Big consumer brands could attract new breed of patient
Cash plan providers could come to the fore as a result
The health insurance industry has an exciting opportunity to develop partnerships in emerging and diverse areas of healthcare provision – as long as it manages to secure the buy-in of health professionals, consumers and retailers.
Analysts at PA Consulting, a global management consultancy, believe that so-called “retail health clinics” have the potential to provide a wider variety of care for patients, delivering more convenience and greater choice.
In a research paper available exclusively at www.hi-mag.com/retail, Emil Kowalski of PA Consulting writes that consumer superbrands such as Virgin and Boots have the ability to attract consumers to the private healthcare market in a way that has not been achieved before. By setting up healthcare practices in consumer-orientated environments, more care could be delivered to both NHS-funded patients and those covered by private medical insurance (PMI) and other health-related benefits. Self-pay patients will also be able to access treatment at retail health clinics in the near future, the paper states.
PA’s Kowalski said that in the US, demand for cheaper and more accessible healthcare has led to a “proliferation” of retail health clinics, which offer simple medical treatments for walk-in patients.
It is a trend which could be mirrored here, Kowalski contests. An interim report by health minister Lord Darzi on the future of the NHS has prompted a number of private companies to line up to provide such extended access, he said.
Earlier this year, retail powerhouse Virgin revealed it is planning to open its first primary care centre somewhere along the M4 corridor in 2008, with an initial roll-out of five further centres, located across England, by the end of 2009. Supermarket chain Sainsbury’s, meanwhile, opened a GP practice in a store near Manchester earlier this year.
Retail health clinics are likely to deliver a range of services such as dentistry, diagnostics, screening, a pharmacy as well as conventional and complementary therapies. Virgin Healthcare said GP services would form the basis of its offering, and it is in discussions with family doctors to find ways of integrating their practices in their current structures and under their existing contracts with primary care trusts. Although GPs working in the Virgin centres will retain their independence, it is understood that the retailer wants other health professionals in its centres to dress in “Virgin-red” uniforms – a move which would underline the importance of brand in today’s consumer-driven healthcare market.
Although Boots pulled out of the dental provision market several years ago, it is thought that it and other retailers are keen to capitalise on this type of brand equity and the emerging market made up of “cash rich, time poor” consumers and patients who are demanding a different and more convenient form of healthcare provision. Boots, which is already in talks to expand from its walk-in centre in Poole in Dorset, has even said it can provide all 150 high street walk-in centres recommended by Lord Darzi.
Over recent years, other retailers – including Tesco through a joint venture with insurer AXAPPP healthcare – have looked to use their brand leverage to distribute financial products that pay for private healthcare, although some, including Sainsbury’s, have done so with mixed results.
However, Virgin, which has in the past diversified successfully into a range of sectors including health clubs and financial services, is clearly determined to succeed and has hired healthcare heavyweight Mark Adams, the former chief executive of Netcare’s UK operation, to run its new venture. Netcare is the parent company of BMI Healthcare, Britain’s largest private hospital chain. Its UK business was also involved in the government’s independent sector treatment centre programme and Adams’ appointment is a clear indication that it plans to make its mark in healthcare provision.
While a spokesman for Virgin Healthcare said that its plans were still at a “very early stage”, she confirmed that the company hopes to attract both private and NHS patients once the centres are up and running.
However, in his research paper, PA’s Kowalski suggests that the issue of funding is perhaps the “biggest question mark” over the success of retail health clinics in the UK. It is not, however, insurmountable.
He writes: “Is the UK public ready to pay for convenience? […] The limited experience so far suggests that there is indeed a market – provided that assurances of quality and safety are in place – and the overall proposition is attractive.”
Most private medical insurers surveyed by Health Insurance expressed enthusiasm for the concept of retail health clinics. While PMI is concerned largely with secondary care, gaps exist which could be filled, they suggested. Some offer access to private GP services, while medical insurer PruHealth is already paying for SME and corporate policyholders to receive health screens and check-ups at selected Boots stores across the country. However, it is healthcare cash plans which could be an even better fit with retail health clinics, according to Richard Halley, head of sales at cash plan provider HSA.
Halley said: “For the cash plan market, by bringing a selection of primary care services together under one location, this particularly represents an opportunity, especially since many of the proposed services are core benefits of their proposition.”
PA’s Kowalski said he is convinced that a partnership approach could result in a number of innovative funding solutions around retail health clinics.
“By contributing to a consortium-based approach insurance companies can then start to contribute a wider range of products as the market grows and economies of scale develop,” he said. “Products would be developed in parallel to the clinics themselves so that customers would have a choice of self-pay or financial products.”
IN THE BAG – COULD RETAIL SUPERBRANDS DRIVE UP DEMAND?
Source: PA Consulting
A strong and trusted brand: several high-street brands should be capable of extending their services to the provision of healthcare.
Convenience: accessibility is key. High-street retailers have the necessary locations, brands and focus on attracting customers.
Quality of care: existing primary care practices already provide high-quality services. We believe entrepreneurial GP practices are willing to partner with commercial organisations.
Clinical focus: while traditional clinics are doctor-staffed, alternative staffing models are becoming increasingly common and are mandatory for viable retail health clinics.
Value for money: healthcare funding has hitherto been “behind the scenes” for most UK customers. Achieving the right price points will be critical to acceptance.
Funding mechanism: a straightforward funding mechanism will facilitate a seamless customer experience and boost growth and credibility; this is an opportunity for financial services firms.
The basis of this Health Insurance analysis is an independent research paper by Emil Kowalski of PA Consulting which is available at www.hi-mag.com/retail.
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