looking at their physical locations.

Gone are the days of “if you build it, they will come” in health care. For example, medical office buildings used to be located on less expensive land off the beaten path. For many years, that strategy worked. However, in today’s environment of engaging consumers and increased competition, that model is antiquated. Forward-thinking health systems now know the analytical minded, consumer focused methods of a retail professional are best suited for understanding where to place new ambulatory health centers.

Take the University of Colorado Health System, which is one of the few hospital systems that has taken the lead on developing urgent care-style centers in the retail setting. These urgent care-style centers help attract patients by bringing exceptional UCHealth health care providers to their neighborhoods and reinforce UCHealth’s community outreach efforts. One example of this is the UCHealth urgent care campus in the Green Valley Ranch neighborhood. The Green Valley Ranch Center operates as an emergency room and offers an array of comprehensive services from addiction treatment to wound care. Green Valley Ranch is miles away from the main hospital campus in Aurora; however, patients are accessing this location for service due to its convenient location.

All clinical “offices” are purposefully built to provide accessible health services to the public, but also must meet multiple health system goals. A project team should be focused on the same metrics that the most sophisticated retailers in the industry are focused on – supply and demand, competition, building barriers to entry and revenue generation. Essentially, you need to take the view that you are building a retail center that sells health care services.

The same sophisticated business intelligence and tools available to retailers to analyze their real estate portfolios and execute their strategy are available to health systems. They can be used to help quantify and examine current performance, such as volume, patient profiles and strategic capital planning.

So, how can health care providers start thinking like a retailer? Begin by asking these questions:

• Who are my consumers and how will they benefit from my location?

• Does my consumer spend time outside of health care at this location?

• Will the adjacent or neighboring retail stores help my strategic objectives?

• Are my competitors able to out position me?

• Is this location sustainable?

Finding the right location enhances visibility and makes services more accessible. That office suite or piece of land may cost more upfront, but it also opens up so much more opportunity. What retailers already know and health care providers are beginning to discover is that a strategically placed facility goes a long way toward building your brand. Hospitals and health systems need to reach out into the neighborhoods they serve. What better way to attract patients than by establishing a presence right down the street? Not only does it increase access to care, but also it shows commitment to the community, which goes a long way toward enhancing reputation and creating loyalty.

This is a complex journey and there is no one-size-fits-all approach. But after examining these questions and creating a customized strategy, hospitals and health systems can create more opportunities to engage with patients, while also building barriers to entry for their competitors and capturing more market share.

Featured in the June 2016 issue of Health Care Properties Quarterly

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