Fitness Futures: Retail Locations for High-risk Population Management

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.

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.