At the recent HLTH conference, I was able to listen in while two massive retailers described their expanding healthcare efforts. First, CVS Chief Executive Officer Larry Merlo shared his message about how the company will leverage their massive physical facility investment to be within “10 minutes of 90% of America.” Later, we heard Walmart’s VP of Health Transformation, Marcus Osborne describing the first full service health center built adjacent to one of their super centers in Dallas, Georgia. Both of these presentations came on the heels of a flurry of activity around primary care delivery from Big Retail in the last several months.
Some quick background for context and orientation:
- CVS: The company has an ambitious agenda to revitalize their previous investment in MinuteClinics with an evolved concept Larry described as The HealthHub. CVS plans to open 50 by the end of the year and 1,500 (!) by the end of 2021. CVS is building these into existing stores by cutting back the non-healthcare space and inserting a new, combined consultation and curated health products retail area. These facilities will be staffed with NP’s and move beyond just urgent care to provide management of chronic conditions. CVS claims it will heavily promote virtual care as an integral part of the experience and the one service where physicians will be used. They also see an expanded role for the pharmacist, which I have always embraced, and will plan to fully leverage their pharmacy advantages. Curiously, not much was said about their Aetna purchase and I am unclear how this would tie in.
- Walmart: Home of the $4 prescription, the company has opened up its first Health Care store concept. This new effort brings together a wide variety of services including primary care, physical therapy, coaching, behavioral health, labs, dental, and optometry under one roof in a roughly 10,000 square foot space. This is obviously a much more comprehensive offering with significantly more ambitions than its prior investments in retail clinics. So far, these are planned to be adjacent to Walmart stores, rather than a part of the store footprint itself. They see the integration of many services into a “single stop shop” as a key component of the service. Furthermore, in a smart move given the proximity to the store, they will offer health coaches who will literally shop with individual consumers (I personally see health coaches as unrecognized superstars that will help members “keep healthy” in the future). Curiously, not much was said about their Humana purchase and I am unclear how this would tie in.
So what is the motivation for these expansive efforts? What does this mean for traditional care? Traditional health systems? Consumers? Payers? Providers? What bets are being placed and what behaviors are driving these strategic initiatives for the Big Retailers?
Some exploratory commentary for perspective and discussion:
- Traditional Providers: This will be yet another threat on the horizon to the current Big Health players (payer regimes and provider systems) that have not yet met the needs of the market nor consumers. Big Retail has both driven and participated in the huge shift in consumer behavior as the world has moved online. The fact that Big Retail—who already control the hearts, minds, and pocketbooks of consumers—sees an opportunity to innovate at scale. Furthermore, the fact that Big Retail knows how to scale geographically with strong brand loyalty should be very concerning to Big Health. I believe this is only the beginning of the coming disruption.
- Primary Care: Again, current primary care providers who are already seeing their business carved up by consolidation, urgent cares, alternative medicine, mid-level providers, and pretty much any other option with a pulse, should also be concerned that they are being left behind and quickly becoming irrelevant. The wake-up alarm for Primary Care to fundamentally change the model, methods, and means by which care is delivered may have been ringing for 10+ years, but it’s never been more of an urgent bell than now. The time for small, incremental changes has passed; it is now time for a fundamentally new way to deliver primary care.
- Consumer Behavior: Big Retail understands the access, convenience, pricing, and engagement techniques required to move millions of dollars of consumption. Given the historical monopolies enjoyed in Big Health, there was never a need to see the patient as an informed “consumer” with alternatives, or as a “voter” with their feet and their wallets. Again, Big Retail has a big leg up in this area, which will continue to shape the new health “products” that will come to market in the coming years.
- Convenience and Cost: Again, advantage Big Retail. They know how to create convenience (physically and online) and given their size they can drive huge economies of scale. We have also seen that people value these two characteristics more than they do the “reputational trust” of Big Health. The historical monopoly enjoyed by Big Health will be bypassed for the convenience and cost advantages of Big Retail.
- Access and Availability: Same as above. The standard 8-5, no nights, no weekends, and no holidays schedule of traditional healthcare will not suffice in the future. We are seeing tremendous innovation at the scheduling “edge” of healthcare, where disruptive new providers can step in and take market share. Again, for simple conditions these innovators will undercut and take business away from those providers who are unwilling or unable to offer solutions. This is risky for Big Health because they may lose these consumers . . . forever.
- Independent, trusted third party: All of the above convinces me that there is a massive opportunity for a new type of entity to come in and leverage the idea of a “health membership” by creating a trusted health brand that can deliver convenience and cost advantages, as well as a primary health platform at a national scale. And, in my opinion, it will NOT be Big Retail because healthcare isn’t their core passion, they will not be perceived as “independent” given their obvious financial incentives, and the urge to “sell things” to the members will be too overwhelming. Also, as you consider this more deeply, do people really want their health to be entrusted to a big conglomerate with multiple competing interests, shareholders, and other motivations other than their health?
We created Crossover Health to be a tech- and data-enabled national medical group to address the comprehensive Primary Health needs of our members, including proactive, personalized care, as well as guidance and help navigating the costly, confusing, and complex Secondary Care system. We believe that our independence (from financial motivations and from network or contractual obligations), our focus on member experience and health outcomes (NPS in the 90’s with Satisfaction even higher), and our national reach (currently licensed in 40 states) make us a singularly unique entity—perhaps something that has not yet existed at any level of scale in our country (is there anything that you can “join” that keeps you healthy and that is available nationally?). This is actually what drives us, the motivation that pushes us each day, and ultimately is the spark of freedom that we plan to use to start the Phoenix-like rebirth of Primary Care. It is also what will put Crossover Health at the center of the target for “how healthcare should be.”