QUANTWORKS, INC. WHITE PAPER

THE RETAILIZATION OF HEALTHCARE Lessons Learned from Modern Retail

How forecasting patient demand from new sources of data can impact delivery of care, the patient experience, healthcare outcomes, costs, and revenues.

Quantworks, Inc. | www.quantworks.com Table of Contents

Abstract ...... 3

Background ...... 4 The Struggle to Retailize ...... 4 Retailization of Healthcare ...... 4

Trends ...... 5 Non-Traditional Competitors Rise Where Healthcare Falls ...... 6 Patients are Powerful Consumers ...... 6

Solution ...... 7 Patient Experience ...... 7 Prioritize Services & Supplies ...... 8

Conclusion ...... 9

Quantworks, Inc. Forecasting Consumer Demands Improves the Trajectory of Healthcare Retailization 2 Abstract

Healthcare is struggling to meet modern demands of a consumer-driven industry. What was once a market that survived without the need to attract and retain patients, providers now depend on acquiring customer loyalty for success. In order to thrive in this new landscape, healthcare providers must adopt a retail mindset and playbook that incorporates the entire patient journey or the totality of patients’ experiences and needs beyond the doctor’s office and their coded health care records. Surviving and thriving requires collaborating with experienced forecasting and data analytics companies like Quantworks, Inc. who have proven success in the retail market and understand the dynamic trade-offs of consumer behavior. By utilizing data science and artificial intelligence, healthcare organizations can strategically optimize what consumers want, where they want it, and when – a model that will reduce costs and improve outcomes for providers and patients. Quantworks, Inc. helps organizations gain a competitive edge by analyzing and converting consumer and internal data into cohesive plans that target patient demands for services, products, information, cost transparency, accessibility, location, and hospitality.

Quantworks, Inc. Forecasting Consumer Demands Improves the Trajectory of Healthcare Retailization 3 Background Healthcare systems are attempting change without integrating retail knowledge and best practices across their organization, leading to skewed outcomes that do THE STRUGGLE TO RETAILIZE not reflect overall customer satisfaction or value.

Amazon, Google, Apple, and Netflix are making waves

across industries as they have shown the power of harnessing consumer behavior and consumer demand RETAILIZATION OF HEALTHCARE data to shape products, services, and customer loyalty. However, despite these and other proven models to The rise of consumerism in healthcare stems from a shift ‘retailize,’ very few healthcare organizations have made in power away from providers to patients, driven by progress in becoming more consumer-centric; only 8% technology, increasing costs, declining reimbursement of hospitals exhibit the consumer-centered behavior rates, and demand by patients for greater information that’s necessary to succeed, but 90% of hospitals see transparency and better care options. patient experience as a top priority.1 Simply offering online or mobile applications and connecting with Consumers want convenience and care wherever and consumers on social media are tactics that fall short whenever they want it. They want personalized and of a strategic path toward transformation. Providers seamless services that meet their specific needs under know patient experience is a top concern, but few steps one umbrella. And consumers expect price and service have been made to understand and address consumer transparency to make more informed decisions. The demand, and most efforts to systematically improve retail market is a model worth understanding because patient experience are disjointed or blindly initiated. retail leaders have mastered customer-first experiences as they faced the power of technology, pressure on margins, and greater customer-choice. One lesson retailers can teach the healthcare industry is how to engage their patient community. Retailers no longer 90% of hospitals see simply engage consumers at the point of sale. Instead, patient experience as a they engage consumers in their past, present, and “ future journeys. In addition, they now engage customers top priority, but only through multiple channels, such as voice, web, mobile, and kiosks. This continuum of engagement avoids the 8% exhibit the missteps of episodic engagement and allows retailers consumer-centered to capture better quality data that can be used to more behavior that’s necessary accurately predict services, supplies, and care delivery attributes that fit their needs. to succeed. ”

Quantworks, Inc. Forecasting Consumer Demands Improves the Trajectory of Healthcare Retailization 4 TRENDS

