We’re pleased to volunteer with Aging Well Evanston. The volunteer planning committee organizes an annual educational conference for older adults in our community. This May Aging Well celebrated its 20th year, and featured keynoter Emily Rogalski, PhD., who presented her research with Super Agers.
Digital, digital, digital. If you’re wearing an exercise tracker, welcome to the new world. I am curious how many FitBit users input additional data and manage it. For fitness owners and leaders who are also technology geeks, this is second nature. But for most exercisers or those just starting to exercise, digital tools may not be that useful to reach actual goals.
Digital marketing is a different story for business owners. Everyone is using digital marketing. (Hello, website.) What I often see is that many businesses don’t use digital tools to collect valuable information from customers at enrollment or during the prospect phase. Here are four essentials for successful marketing, digital or traditional:
Beware the one-size-fits all software program: it often cannot segment AND include contract information for database marketing. If you have had success, please email me, and I’ll write a case study in a future column. There is a downside to using multiple programs as data is often duplicated or incorrect. This makes it even more important to manage lists and mailings (email and physical) through a yearly promotional plan.
It may seem easy to start digital marketing projects, but it’s difficult to retain quality and professionalism unless you dedicate personnel to manage the data and have a communications plan in place. One way to make content more meaningful is to personalize with photos or video of members (or team members) and their success stories. Make that a part of everyone’s job description, otherwise you’ll never have enough content.
Digital marketing is here to stay and grow. So take the time now to make sure team members understand the communications process for inputting and managing data and collecting great stories.
Ten years ago, we published a historical narrative of Brown Greene with memoirs from his four adult children. For this Father’s day, we re-issued and updated the book for the Greene family, but the story has resonance for other reasons. Creating this memoir was cathartic for John, as his dad died from a sudden heart attack when John was only 12. Although there are many wonderful traits John attributes to his parents, he also inherited heart disease. Given his professional background in wellness and as a cancer survivor in his 30s, John understood early on the benefits of daily exercise. Once he reached 50, he had his first stress test. Knowing that his father died at 56 of a heart attack, coronary care was critical for him. As a home chef focused on scratch cooking, he has been able to monitor his diet. But diet and exercise alone can’t combat our heredity. Understanding family history gives us a foundation of who we are, but looking into our family medical history gives us tools to potentially better our own health and well-being.
EssenceofaMan2015 (pdf)
Start planning now for a Spring 2015 promotion to build leads, sales and ancillary revenues. Last week at Club Industry in Chicago, I had the opportunity to present some thoughts on how healthclubs and wellness facilities could expand their referral network in the healthcare community. We have had success with developing self-referrals through a community-wide event, Choose to Lose. Here are some steps to get started.
First, identify the following:
I. Set Project Goals for Weight-loss Program (8 or 10 weeks)
Losing even 10 pounds can impact a variety of chronic disease conditions.
 II. Project Phases
III. Team/Resources
IV. Final Analysis & Results
PLANNING – Thought Leadership
PLANNING — Program Content
FACILITY PLANNING — Sign up Week & Weekly Weigh-ins
Given that there are more than 8,000 vendors serving the corporate wellness market, how do health clubs or wellness centers begin to differentiate their services? In reading a recent article in Modern Healthcare (May 26 issue), I was interested to learn that of the 8,000, four companies account for less than 15 percent of market share. This leaves plenty of opportunity for other wellness providers including your business to partner with small, medium-sized local organizations. The article didn’t mention companies like Virgin Pulse, which has 200 international clients with 1 million participants, so product differentiation is key.
Many clubs already partner with local businesses by offering a corporate discount on membership fees or providing a la carte wellness services, such as fitness screenings or assessments. I believe your club has a better opportunity to make lasting change by first modeling a culture of wellness among your own employees and providing targeted chronic-disease management programs. In this article we’ll go through some key steps to create your own corporate culture. In our next article, we’ll cover developing chronic-disease programs.
By modeling a wellness culture within your club, you gain first-hand knowledge of how to start planning with local businesses, and eventually will have key results to promote. First, consider these five steps:
Last year, we were honored to receive a Healthiest Employer award in the category of100-499 employees for a project we had managed for 12 years. We were acknowledged for complimentary memberships, group activities, rewards-based incentives and biometric screenings.
