The Role of Retail in Revolutionizing Health Care, Part IV

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The Role of Retail in Revolutionizing Health Care, Part IV

By Dave Nazaruk - 08/18/2009
In this fourth of a six-part series, Dave Nazaruk, senior vice president, retail business development for StayWell/MediMedia USA, the world’s leading provider of patient education and consumer health information, continues his exploration of the role of retail in revolutionizing health care and the economy.

In the last article in this series on the Retail industry’s impact on the health care system and U.S. economy (Role of Retail in Healthcare PG article 3), we examined the “workflow touch point”: a position as an embedded part of consumers’ everyday routines, including health-related decisions.  Consumers are already in the habit of shopping to pick up their medications, food, and other health-improving products. This workflow integration provides retailers with the unique opportunity to introduce and continually engage consumers in education, awareness, and reminders about their healthcare needs.

In addition to this workflow connection, retailers enjoy two other unique and compelling touch points with consumers:
•    “Relationship”: retailers’ ongoing, loyal, high-frequency interaction with and accessibility to all consumers, which we explored in a previous article (Role of Retail in Healthcare PG article 2) and
•    “Incentive,” the ability to deliver powerful rewards to motivate desired behaviors, which we’ll investigate in this article.

What reward(s), apart from better health and all the positive lifestyle enhancements that accrue from it, will motivate a large number of consumers to participate in a program designed to improve their health status?  The typical health or disease management program uses a very high cost but low participant yield mechanism to acquire, and then sustain, consumer engagement: usually a cash or cash-equivalent incentive that is dangled at program inception and then often not repeated at various points throughout the program to sustain participation.  This type of incentive structure–depending upon how lucrative the initial cash offer is–captures a larger portion of the targeted population at program inception than ever intends to actually participate in the core intervention programs, as they’re usually in it only for that first payoff.  Overall, such programs attract and retain only that very small percentage that is already highly motivated to improve their health status: that is, those that likely didn’t need the initial offer paid to them.

In other words, health plans and employer groups offering these one-time incentive payments potentially pay much more than is necessary to recruit their at-risk populations for health and disease management intervention programs.  Offering additional incentives throughout the intervention phase helps to both attract and retain additional participants, but the cost burden is more than many organizations are prepared to add to the overall program expense.  In addition, though the interventions programs themselves are usually designed from a strong science of behavior change base, the one-size-fits-all incentives used to attract and retain consumers fail to take into consideration what will really motivate the largest numbers of consumers to participate.  So again, the vast majority of people in need of these programs fail to utilize them.

Enhancing incentive response by changing the incentive model through partnership
Many current incentives programs only scratch the surface, resulting in low participation levels among employees or beneficiaries and fail to engage a large portion of those most in need of help–and further fail to sustain active participation among those who do initially respond. This failure is a given, based on the way we think about incentives as well as about the realities around employer funding limitations for such programs. But how might the picture change if we were to:

1.    Enable each consumer the ability to choose his or her own rewards program–that is, effectively creating a sort of U-Promise model spanning multiple reward program-offering companies to allow consumers the option to increase their earned points in programs in which they’re already enrolled. According to Convenience Store News, membership in U.S. loyalty rewards programs has reached 1.8 billion, with the average U.S. household enrolled in 14.1 loyalty programs and actively participating in 6.2 of them.
2.    Remove employer funding hurdles from the equation.

We can achieve both goals by aligning the incentives of two other very powerful parties which also have a vested interest in the outcome of consumer health improvement and who are already intrinsically intertwined in consumer workflow – retailers and manufacturers of health products (Rx, OTC, CPG, and DME).  Some of the benefits for their aggressive participation in the equation include increases in:

•    Store/chain and brand loyalty.
•    Sales volumes of featured products.
    Ability to integrate or enhance existing rewards programs that many retailers already have in place – upwards of 352 million consumers currently enrolled in drugstore, supermarket, and mass merchant programs – to extend to a health rewards offering, giving registered users not only additional points or discounts based on their volume of purchases, but also on their participation in a wide range of health management offerings.
    More efficient, cost-effective, scalable, targeted programs (the holy grail: connecting the right consumer with the right message at precisely the right time), could revolutionize the very practice of consumer advertising, moving it away from mass, scattershot communication (with corresponding massive “misses” in reaching your target audience) to very tightly defined, controlled, and measurable micro communications that your targets anticipate and respond to.
•    Participation in their own employee health programs: retail chains and manufacturers are some of the very largest employers in the U.S., and such retail-driven health management programs could well provide substantial, quantifiable health benefit savings via wider employee utilization at a lower cost than traditional health management programs.

In Part V of this series, “Leveraging Retail’s Influence,” we’ll look at practical ways the industry can utilize the Relationship, Workflow, and Incentive touch points to impact some of healthcare’s most vexing problems.  To read Parts I - III in this series, visit Role of Retail in Healthcare_PG article 1, Role of Retail in Healthcare PG article 2, and Role of Retail in Healthcare PG article 3 . To download a comprehensive White Paper on this topic from Nazaruk, visit Get Role of Retail in Revolutionizing Health Care White Paper.