Target Thinks Retail About Healthcare

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As an MD and MBA, when Joshua Riff joined Target in 2007 to launch in-store clinics, he thought it was his job to teach retail the business of delivering medical care. But when the clinics initially foundered, he was convinced to try another approach.

"We said, let's learn from retail what retail does right, and let's bring that into our clinics. To me, this was a big 'aha' moment -- realizing that medicine doesn't have all the answers," he told attendees Tuesday at the eHealth Initiative conference in Orlando, Fla. Riff currently serves as both Target's medical director and its director of health and wellbeing, a role that includes encouraging the health of Target employees.

The healthcare industry in general needs to do a better job of catering to consumers, Riff said, and healthcare organizations could learn a lot from retail. He shared some of the ways Target is using analytics to improve its clinics' operations and to connect the wellbeing of its employees to the productivity of its stores. He also challenged his audience to "think about population health like a retailer."

Retail organizations like Target and the big pharmacy chains are playing a bigger role in healthcare, partly because of the nationwide distribution they can offer. Consumers are also showing more interest in shopping around for care in an era of high-deductible insurance plans. He compared it to the way guaranteed pension plans gave way to 401(k) plans, which lead to a boom in online trading and financial advisory services because consumers had to take more responsibility for their retirement plans.

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His favorite example of a healthcare procedure that has been almost entirely consumerized is the pregnancy test. Once something a woman could only get at her doctor's office, it is now almost always completed as an at-home test.

Many more consumer diagnostic tests are coming. One innovation he celebrates is the CellScope. A digital otoscope (device for looking inside the ear) that attaches to an iPhone, it can transmit an image for remote diagnosis. A parent whose child suffers frequent ear infections can use this technique to get a diagnosis and have a prescription ordered, if necessary, without the need for an in-person doctor's visit.

Just as consumers are demanding more information about the cost and quality of their own care, employers are recognizing that the "consumer-driven" plans for their employees are really just high-deductible plans in the absence of data and tools for cost control, Riff said.

One thing retail does really well is segment its customers and understand their buying habits, Riff said. For example, the retailers know they need different strategies to appeal to the frequent shopper coming to the store on a weekly grocery run and to the occasional shopper who comes to the store with a specific mission. Another pattern they understand is the convenience or impulse buy -- the additional item purchased by the consumer because he or she is already in the store, like the pack of gum or the magazine at the checkout line.

Healthcare is not so different. Target tried all sorts of promotions when it was offering flu shots in its clinics, but the one that worked was simply a prominent sign in the store -- which produced a 70% increase in people taking advantage of the offer. Many of the patients who got the shot told the same story. They hadn't been planning to get a flu shot, but since they were already in the store… In other words, it was an impulse buy, Riff said. "It was like when you buy gum at checkout." To those in traditional healthcare organizations, he said, "You literally have waiting rooms. Are you advertising in your waiting rooms for these services?"

One of the most important trends in retail has been giving consumers everything-in-one-place convenience, as with stores like Target, where you can buy clothing and hardware as well as groceries. In healthcare, you often go one place for a diagnosis and another for treatment -- just the sort of thing that ought to change in an era of consumerization, he said. Healthcare organizations might also consider hiring executives away from hotel chains, he said. "Healthcare pays better than hospitality, but those people know how to take care of a consumer."

Target has also started tracking an index of the health and wellbeing of its own employees, discovering in the process that employees who believe their manager cares about their wellbeing are happier and more productive. The stores with the best scores for wellness and wellbeing also turn out to have about 6% higher comparable store sales, as well as the lowest turnover rates. By tracking wellness and wellbeing metrics, Target has begun experimenting with replacing managers in stores with poor scores, and early results have been positive for improving store performance, Riff said.

Scrutinizing the drivers of healthcare expense for employees, Target looks at conditions, such as complaints of back pain, for which some people run up much bigger bills than others, to try to pin down what makes the difference. Riff said he also seeks to identify conditions "we should never pay for," such as those that result from easily preventable complications. He used the example of urinary tract infections caused by a faulty catheterization.

In other cases, it makes more sense to look for patterns related to individuals, rather than conditions. For example, a person who makes three emergency room visits in a year is likely to go a fourth time -- for whatever complaint. "It's not the conditions we have to go after, it's the individuals," in order to reduce overutilization of the ER.

David F. Carr is the editor of InformationWeek Healthcare and a contributor on social business, as well as the author of Social Collaboration for Dummies. Follow him on Twitter @davidfcarr or Google+.

Though the online exchange of medical records is central to the government's Meaningful Use program, the effort to make such transactions routine has just begun. Also in the Barriers to Health Information Exchange issue of InformationWeek Healthcare: why cloud startups favor Direct Protocol as a simpler alternative to centralized HIEs. (Free registration required.)