Here’s a simple question I ask myself all the time:
It’s a pretty important one for me—and you—to be able to answer, and I'll share my prediction at the end.
On the one hand, you’d be on safe ground arguing that health care is becoming a retail industry. You could mention the rise of insurance exchanges, higher deductibles, price and quality transparency, and you’d reason that individual choice and responsibility are more important than ever. Then you’d note the proliferation of disruptive market entrants reshaping the choices individual consumers have: mobile health apps, freestanding diagnostics, and primary care at WalMart to name a few. There’s plenty of evidence to suggest that tomorrow’s market will be dominated by nimble, low-cost point solutions.
But you could just as easily argue that population health management is the most salient market trend. You’d recall the continued migration to risk-based payment and the massive investments in care transformation hospitals of all types are making. You’d point out how important controlling the total cost of care is to securing preferred status with employers and insurers. And you’d suggest that the national wave of consolidation and integration is a signal that the future of health care is in big, integrated networks that can manage entire populations.
Is either view right? Could they both be right? And regardless, what should the majority of hospitals—neither agile enough for a retail world nor integrated enough for a population health world—do to prepare?
The truth of the matter is, retail medicine and population health are real, and probably around for the long haul. The good news for hospital leaders is that many of the strategies that will be successful in a retail setting will pay dividends in a world of population health management as well.
We identified three strategic objectives in particular that are relevant in both types of markets: convenient access, lean cost structures, and a smart partnership strategy.
Convenient access matters for more than patient satisfaction
Why convenience matters in a retail market: The most obvious feature of many "retail" health services is convenience. You can go to a CVS clinic after work or on the weekend, and you don’t need an appointment. Virtual options allow patients to interact with physicians and other providers without fighting traffic or spending an hour in the waiting room.
Our research shows that convenient access is one of the top priorities for discerning consumers, but it’s not just about improving the patient experience. More organizations are finding ways, whether through one-off payments or subscription services, to drive direct returns from improved access.
Why convenience matters for population health: Access has indirect benefits too, and one of the most important is its impact on patient engagement. When it’s easier for patients to get care, or even just information, when they need it, they’re more likely to follow care plans. That means better outcomes and lower total costs. Patients are also more likely to stay within your network if they can always access it, so you can be confident that the returns on your care management investments will accrue to you, not your competition.
Lean cost structures mean strategic flexibility
Why lean cost structures matter in a retail market: On the surface, this one is obvious. Of course you’re in a better spot if your organization runs leanly; lower costs mean higher margins. But the imperative to control operational expenses is even stronger in a retail environment where price competition is rampant. It’s a lot tougher to match or beat your competitor’s rates when you have an overgrown fixed cost base and inefficient operations to prop up.
Why lean cost structures matter for population health: Investing in care transformation isn’t cheap, and there’s a real tension between keeping today’s prices low and finding the resources for long-run population health efforts. But the more you do to keep your own expenses under control, the more freedom you have to make new investments without driving your prices to uncompetitive levels. It’s especially important to use scalable approaches to population health to get the most out of costly labor and technology.
A smart partnership strategy supports multiple ambitions
Why a smart partnership strategy matters in a retail market: Most hospitals don’t already have the network of low-cost, high-convenience facilities that the retail market demands. And it’s probably not wise (or even possible) to build all those facilities from scratch.
The right partnerships can fill some of those gaps. Perhaps it’s an academic center teaming up with a community hospital to offer a low-cost option closer to home. Or maybe it’s a physician network partnering with local urgent care centers to expand access. No matter the form it takes (and it’s not always M&A), a smart partnership can strengthen any organization’s appeal to retail consumers.
Why a smart partnership strategy matters for population health: Not even the biggest health systems can observe, let alone control, the entire continuum of care. But being a successful population health manager means being responsible for all of a patient’s care—even if someone else is providing it. So partnerships that reduce fragmentation—of data, of care pathways, even of incentives and accountability—are a big part of successful population health managers’ organizational identity. Organizations can stay legally independent, but they can’t stay isolated.
So who do I think will be the big winners in tomorrow’s market? They won’t be the big, or the small, or the medium-sized providers. They will be those whose doors are open widest, whose options are least constrained by uncontrolled expense, and whose relationships with the broader market yield value, not just leverage. Those are no-regrets strategies. I hope they are yours.
Access to Care,
Regionalization and Networks