But actually we had spent years developing a healthy workplace environment that entailed more than just screenings and free memberships. We worked from the top down to communicate to our team that we were addressing all aspects of wellness for healthy living. Whether it was establishing a 401K plan to assist with savings or reviewing safety procedures, all of our team communications, trainings and policies were part of an overall strategy to support the mission and vision of the business.
In addition, at the start of each benefit plan year, our communications tactics included itemizing all benefits for full-time and part-time staff in an overview of their hidden paycheck. For a wellness program to really take root, it needs to start with benefit plan design and a strategy to communicate mission and vision of the organization. Ultimately, our goal was to become the No. 1 employer of choice given the competitiveness in the fitness and spa industries for outstanding employees.
In launching our employee wellness initiative, we believed it was important for all staff to take part in our branded 5 Alive program, which was also a key membership benefit for the public and an important part of the Center’s retention efforts. With each membership, we offered five essential appointments:
Our goal in developing 5 Alive was to reinforce our mission of improving health and wellness for the public and our company. We also didn’t want to overlook housekeeping, childcare or spa personnel who may not have focused as much on their personal health and wellness as our fitness team. We also believed every staff member should have first-hand knowledge and experience in talking about 5 Alive, as every single employee was responsible for member satisfaction and sales.
In addition, we partnered with our health insurer to provide the entire employee wellness program online. We offered incentives through quarterly drawings (gift cards) for participation, with the 5Alive program being an important component. At the end of the first year, those team members who successfully completed all steps outlined for ACE were eligible for a discount on their monthly medical insurance premium.
Your team is your greatest resource, and you want them to know that helping them take care of themselves and their families is a priority. An employee wellness program is just the beginning, or at least just one aspect of a multi-level planning and execution strategy to create a wellness culture.
For a free outline on our 5Alive communications program, sign up on our website: https://www.medfitpartners.com/contact.
Walgreens, Blue Cross Blue Shield of Kansas City and other major insurers such as WellPoint, Humana and United Healthcare have something in common that should pique the interest of the health and fitness industry. These companies have launched new retail locations to provide and sell products and services to attract more wellness consumers. Specifically, their goals are to capture more of the $5 billion market for primary care services.
For some insurers new retail locations in neighborhoods are offering urgent care, occupational medicine, physical therapy and other similar services. For others, new store formats to sell insurance products including fitness and wellness classes.
Walgreens, which operates more than 6,000 stores and 700 medical clinics, is extending its pharmacy and medical personnel into the growing field of high-risk population management. For LiveBlue of Kansas City Blue Cross, two new locations are selling insurance in a more consumer-friendly environment that uses the carrot of providing yoga classes and healthy living seminars. With different service and retail models, these businesses can provide new accessible locations for managing the most costly high-risk patients.
Other national retail clinics have jumped on this bandwagon by linking with major health systems to provide care to patients. Both the Henry Ford Health System and the Cleveland Clinic have relationships with CVS Pharmacy in-store clinics for basic primary care services. What if other national retailers decided to tap into this market as well?
Whole Foods would be a logical candidate, along with other big box retailers (Walmart) looking to repurpose space and attract traffic. How could these new retail medical locations expand and deliver fitness, nutrition and weight-management services as extensions of their brands? How might it impact the fitness industry?
I believe the fundamentals include:
1. Dedicated, visible space-An esthetic environment distinct from the dominant retail theme is a necessity. The space needs to include a multi-purpose classroom with resilient flooring, personal instruction area, meeting room and smaller spaces for counseling and testing with an exercise physiologist as the lead.
2. Exercise Software-Software and apps currently provide appraisals and exercise biometrics (e.g., mapmyfitness.com) for healthclubs and individuals. However, a system needs to be developed for graded exercise programs based upon an individual’s health history of chronic conditions, medications and capability. These guided exercise and nutrition programs will need to be linked to the Electronic Health Record (EHR) providing consistency in managing diet and exercise for the care clinic provider. Exercise is Medicine through the American College of Sports Medicine is working on a Prescription and Referral Tool for healthcare professionals to link to the EHR. Given HIPAA requirements, it’s not clear how qualified fitness professionals would utilize the tool this stage.
