Friday, November 11, 2011

Done Right, Retail Clinics Can Work for Wal Mart...Or Other Outlets

In-store medical clinics represent a viable business for retailers who locate and manage them correctly.   Kalorama has completed 3 studies on the nascent industry over the past five years and estimates retail store sales at $733.4 million.  We’ve always felt our forecasts could be dramatically changed if a major retailer jumped in.  

Recent news suggests that may happen.  WalMart sent out a request for information document to strategic partners that was obtained by media sources indicated that WalMart planned to offer primary care services to its customers and sought a partner to help do that.  Further statements indicate the retailer intends to take advantage of healthcare reform and the possibility of millions of newly insured.  According to Kalorama, the retailer could benefit from tying new clinics into the store rather than keeping it as an independent entity outside the main traffic zone.  Some of the old Wal Mart locations were near the entrance to the stores.

This is clear.  The clinics can’t be seen the same as a travel agency, optometrist or Subway sandwich shop.  Our research has found that retail clinics worked best when connected to pharmacies, when supported by the management of the store and when their success or failure was measured on indirect as well as direct revenue.   We note  the success of retail clinics in pharmacies versus other locations.  The two strongest retail clinic chains mirror the two strongest drug store chains, CVS and Walgreens. CVS’s Minute Clinic grew from 541 stores in 2009 to over 560 in 2011. With fewer stores but faster growth, Walgreens has embraced the concept; its Take Care Health has gone from 250 to approximately 330 in two years’ time.  

Kalorama’s study indicated that mass outlets like WalMart or Costco could gain at least $800 per day from indirect revenues – extra purchases made by customers who came to the store to receive primary care services.  This is most likely what's on the retailer's mind as they consider more clinics.

Wednesday, November 9, 2011

To Sell Medical Beds, Companies Looking Outside the US and Europe

Makers of the beds used in hospitals, nursing homes and patient’s homes  will see their best growth from markets outside the U.S. and Europe, according to our latest healthcare market research report.  According to the healthcare market research publisher, the 5.3 billion dollar market for medical beds will see small growth over the next five years in traditionally strong markets but growth can be expected in other countries.

Medical bed makers selling to Europe have already encountered lower sales due to cost restraints, and changes to the US healthcare system are likely to have the same effect.   At the same time, we expect sales of medical beds in the rest of world to more than double by 2016.
This change the way bed manufacturers look at their marketing efforts and where they locate distributors and sales personnel..  As a percentage of the total market, the report forecasts that sales outside the US and Europe will grow from 13% to 18% of all medical bed sales between now and 2016.  Africa, Middle East are among the regions that Kalorama sees companies targeting more in the future.   India presently has one-fifth of the world average number of hospital beds per million population and an estimated 455,000 additional beds will be required by 2012, an investment estimated at over $30 billion.  

We note that the "rest of world" market, as it is labeled in our report, still represents the smaller portion of total sales and bed manufacturers will still need to adapt to competitive bidding and other changes in the major markets.   Innovation and production cost reduction are likely at most firms.