In order to grow and thrive in a consumer market With drug stores located within three miles of and become more patient-first centered, healthcare two-thirds of Americans and hospitals only 35 miles, it organizations must think like retailers and design is no surprise that CVS and Walgreens operate 75% of the delivery of care, the collection and use of data, all retail clinics. and the application of their resources around better understanding consumer demand and the patient More health care organizations are having to collaborate journey. There are several trends emerging in the with other players in the health care system as well industry to improve the patient journey, including as non-traditional health care service providers. For how patient data can be shared securely between example, CVS Healthcare is absorbing Anthem, and different providers and how patients can access their Blue Cross Blue Shield and LogistiCare are collaborating own data, investing in the delivery of care where it is with Lyft, whose rides bring one-third of customers to more convenient for patients, and addressing critical medical appointments. Even Samsung Electronics Co. social determinants that often impede positive health Ltd and General Electric Company have recognized care outcomes. Organizations such as Aetna, the importance of meeting the customer where they Anthem, and Health Care Service Corp. are joining are by continuing to invest in the smart home 3 with PNC Bank and IBM to create a blockchain healthcare market. network for a more convenient, unified network that shares patient health information and eliminates The value of convenience has inspired the growth potential roadblocks. Most patient visits to retail clinics in telemedicine as well (e.g. Doctors on Demand, take place outside of normal physician office hours One Medical, TeleDoc, OneDrop, American Well), and outpatient centers have shown the highest growth which sits at the top of the list for impacts on compared to any other segment in the healthcare emerging technologies. industry. According to recent studies 2 out of 1 million consumers, 83% valued convenience as the deciding The method is clear: understand customer behavior factor for choosing a provider. at different points of their journey, capitalize on convenience, and move integrated healthcare services The study also points out that since 2005, the number of into communities that are closer to the patient. retail providers has ballooned by 500%, and is projected to grow by 25%-30% annually in the coming years.

Quantworks, Inc. Forecasting Consumer Demands Improves the Trajectory of Healthcare Retailization 5 NON-TRADITIONAL COMPETITORS RISE WHERE WELLNESS INDUSTRY HEALTHCARE FALLS

With the wellness industry valued at $4.2 trillion and expected to grow 12.8% in the next two years, retailers are capitalizing on massive profits 4 and looking to capture more share of the consumer healthcare wallet. From fitness gyms to juice bars, acupuncture to yoga studios, consumer spending on health maintenance has become mainstream. Stores $4.2 12.8% growth used to be a place where people went to buy goods trillion in next 2 years and services, but they too have been forced to adapt expected to the competing influences of social media and online shopping. Retail outlets are dominating the healthcare industry by mastering key components of customer experience that target not only sick care, but also well care. As consumer needs continue to evolve, retailers PATIENTS ARE POWERFUL will continue to utilize demand forecasting insights CONSUMERS for efficient change. Amazon is projected to be the number one disrupter of the healthcare market and has With more than 80% of people aged 18 to 34 already already partnered with Berkshire Hathaway and other spending a quarter of their income on health products financers to lower healthcare costs. It has entered the and services, millennials control the growth of wellness healthcare supply chain market with its distribution and and healthcare 6. Before retailization and technology, fulfillment infrastructure and data analytics know-how. primary care physicians (PCPs) were better equipped These companies don’t need to understand healthcare; at forming and maintaining relationships with patients. they understand retail and the power of consumer Today, the overall percentage of individuals who visit analytics to produce accurate forecasts that drive a PCP continues to decline 7, and most patients are supply chains, boost profitability, and detect hiccups dissatisfied by their provider’s knowledge of their in individual experience. When asked which company health history. This breakup of the patient-PCP health organizations should be like, consumers relationship corresponds to the lack of continuity in responded with: Amazon, Google, Chick-fil-A, individual health care. and Wal-Mart 5.

Quantworks, Inc. Forecasting Consumer Demands Improves the Trajectory of Healthcare Retailization 6 Solution