3. Rewards-Money talks. Customer loyalty programs tied to individual compliance with established health and exercise goals could go a long way to stimulate and maintain compliance among low-interest participants.
4. Relationships with ACOs-I believe that an ACO will be the treasurer for paying out a portion of their bundled payments for vendors providing prevention and wellness services. These fees would likely be based on a formula involving capitated rates, frequency of use data and patient compliance factors. For retailers, payments may be a new source of income.
5. Strategic Site Selection-With so much commercial real estate, medical retail needs to follow the systematic approach used by other retail brands. This approach consists of knowing the target demographics and location criteria of higher volume comparables. For example, MedFit has developed a site selection model for urgent care clinics with more than 20 site-specific variables to forecast expected patient volumes.
The expansion of prevention and wellness with national retailers would augment the efforts of traditional fitness providers, i.e., commercial clubs, YMCAs, public recreation and medical fitness centers, capturing the enormous market of non-healthclub users. For these consumers, this expanded universe of locations would increase access. Combined with the correct mix of frequent communication, the numbers of Americans that could regularly receive sound exercise and nutrition guidance would push the national fitness club participation rate above the current national average of 20 percent, accomplishing a critical goal of the Affordable Care Act.
The first quarter of 2014 is nearly over (and hopefully that is true of our winter!), so it’s a great time to assess if your strategies are on track to make your fitness or wellness business better this year. Fine-tuning your programs and communications tactics can better position your club as a part of the new healthcare delivery model. Although it is unclear how physicians and hospitals receiving bundled payments may pay for prevention and wellness services, it is clear that they will need to focus more attention on an individual’s complete health. Let’s start with who is actually in your club and how you can leverage these relationships strategically.
1. Connectors, Mavens and Salesmen
Malcolm Gladwell shares case studies on “How Little Things Can Make a Big Difference†in his 2000 book, The Tipping Point. We assigned this book to a group of fitness center managers, and asked them to formulate their own tipping points related to primary goals for their center’s business.
We especially wanted to increase awareness of chronic disease issues in the community, as we had purchased a series of ACSM exercise protocols that we believed create a key competitive advantage. But first we needed the team’s help in identifying connectors, mavens and salesmen among the membership to help spread our message–to create our own tipping point. Having your staff formulate a plan to identify such customers for key message delivery is an effective group exercise that can energize your current plan or be part of your planning process next year.
Our primary goal was to identify the Mavens, whom Gladwell describes as the “information specialists, or people we rely upon to connect us with new information.†These prime referrers want to solve other people’s problems. While probably not motivated by actual referral rewards, this group still needs nurturing. Our goal was to identify this type from members who had responded to a Loyalty Survey or who had been recognized in Leader Circle groups (based on weekly attendance). Ultimately, we wanted to discover and promote their personal improvement stories, and to develop talking points and incentives to spur them on to more referrals.
The other key groups in the Tipping Point concept are connectors and salesmen. Connectors typically make introductions in social circles because they have so many contacts in their network. Perhaps this valuable group is already active on your Facebook page. As you already know, salespeople are persuasive and charismatic, and you have them on staff.
You need all three groups working in concert to position your club for health care. But you also need “the stickiness factor,†as coined by Gladwell. That factor is the message. We’ll describe more on key consumer segments and specific messages in a later article.
2. Strategic Visioning
Change is rapidly occurring in the $2.7 trillion health care industry–especially in delivery. How will you be part of that change? When did you last take time to dream about your business, to dream with your key managers? Ask your core team members to explore their high point in working for your club, a time when they were operating at peak performance. Have them tell the story and describe the most important and helpful factors in the organization and the results. What can you learn from each other’s experience in how change occurs? Capture these details as you prepare for other changes that will be occurring in our industry. Start by asking what was it about the organization or team members that made a positive experience possible? What were the best qualities, skills or values that made it a high point? Write them down.
3. Asking Better Questions
Are you asking the right questions of your employees, your customers and yourself? The answers we get are often determined by the questions we ask. If we ask irrelevant questions, we get irrelevant answers. If we ask better questions—empowering questions—we get empowering answers. Marilee Adams, an executive coach, has developed a system of tools called Question Thinking that she outlines in her book Change Your Questions, Change Your Life. In a future article we will use these tools to dive into new member orientations and health and fitness assessments. Get started with your team with these questions: What could or should our competitive strategic advantage be? What do we have the ability to create right now? In mid-term? In the long-term?
