Category: Trends

Medical Fitness Trends

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.

Prevention and Accountable Care Organizations

In 2012, Medicare is scheduled to implement physician payment reforms to enhance primary care and encourage the formation of Accountable Care Organizations that will manage sizable groups of Medicare beneficiaries’ lives. These ACOs will also include hospitals with fees based upon a formula of cost reductions and quality care results. This will be quite a change from the traditional fee-for-service payment model. Once Medicare gets this ball rolling, the private insurance companies will quickly do the same.

Prevention including annual medical exams, screenings and other diagnostic tests are expected to become routine for everyone in these ACOs by 2014. What is unclear is the role of fitness, nutrition and wellness services in this business model and who is best able to provide these services and at what cost. While physicians clearly understand the benefits of fitness, nutrition and wellness services to improve their patient lives and reduce their demands on the system, current legislation fails to specify a role for this important aspect of wellbeing in the new healthcare business model.

Consumers value what they pay for and clearly the explosion of the health and fitness industry over the last two decades speaks for itself. What has not happened is the focus on improving community health through a wide-scale effort including all the major stakeholders: schools, businesses, healthcare and public institutions. If society is really going to reduce our soaring healthcare costs while improving health, prevention in all forms must be the front-line defense.

For most of my professional career, I have been involved with shaping a new direction for healthcare, which includes medical fitness and wellness as part of hospital services. During those decades, I have experienced the consolidation of healthcare through hospital mergers, physician acquisition and the rapid expansion into convenient ambulatory care centers. The medical fitness industry has continued to grow during this period.

However, for the next generation of medical fitness services to be embraced, these services will need to be:

  • Covered by private health insurance and Medicare/Medicaid
  • Premium reduction and tax incentives for companies that incorporate these programs into their benefit programs

In addition, there will need to be financial incentives for building ACOs and for the physicians and hospitals that participate. Today’s model is one of reimbursement for disease – not financial reward for health. Without a well-planned transition, it will be initially too costly to make this transition.

 

I believe that every ACO will need a network of medically affiliated fitness and wellness centers with certified and trained teams delivering the latest in exercise and nutrition science in environments that also combine rehabilitation and conditioning services. These centers will have to have a complicated business model based upon a capitated annual rate as well as market-driven ancillary businesses. They will be a lot different from the current landscape of small, local fitness clubs and the Ys based upon their complex staff mix, policies and processes, integrated communications strategies and branding. They will

Ten Good Reasons Why Your Community needs a MedFit Wellness Center

1. Provide a channel to an enormous market of health-seeking Baby Boomers.
• By 2005, 1 out of 2 American adults will be over the age of 55.
• Four out of 10 in that group are willing to pay out-of-pocket to maintain their health and physical vibrancy.

2. Expand the visibility, scope and outreach of outpatient programs and affiliated physicians.
• Medical fitness center members represent a huge market of potential users of additional health-related services.
• Locating outpatient programs and physicians on-site provides natural and easy access to these services as required.

3. Provide a new source of operating income.
• Well-managed medical fitness centers consistently generate 15% or more of new net operating income for the general operating fund of the hospital.
• Typically, the money is used to further expand preventive initiatives in the community.

4. Utilize philanthropic donations to create a unique community asset.
• Although a medical fitness center consists of bricks and mortar, it is energetically human in scope and services.
• It offers a satisfying philanthropic opportunity to people interested in vigorous initiatives in community health.

5. Provide a mechanism to enter the integrative medicine marketplace.
• A medical fitness center provides an extension of the wellness continuum and can reflect or extend your institution’s philosophy.
• The center offers a natural, comfortable environment for introducing the professional services of integrative medicine practitioners and also can easily encompass licensed MD medical techniques.

6. Provide a more compassionate reality to your wellness mission.
• Typically, hospitals focus on wellness programming to improve community health, but frequently lack a centralized facility in which to provide these services.
• A fitness center offers a bright, inviting, health-focused environment in which to pursue wellness-related activities.

7. Financially underwrite satellite ambulatory care campus real estate.
• Virtually all healthcare providers struggle with how to operate effective outreach programs to expand and solidify their base.
• Fitness centers produce income to support the development of other synergistic real estate projects, such as senior housing and physician offices.

8. Definitively differentiate your organization from the competition.
• Only 500-600 local hospitals and healthcare systems across the country offer the advantage of medical fitness centers.
• Developing and building a center speaks volumes about your commitment to improving community health.

9. Expand social entrepreneurship role into other community health ventures.
• A successful fitness center project strengthens and enhances entrepreneurial interest and skills at the sponsoring institution.
• An enthusiastic entrepreneurial attitude plays an extremely valuable role in terms of future business growth, even in healthcare.

10. Create healthier patients for the future.
• Medical fitness centers help keep people healthier as they age.
• When these people eventually utilize healthcare services, they generally will require shorter hospital stays and have better outcomes, improving hospital cost-effectiveness.