Positive Prognosis

11/1/2010

Opportunities exist for food and drug retailers in the age of health care reform.

In spite of potential pitfalls with the Patient Protection & Affordable Care Act, many ways now exist for food and drug retailers to capitalize on the situation by leveraging their position — unique from any other sector of the health care delivery system — to make up for deficiencies in the legislation in regard to lowering cost while increasing access for the consumers they serve.

Food and drug retailers are an economic force to be reckoned with, collectively employing millions of consumers, driving between $800 billion and $900 billion in annual sales, and delivering a “total annual economic impact of $2.42 trillion … the equivalent of approximately 17 percent of the gross domestic product … every $1 spent in these stores creat[ing] a ripple effect of $2.93 throughout other segments of the economy,” according to the Alexandria, Va.-based National Association of Chain Drug Stores (NACDS).

Further, these retailers are uniquely positioned to impact health care and to leverage their competencies for enhanced profitability. Retail alone possesses the unique combination of capital and people resources, supply chain infrastructure, creative and technological expertise, and shared collaboration incentives to create a solution for a nation eager for leadership on this issue.

Of all participants in the overarching health care delivery system, food and drug retailers have by far the most direct impact on consumers by virtue of the following touchpoints:

  • Relationship: Access, frequency of interaction and pre-existing relationship of trust and loyalty
  • Routine: A position as an embedded part of the vast majority of consumers’ everyday lifestyles
  • Rewards: Ability to deliver powerful messaging and incentives to motivate desired behaviors

In many U.S. communities, there are no doctors, clinics or hospitals, but there is a food and pharmacy store boasting an existing infrastructure, professional staff, and the data necessary to drive efficiencies beyond other segments of the health care delivery system. Every day, these food and drug retailers directly impact the health and wellness of the consumers they serve, not only through the enormous volume of lifestyle-enhancing and lifesaving medications they dispense, but also through the critical role they provide in meeting practically every other health-enhancing product need, from OTC remedies and nutritional supplements to a wide array of life-sustaining foods and beverages, and even, in many cases, fitness products and medical devices.

To that wealth of products, add the onsite clinical support provided by trained health care professionals, including pharmacists, dietitians, and even nurse practitioners via the retail clinic movement. Retailers can legitimately claim to be on the front lines, guiding consumers through their evolving health care needs — and are therefore best positioned to drive the very development and implementation of the new model of health care delivery in this country.

For these reasons, food and drug retailers have a window of opportunity to transform health care in the United States by participating in a virtual network that provides broad-based population health management programs aimed at wellness, through disease awareness, prevention and management, especially in the crucial areas of obesity and medication adherence. Such a network would effectively dwarf all other health care organizations and media outlets currently competing for share of voice, new models of care, advertising dollars, and emerging new business opportunities in the consumer health care space, amounting to billions of dollars already budgeted for community, media and technology providers that can instead be funneled to retail organizations if the industry acts during this crucial opening to re-engineer health care.

Beyond the positive financial benefits, the resulting network would make a tremendous contribution to public health, with all of the attendant positive publicity and enhanced consumer good will such success would foster. Further, by adopting such programs themselves, retailers would be better able to defend against serious profit margin erosion as a result of rising health insurance costs on behalf of their employees. Ultimately, helping consumers lead healthier lives will spark increases in retailers’ core business of selling food and drugs, as well as creating new and highly profitable revenue streams, four of the most promising of which are detailed in a new white paper, “Health Care Reform: Growth Opportunities for Food & Drug Retailers,” now available from Progressive Grocer at www.progressivegrocer. com/white-papers.html.

Dave Nazaruk is SVP retail business development at Evanston, Ill.-based StayWell Custom Communications. He can be reached at [email protected].

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