4. Living the Vision
How has your business vision changed? In an annual all-staff meeting years ago, we used the FISH! Philosophy video, which describes how Pike’s Place Fish Market in Seattle became world-famous. I still relate to its simple idea of coming together as a team to live the vision. Successful teams are guided by three principles:
Be it: make the vision part of everything you do
Commit: make a commitment to bringing the vision into your place of work
Coach it: teach others about the importance of the vision, and have fun in doing it
Are you modeling a culture of wellness and fitness among your employees? If not, how do they feel about delivering health and wellness to your customers, other clients and possibly mavens in your community? An upcoming article will explore corporate wellness programs and their role in the new healthcare landscape.
5. Leaders Lead
Leaders focus on people and ask what and why. They develop and innovate. Are you ready to lead this next innovation? It’s going to require a longer-term perspective and resources to create change in your club and its position within the community. We’ll give you tips on how to get there.
Watch for our series for the Club Insider and excerpted here, Fitness Futures and Healthcare Delivery. We’ll cover:
Developing Healthcare Referrals: Sedentary, deconditioned and overweight. You can reach this market more effectively with lifestyle programs that can expand your ancillary revenues. But first you need to use the right message to get referrals from healthcare professionals in your market.
Your Club, Your Community: The healthcare environment is changing, and your role as a top fitness provider is a community asset. Have you identified community initiatives that can help you showcase your facility to residents and the health care community?
Going Corporate: Are you modeling a culture of wellness among your own employees? One of the best ways to develop a corporate wellness program is to practice what you preach.
Sticky Messages for Segments: Understanding who your customers are is one of the ways you’ve been successful in your business. Do you know what other customers you can reach in your market area? We do. With our Prizm analysis model for medical fitness center consumers, we’ve identified 10 top segments you can reach with lifestyle programs and targeted communications.
Measure and Evaluate. Assessing your programs is yet another way to communicate your results to your customers and potential customers. Plus, it makes smart business sense for those healthcare constituents you want to entice.
Use these ideas to start brainstorming on changes occurring in our industry. We welcome your thoughts and feedback. Sign up on our web site to get a list of analytical questions to help maximize your strategic competitive advantage.
At MedFit Partners, our assessment of market conditions affecting medical fitness centers contains both challenging news and exciting opportunities for 2014.
1. Hospital-financed projects continue an anemic growth trend. During the last 10 years, health care has been undergoing a transformation at all levels. Priorities have shifted from local to regional perspectives as providers have merged to create larger, more efficient systems. In 2009, there were 52 hospital mergers, 72 in 2010, 90 in 2011 and 105 in 2012. The goal is market share with the correct cost mix of physicians and vendors providing outpatient services. In most markets, medical real estate development becomes too expensive and competitive with other medical users to support the returns from a medical fitness center. Without a pressing mandate, it will be difficult to gain hospital executives’ attention.
2. The word wellness is everywhere, especially in major urban markets. There is an amazing range of retail options in fitness, personal services, dining, grocery and information under the wellness umbrella. New entries arrive daily providing a variety of choices and price points for the knowledgeable consumer. Messaging, multi-channel marketing, outrageous customer service and outcome reporting are especially critical today in creating demand and differentiation for the medical fitness product.
3. Collaborations and networks are critical for improving community health. The 2008 and 2013 reports from the Robert Woods Johnson Foundation, Commission to Build a Healthier America, speak to the importance of making healthcare more responsively linked into the development context of our communities. To me, this means more public and private collaborations as well as integrated fitness networks with all types of providers. Just as there are “food deserts†there are “medical fitness deserts†that need our services to improve community health. Our goal should be to substantially increase the national fitness membership demand above the 20 percent participation rate.
4. Prevention and fitness under Accountable Care Organizations (ACOs) may provide opportunities for medical fitness centers. Obamacare supports the creation of larger networks of insurers, hospitals, physicians and providers under ACOs. A limited number of trials are underway, providing medical coverage to a large group of lives paid under a bundled provider payment model. If the goal is to reduce the demand for medical services by managing chronic issues, what is a reasonable amount that could be allocated to prevention and fitness services provided by a vendor? If the average per capita medical cost in the United States is $8,601, what portion should cover wellness activities to reduce this number? This critical question needs to be answered by medical fitness center member research.