Follow the data. Most people spend the better part of patients will choose when they need care and match their lives outside of the four walls of the healthcare that up with providers’ supply chain planning. Retailers industry– at home, at school, at work, and around have been leaders in mining non-traditional data, such their community. These are places where the majority as wearable devices and in-store tracking technology, to of consumer decisions are made, including how they help gain visibility into consumer demand. This focus on eat, how they deal with everyday stress, and how they harnessing consumer data has uncovered lessons that may follow or not follow healthcare treatment plans. can be applied to the healthcare industry. As a result, collecting consumer data intelligence and understanding the patient journey has to include new data sources that are not typically found in coded EHR PATIENT EXPERIENCE records. In addition, coded EHR data tends to cover short-term episodes, and often fails to capture longer Most consumers are happier with their healthcare term trends or longitudinal data that can signal disease experience the less they have to interact with the progression or pivots to treatment plans. Utilizing system 8. In response, providers have invested in unstructured and consumer-generated information to tactical patient experiences, such as providing online construct smarter planning, insights, and optimization scheduling and billing and having coffee and WiFi in of the total patient experience is what consumerist the lobby. But these changes are minimal and don’t analytics leader Quantworks, Inc. does. Demand address the entire patient experience that generates forecasting enables Quantworks, Inc. to analyze customer loyalty. Providers often use surveys, either patterns and predict the services and products that at the point of care or following a visit, but it’s unclear as to how customer feedback is incorporated into strategic planning and operations. Instead, providers must understand the entire consumer journey and incorporate data analysis to predict what, when, and where consumers will demand in order to provide a personalized experience. Equally important, the right type of analytics and insights can help not only drive better patient experience, but optimize equipment and facility utilization rates, provide more cost-efficient staffing schedules, lower supply costs, and serve to retain and engage employees.

Quantworks, Inc. Forecasting Consumer Demands Improves the Trajectory of Healthcare Retailization 7 PRIORITIZE SERVICES & SUPPLIES

Hospital systems and other healthcare providers streamline the consumer purchase and support have traditionally designed their business process by bundling a good with a service and the models with “build a field and they shall come.” expertise for an all-in-one visit. Longitudinal and This strategy often results in an oversupply of segmented algorithms can help solve consumer in inventory, silos in care, poor optimization of pain points before they occur by identifying equipment, staff, and resources, and a mismatch patterns and recognizing risks. Mount Sinai Health of customer demand and service. Instead, System has employed this in its approach to retailization demands that providers start with the alleviating the pain of patients who undergo hip customer– who are they, what do they want, what and knee replacements and has seen a cost savings do they need, what are their lifestyle preferences, of more than 10% by providing an inclusive bundle and what are the drivers of their behavior? of post-operation services for recovering patients: Modeling after forward-thinking retail giants and a care navigator, free food delivery, and free weaving together fragmented sectors within the transportation to follow-up appointments. healthcare system will help organizations provide a more patient-centered experience and deliver services and supplies more efficiently. Take Apple, for example, who partnered with AT&T when introducing the iPhone in 2007. Apple did this to

Quantworks, Inc. Forecasting Consumer Demands Improves the Trajectory of Healthcare Retailization 8 Conclusion

Traditional healthcare organizations are uniquely positioned to become the way forward in delivering patient care, but without understanding and implementing retailization, they may quickly fall behind new market entrants and struggle to compete. Patients are consumers; they crave consumer-first experiences, and they expect other industries to create similar experiences as their favorite brands. The way forward is to tap an enormous amount of consumer-driven data that can be mined from external and internal data sources to identify gaps, inform key decisions, and create a consumer-crazed culture that patients want to partake in. Collaboration with Quantworks, Inc. provides an opportunity for healthcare providers to navigate a trajectory towards prosperity.

Endnotes

1 “This report is based on the Kaufman Hall 2018 Healthcare 4 “2018 Global Wellness Economy Monitor” – from the Global Consumerism Survey and the Kaufman Hall Healthcare Consumerism Wellness Institute Index. The annual survey is a detailed online questionnaire sent to executives at hospitals and health systems nationwide. More than 5 McKinsey & Co., “Enabling HealthCare Consumerism, Cordina et al 425 respondents representing about 200 organizations participated” (Crnkovich, et al. 1). 6 JLL, How “wellness” transformed American retail

2 “To assist planners, B.E.Smith offers its annual Healthcare Leadership 7 McKinsey & Co., “The Evolving Role of Clinics, Cordina et al Intelligence Report presenting key findings from a survey of hundreds of executives representing a cross-section of C-suite, senior, and mid- 8 Prophet. “Healthcare’s Transformation to Consumer-Centricity”, level leaders” (“Healthcare Trends 2019: Whitepaper”). Gourdji and Davis

3 The smart home healthcare market targets personalized healthcare for seniors and is expected to gain revenue of $30 billion by 2023 (“Smart Home Healthcare Market”).

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