Redefining Multi-Channel Retailing to Get Results

Health care is top of mind for lots of folks, these days as health care reform seems hopelessly bogged down in Congress. Meanwhile, costs continue to escalate. It's well-documented that providing home care is far less costly, more comfortable and potentially more effective than caring for patients in the hospital. And effective home care for chronic conditions can even help to avoid hospitalization entirely. Home care has been a fragmented industry about which information on effectiveness, patient satisfaction and comparison pricing has been hard to get.

Enter Walgreens. I've written before about the drugstore chain's move to provide in-store clinics for walk-in patients as well as clinics that operate at company workplaces, like Disney World in Orlando and Harrah’s in Las Vegas. In a throw-back to the days when doctors made housecalls, Walgreens is now offering home health services.

Through its acquisition of OptionCare, Walgreens delivers home infusion, respiratory/oxygen and medical equipment services through more than 100 accredited home care facilities in 36 states. The extension into home care means Walgreens can meet its customers' OTC and prescription needs, as well as their needs for infusion services, respiratory therapies and durable medical equipment.

In some ways, the move parallels Best Buy's acquisition of the Geek Squad, which extended the retailer into helping customers make their consumer electronics work. This is a new type of multi-channel retailing. It's not just about store, mail, web and phone orders.

Best Buy's in-home services represent a move out of consumer electronics retailing and into home integration or simply into making stuff work. Similarly, Walgreens in-home services represent a move out of the drugstore category and into longevity or independent living.

Which retailer will be next to see the opportunity to redefine multi-channel and transcend their category?

Drugstores Innovate to Increase Loyalty

Recent conversations with senior executives highlight a huge range of interpretations of customer loyalty and how to get and keep it. For some, it’s about offering discounts or rewarding customers with points toward discounts. For others, it’s about offering free stuff customers may or may not want.

The airlines popularized the the discount version of loyalty programs. American Airlines launched its AAdvantage loyalty program in 1981 and cards and points became the status symbols of the new loyalty. I know people who jump through hoops to fly enough segments to qualify for specific airline bonus programs.

While the programs arguably generate incremental bookings, building positive feelings toward the brand is a big part of the point. So, to see how well these programs have worked, regard for airline brands has to be considered.

Turns out the airline industry as a whole scored the lowest of all 43 industries tracked by the American Customer Satisfaction Index for 2008. In contrast, cigarette companies, wireless service providers, and banks -- not exactly topping anyone's list of favorite industries -- ranked higher than airlines, and were not even in the bottom 3! And airline tickets are a commodity, as the ever-growing number of web tools for finding the best fare demonstrate. So, overall, it's hard to say these programs have worked as intended.

Making it easy to join, and offering discounts for “members” like the airlines and grocery stores do, is one approach to loyalty. Recently, two drug store chains took a different approach by strategically selecting which relationships to invest in. Both have launched new programs that will help promote customer loyalty, even though they aren’t officially “loyalty programs.”

Walgreens just announced that it is offering free visits to its TakeCare in-store clinics for the rest of the year for workers who are laid off and have no health insurance. The assumption is that these workers will find new jobs, and when they do, they will continue shopping (and start paying) Walgreens.

CVS is also investing in a strategic group of customers. Though its partnership with Google, CVS pharmacy customers can now download their prescription and medication histories to Google Health accounts. Like downloads into Quickbooks, the ability to download into Google Health accounts may become standard. Google certainly hopes so. For now, CVS is the only drugstore to offer these downloads, and is betting the early adopters it appeals to are upscale customers who value the opportunity to manage their health-related information themselves, and will consolidate their prescriptions (and other purchases) at the drugstore that enables them to do so.

The urgency surrounding health care cost management and health insurance coverage is becoming a potent source of innovation and potentially of loyalty for retailers. Hopefully, health care providers and insurers will be similarly inspired!

What Healthcare Can Learn from Multichannel Retail

In the ‘80s I was part of a team of consultants that explored retail healthcare concepts for a client. The idea was to evaluate the market for healthcare services and identify situations where consumers would be willing to visit a self-contained clinic to have their medical needs addressed. We showed back then that health care delivery was broken, and that market innovators could provide breakthroughs in the health care delivery experience profitably.

Launched in the early ‘80s, Urgent Care Centers came of age in the ‘90s. These centers are a response to the long times patients typically have to wait to get an appointment at traditional medical practices, and their emphasis on convenient,"good-enough" care makes them an alternative to hospital emergency departments. They fill a need and spawned other health care service delivery innovations.

In-store retail clinics appeared in 2000. Typically staffed by nurse practitioners, these clinics provide diagnoses and prescriptions on a walk-in basis. They repackage medical services available in traditional physicians' office. The core of the concept is a limited range of "get well" medical services, such as allergy or flu relief, which account for the bulk of these clinics' revenue, demand and profitability though they also treat patients who have uncomplicated minor conditions, such as bronchitis and ear, urinary tract, or sinus infections. According to a July '06 report prepared for the California HealthCare Foundation, retail clinics proliferated rapidly, and were forecast to total more than 1,500 by the end of 2008. The market has been largely driven by small start-up chains, such as MinuteClinic, RediClinic and Take Care Health Systems, which run the outlets under agreements with retailers and have had few formal ties to the medical establishment.

As reported in June ’08 on Nurse.com, “Even if we are not in-network with a particular insurance company, the choice is there for a $59 out-of-pocket expense compared to a co-pay of $75 to $100 for an Emergency Doctor visit, where you may have to wait for hours to be seen for an ear infection,” says Anne Pohnert, RN, MSN, FNP, manager of operations for MinuteClinic in Northern Virginia and Washington, D.C. The affordability and convenience of these clinics encourage patients to receive care early, which promotes early treatment and better outcomes.

According to the Convenience Care Association’s 2007 research, in-store and other types of convenience clinics have a 98% patient satisfaction rate. In contrast, patients do not rate hospital care as highly. Business Week reported late last month on research by the Harvard School of Public Health that found only 67% of patients said they would recommend the hospital where they were treated. According to the researchers, “part of the onus is on patients to improve care: Patients need to be proactive -- ask questions. The more engaged patients are, the better the care they will receive and the better the care all of us will receive, because they will drive the change for better systems of health care."

Patients are indeed becoming more assertive about their own care as health costs shift to consumers. It’s clear that different needs are best addressed in different settings – in our family alone, we’ve been to the ER when our daughter broke her leg skiing and when she hyperextended her elbow playing softball. We’ve gone to an urgicenter when my son got a spider bite on his eyelid while we were on vacation. We’ve gotten flu shots at our local Long’s pharmacy.

As healthcare consumers, we all want options that work in respectful, convenient and qualified settings. Specialty retailers like Williams-Sonoma, Patagonia and Lands' End learned long ago that their best customers were multichannel buyers – that is, they shop the brand in their own stores, online, through catalogs, and through their channel partners.

Multichannel healthcare is part of the answer to today's high-cost, broken health care delivery system. Look for savvy providers and insurers to follow retailers’ lead and find ways to offer their patients a variety of experience alternatives and care in a variety of settings.