5. Orthopedic specialists and their ancillaries will continue to be major champions of medical fitness, but in smaller, more integrated settings. Driven by demographics, more active lifestyles and obesity, the demand for orthopedic services will continue at high levels, providing pre- and post- treatment opportunities. Medical fitness providers should be able to take on the role of outpatient therapy, extending patient care well beyond the typical reimbursement period.
6. Technology and its application to chronic-condition management for all age groups is a critical necessity for all fitness providers. Currently, one out of four adults has multiple chronic conditions—a focus of high-risk management strategies by ACOs. To control medical usage patterns, chronic patients will need to become more physically active under uniform, condition-based exercise guidelines applied through a software solution. Fitness providers will need to have certified personnel capable of translating and applying this technology to the specifics of the consumer and the ACO.
7. Weak economy continues to negatively impact sales and retention. The fitness industry is definitely feeling the impact of the weak economy—14 percent of adults out of work, weak consumer discretionary spending and static real estate prices. Simultaneously, there has been a dramatic increase in the supply of health clubs at all price levels. In some markets, fitness clubs are as prevalent as coffee shops. The result: consumers have a range of choices, and they are willing to try other fitness providers that have excellent staff, programming and clean facilities.
With hospitals increasingly focused on core businesses, there is a growing trend to sell and lease back a variety of non-core real estate, including medical office buildings, surgery centers and senior housing. Which raises the question, should your hospital capitalize on the real estate value of your medical fitness center? If it is an underperforming asset, the organization may consider selling it and developing a strategy to achieve the financial results required for future disposition.
During the last two decades, more than 700 community hospitals in the United States have developed medically integrated fitness centers or wellness centers. These hospitals have invested more than $3 billion in real estate. While many centers have produced sizeable long-term economic benefits, most have drained financial resources. Often rationalized as a community asset or a marketing channel for the hospital, many of these retail service businesses simply have lost their energy and failed to produce long-term economic benefits.
Within the last 15 years, the healthcare real estate market has exploded. Both public and private real estate investment trusts (REITs) as well as private investors have acquired all types of healthcare real estate, including such special-purpose facilities as free-standing emergency rooms. The movement away from the fortress mentality of owning everything has been steady as executives have sought to capture values in these locked-up assets.
To benefit from this trend, owners must significantly improve financial performance to achieve a net operating income comparable with other medical real estate holdings. For medical fitness centers, we project an outside investor will value a facility at a 9 to 10 percent market capitalization rate of net operating income. This rate is greater than the target for a medical office building (7 to 8 percent) due to the special-purpose nature of the medical fitness center facility. Depending on your organization’s credit, both targets may be reduced under a sale/leaseback transaction.
If your center is not earning at least an 8 to 10 percent return on total project costs, it will take strategic planning, execution and communication as well as time to significantly improve financial performance. To achieve the positive consecutive returns that will allow an outside investor to value a potential acquisition can easily take at least three years.
For those organizations with viable medical fitness centers interested in capitalizing on their real estate values, the timing couldn’t be better. With real estate capital inflows at record levels and portfolios shifting to proven income-producing acquisitions, investors are becoming more interested in medical fitness centers. As with other real estate transactions, proper due diligence documentation and esthetic property improvements should be completed prior to solicitation.
As management consultants, MedFit Partners brings the focus to achieve financial results: we adhere to proven procedures and training programs to improve and empower staff performance, and we plan and execute strategic initiatives through powerful communications. MedFit Partners helps you find the answers needed to achieve your goals. We offer property evaluation services as well as placement of your transaction.
There’s a lot of misleading information when it comes to management companies and the results that you can expect for your medical fitness center business. Some over promise results without first assessing your business environment. Others may promote their recruiting ability, but then find it difficult to hire in the marketplace. Or perhaps the company is able to recruit personnel, but their corporate culture doesn’t focus on training, which in the high-turnover field of fitness leads to an even greater rate of turnover.
When it comes to evaluating existing services, your primary consideration should be whether you are getting your money’s worth. At MedFit Partners, we believe a valuable management company provides 10 major benefits:
1. Profitability. As an operating business, it is critical that net operating income consistently exceed financial expectations of comparable investments.
