April 2015: Hospitals Play Catchup in the New World of Consumerism

How do you compete with the independent urgent care or retail clinic operator who opened just down the street from your hospital?

• Find an end cap or free-standing building
• Call your architect and design the space
• Hire a general contractor and get it built
• Hire some providers and a support team
• Send out the marketing materials and hold a grand opening

What could be simpler, right? But you would be hard-pressed to find any hospital executive saying it was that simple.  As John Hamburger said at our recent ConvUrgentCare Symposium, “Simple is hard.”

There are literally hundreds of issues hospitals face when looking at walk-in medicine for the first time.  They include legal issues like forming new legal entities and deciding whether those should be for-profit or notfor-profit.  Does that new business unit fall under the same HR and compliance requirements as the hospital and are pay rates and work schedules handled the same way?  What is the provider model: physicians, mid-levels or both?  Should it be located in a medical office building or in a retail area?  Are we capable of competing with the operational and marketing sophistication of the big retailers or private equity-backed urgent care operators?  How much walk-in care can a market handle and how do we know the market isn’t saturated already?

Adding to the stress is that most hospitals have board members who see walk-in medicine as strategic, but each member’s views are either highly divergent from one another or ill informed.  If you are like most hospital executives, you have too much on your plate already.

Hospitals are aggressively competing with one another, encroaching on service areas and looking at pulling high-dollar procedures into their in- and outpatient facilities via the walk-in clinic funnel. Winners and losers will be defined by the service areas they strategically dominate. Many health systems have reported their best earnings in years (if ever) and the market just closed out a strong winter season. Waiting until financial pressure makes these strategic moves a do-or-die situation may, in fact, be too late for many systems given the 12 to 24 month lag on top line revenue performance.

So if you are the decision maker at a health system charged with areas such as ambulatory service line growth, overall system strategy, innovation, and/ or consumer experience, what are some things you can do to shore up your competitive barriers while moving forward with a solid on-demand medicine strategy?