Disruption is Here to Stay

3 Lessons to take from retailer’s recent moves in healthcare

In the first half of 2024, several major disruptors have scaled back their healthcare offerings.  At first it may be tempting for those of us that have been in the healthcare game for a long time to brush this off. After all, these Johnny-Come-Latelys couldn’t have possibly known what they were getting themselves into!  Healthcare is hard. Healthcare isn’t like retail.  Healthcare is local. It would be tempting to assume that they couldn’t handle the pressure we live in on a daily basis; that they were ill-prepared or that these so-called innovations weren’t worthwhile.

These thoughts are tempting because they make us the hero of our own story, but if you feel yourself falling for that trap (or are old enough that the phrase Johnny-Come-Lately didn’t require a Google search) it’s worth stepping back and taking a closer look. Here are 3 lessons we should be taking away from this experiment.

Patients Still Want a Better Experience

It’s important to remember why these retail giants and healthcare-adjacent companies looked to get into healthcare in the first place. Sure, 18% of the United States’ GDP is spent on healthcare, but no one was under the impression that the money was easy to get.

Businesses get into new lines of products and services when they believe there is a demand for those services.  In the case of healthcare, there was a demand double-whammy. Demand for healthcare services had outstripped what was available from traditional providers and healthcare consumers are acting like, well… consumers.

Gone are the days that patients show up on your doorstep simply because you are the closest provider geographically.  They are armed with star ratings, wait times, hours of operation, and so much more information that they can match their provider to their expectations. If they don’t have the experience they desire with you, they’ll find it somewhere else.

Retailers have a leg up in the experience world. They spend all day every day figuring out what their customers are looking for so they can not only get their attention, but keep them coming back. It was not a crazy leap to think that this maturity in the experience realm could be applied to a new line of business.

Innovations Were Welcomed by Patients

It turns out in large part that the disruptors were right – patients were ready for new options. A few examples:

• Telemedicine remains far more popular post-pandemic than it was pre-pandemic. After the Public Health Emergency ended, many of the telehealth flexibilities remained in place and in rare bi-partisan form legislators will likely extend them further. 
• Dollar General’s DocGo program “consistently earned a Net Promoter Score above 90% based on patient feedback.” 
• 64% of US Adults have used a Health App.

Disruptors were giving patients what they wanted. The need was legitimate. So why the contraction? For the same reason they get out of any other line of business: they weren’t making enough money. Enough is the key word here. We may never know exactly what the profit margins were for these services, but keep in mind that they don’t have to be negative for a business to abandon an initiative. They simply need to believe they can generate more return doing something else with that money. Healthcare could have been giving them a 5% ROI, but a promise of a 6% ROI would be enough to get most businesses to pivot to life-saving pharma advancements or selling 10 packs of Twinkies to Costco.

Whether retailers were losing money or just not making enough (which in and of itself probably says more about the reimbursement system than business practices) is irrelevant.  What matters now is that the supply of healthcare has once again contracted while the expectations around experience have been heightened.

Disruption Isn’t Over

The low supply of providers and high expectations of patients demands change. That may come in the form of new disruptors trying new models or the same retailers making a run at things in a slightly different way. The patient base has been disrupted and a new normal hasn’t been established. But why let disruptors have all the fun?

Traditional providers of care can take advantage of this moment. One option would be to adopt what was working for retailers: give patients choices that fit their desires when it comes to convenience and quality. If you’re looking for a place to start we at Bottle Rocket would love to have a conversation with you. 

Click here to get in touch with one of our Healthcare Experts.