• Look at your medical fitness center as another stock in your portfolio: What long- term return do you expect to achieve?
• Are you generating cash returns of 10 percent or greater?
2. Revenue Maximization. To achieve superior financial results, productivity must be high for the many selling areas in your center. Programs, service mix and effective pricing strategies are important in achieving the performance you want. As membership numbers mature and stabilize, real dynamic growth over time must be found in other areas such as ancillary businesses.
• Picture your center as a department store: what kind of productivity are you getting from each space?
• Are you getting a minimum of 25 percent of gross revenues from fee-based programs, such as personal training, spa services, retail, parties and rentals?
3. Effective Expense Controls. Producing net operating income requires effective expense controls tied to business standards. Personnel costs, marketing/advertising and real estate are the top three expense areas. Your payroll, including management fees, should not exceed 45 percent of gross revenues. (Benefits for fitness management staff are typically half those of the hospital’s personnel.) For a mature center, marketing/advertising should be approximately 5 percent, while real estate varies depending on numerous factors.
• Can you consistently depend on proper budgeting and codifying of expenses, accurately reported on a regular and timely basis, to immediately pinpoint and address any potential problems?
• Are solutions presented for seasonal business cycles and readjusted for growth?
4. Dynamic Integrated Communication. For a consumer-based retail business, the competition for customers’ attention is daunting. Physicians within your organization and in the community are a key target audience.
• Do your communications and public relation strategies focus on creative, informative and professional promotions of your activities and services–as well as the medical fitness difference?
• Are there different messages for the different mediums as well as key consumer segments?
• How effectively and frequently do you communicate with physicians? Are they involved in programs at your facility? Do they recommend your programs and services to their patients?
5. Property Management. Skilled property managers and operators must have the experience to know what works within the physical environment and what doesn’t. The ability to participate early in the design/development stage can identify cost-effective solutions and provide checks and balance during both the design and the construction phases. Experienced operations managers have the ability to rectify existing design issues and recommend solutions during renovation and expansion planning.
• Does your management company provide a regular interior design review?
• Are purchases of equipment and replacements consistent with the design scheme?
• To maintain a state-of-the-art facility and consumer appeal, does your management company budget for regular renovation and updates?
6. Innovative Business Development. The definition of health care is broadening to include businesses once perceived as beyond the scope of traditional services. Spa and integrative medicine businesses are in high demand by consumers and are a logical business extension of wellness fulfillment, but they may not initially seem like a good fit.
• Does your management company have the knowledge and experience to successfully introduce integrative medical practices and clinically oriented spa services in the context of your organization’s culture?
• How do they win the support of established health care providers?
• How do they evaluate real estate for expansion or mixed use?
7. Productive Training. Wellness center personnel require continuous training to be effective at delivering service to members.
• Does your medical fitness team participate in regular group training on a broad spectrum of topics ranging from customer service standards to business practices?
• Are training tools provided to front-line managers for their daily interactions with their team, as well as department meetings?
8. Satisfying Solutions. Utilizing a management company to operate your medical fitness center follows standard business practice for not-for-profit entities, including hospitals, to contract with outside firms to manage non-core operations.
• Is your management company focused on creating a culture unique to your organization? Or is it applying cookie-cutter solutions?
• How do they work with health care leaders to provide clinical integration and employee programs consistent with the medical fitness service mix?
9. Measurement and Evaluation. Since “what gets measured gets done,†it is important that your management company measures what matters for your business.
• What performance indicators are important to your organization?
• Given that most not-for-profits monitor expenses, what adjustments are made for evaluating this retail business?
• Are results for your center in line with other like-sized, similar market projects?
10. Research and Development. Keeping abreast of the latest in consumer attitudes and spending trends in key business categories isn’t an end in itself. Applying this information to your center and testing new programs and services are critical in maintaining and attracting new members.
• Does your center consistently introduce new products and services geared to your market demands?
• Does your model support continuing education for key managers?
When your management company provides all 10 benefits, you know that your business partner is focused on you. Hands-on responsibility means implementing solutions before potential problems have the opportunity to blossom. The best client-focused management firms provide answers before you even think of the questions.
