Discovering the White Space for Retail Clinics in Drugstores

“White space” refers to an unmet need for consumers (or patients).  Finding it is a critical step in successfully marketing any product or service.  On a visual or graphic representation, white space is an area of need that is not occupied by competitors, or where demand could be developed.

Drugstores are a tantalizing channel for new services, especially ones that patients would find convenient, useful, or more difficult to get elsewhere.  The COVID-19 pandemic is a disruptive event that will change how people use these retail settings.  What is missing from the drugstore experience now?  What services or products that could be successfully delivered there in the future?

Background

Drugstores have huge advantages in relation to other places where healthcare transactions occur.

• In the USA, the largest chains (CVS, Rite Aid and Walgreens) have many great locations, with bricks-and-mortar at a vast number of busy intersections. Pharmacies and drugstores are widespread in other industrialized democracies too, even if they function in quite different ways.
• These companies are nested within differentiated and profitably interdependent chains of services. Payors, pharmacy benefit managers, distributors and retail outlets constitute a single integrated ‘ecosystem’.   Walgreens owns about a quarter of Amerisource Bergen.  CVS Health is an amalgmation of the eponymous pharmacy, Caremark (PBM), and Aetna (insurance).  Even without outright ownership, the contracting matters within these chains and arms-length suppliers are complex and intricate- a topic for another day.
• The general public esteems pharmacists. Regard for their profession is very high, particularly in attributes such as trust and honesty (Gallup Poll 2020).  And unlike other highly-ranked professions, it is usually easy to access pharmacists, often on a walk-in basis, without an appointment. They are at heart of drugstores.  In some countries, such as France, they virtually are the store.  Pharmacies there are set up to function more like the independent hardware model in the US, centered on professional advice and recommendations.
• As the feasibility of primary care diminishes against procedure-oriented and diagnostic medical service models, a vast amount of clinical services are potentially more convenient and accessible outside traditional hospital or clinic settings.
• In theory at least, drugstores needn’t be as encumbered by models of sickness that underly other healthcare transactions. There’s more chance of promoting wellness than in hospitals or medical clinics.  People encounter the medical system because they are sick.  Drugstores benefit from visits for a wider range of purposes.

Retail Clinics sprung up over the last 15 years as a logical way of leveraging the value of drugstores to fulfill patient needs for speedy, convenient healthcare.   It is an evolving concept.  Like any early-stage product or service, the shape of retail healthcare isn’t settled yet.  Service models are constantly evolving.  Some are being refined while others are being ditched. Tom Charland of Merchant Medicine  (a great source for knowledge on this topic) refers to the broader category of on-demand medicine: “urgent care, virtual health, retail clinics and employer clinics”.  This is a key distinction- a common denominator among all of these is being able to offer professional services without an appointment.

Market Context

There have been plenty of twists and turns as retail clinic models evolve.  Drugstore chains and large retailers (e.g., Wal-Mart, Target, Kroger) are going through successive design iterations, internal vs. external, ranging from simple to comprehensive services, etc.  Cataloguing these would make a long, if not uninteresting blog post.  Payors are not necessarily excited by emerging models that incite more demand for services.  Suffice it to say that the best approach probably hasn’t surfaced yet- both in terms of  customer experience and profitable operations.

• CVS created MinuteClinic in 2006, relying on NP or PA staffing. Now, their newest iteration, HealthHub adds more features: a CareConcierge, durable medical equipment, and a larger footprint.  These displace shelf-space for other consumer items in the store, many of which (potato chips? ice cream bars?) aren’t consistent with a brand image of health promotion and wellness anyhow.
• Walgreens, after running many of its own store clinics, is now aiming to partner entirely with 3^rd-party partners.   Previously, they had attempted operating retail clinics with “local health system partners”.   New clinics however will reportedly be owned and operated entirely separate from Walgreens, designed to resemble primary care, and employing MDs.
• Rite Aid operates RediClinic, which has gone through parallel evolution. Newer versions of store design will promote direct encounters with pharmacists, removing barriers so that they may “step out” and interact with patients.
• Grocery stores and other large retailers have had significant retail clinic profiles too, including Kroger (Little Clinic), Wal-Mart, and UnitedHealth’s Optum PBM.  The retail clinic space isn’t territory that drugstores automatically own.  Health systems and freestanding urgent care companies are equally likely to compete in developing retail clinic operations.

Customer Experience

What is missing in the attempts to come up with a winning model so far?   Customer experience research can help guide planning, but will also come up short if there is too much reliance on comparisons to hospitals or hotels (common frames of reference).

Some characteristics are purely transactional, such as overall speed, or length of time spent waiting to speak to pharmacist.  Moments-of-truth such as the greeting or farewell will drive experience, not unlike hotels, along with factors like parking, and store appearance, which influence opinions of most brick-and-mortar settings.

Industry leaders in customer experience, such as Amazon, Starbucks, USAA and Ritz-Carlton are often highlighted for their best practices.  Yet these don’t necessarily crosswalk well to a retail clinic setting.  Even in healthcare, Disney is frequently promoted as an example, as are hotels, in general.

The popular Net Promoter Score approach, which is simple and transactional, also potentially minimizes understanding of factors that would help guide service design.

What characteristics may uniquely define drugstore experience?  They might include:

• Privacy, for revealing and receiving confidential health information
• Recurrent contact with same person (opportunity to establish professional rapport, potentially establishing stickiness or imposing barriers to switching)
• Ease of contact with the pharmacist (and to a lesser extent, pharmacy staff)
• Time spent per encounter (fulfilling needs unmet in traditional primary care settings)
• Quality of health advice given by the pharmacist
• Availability of advice beyond prescription products, especially ancillary wellness services (OTC products, DME, health promotion, information exchanges, etc.)

Supermarkets and mass-market merchandisers possess many of the same characteristics, yet the customer experience in those locations is less explicitly centered on health and wellness.   This is one of the reasons why discontinuing the sale of items like beer and ice cream could actually help- by establishing a context that is unambiguously focused on health. 

The pharmacist is a potentially huge driver.  Ideally, a good pharmacist would be so good that patients would follow him or her to a different drugstore if they moved.

One part of the equation is dictated by payers, which haven’t necessarily embraced retail clinics.  Improving convenience and access results in higher healthcare utilization, and paying more claims.  In the USA particularly, where primary care is comparatively under-appreciated, the pent-up need for quick, quality healthcare may potentially be overwhelming.  CVS has promoted findings that their retail clinic services are a more cost-efficient alternative to Emergency Rooms.  Like so many innovations in US American healthcare, cost-offset data is proffered as a ticket to play. 

Next Steps

I’d like to see ethnographic research that follows the natural course of patient encounters with drugstores.  There might also be quasi-experimental methods of varying elements of physical design in order to determine which approaches produce the strongest clinical rapport (“stickiness”) with pharmacists.

It might also be worthwhile to vary pharmacist qualities, by matching patients with pharmacists who have deeper, specific knowledge of specific conditions (e.g., diabetes, chronic immune disorders, cancer).  This begins to blur the boundaries between traditional retail pharmacies and specialty outfits, something that companies like Walgreens might engineer through its partial ownership of Amerisource Bergen the enormous distribution company (which includes important specialty channels).  Leveraging these ecosystems of suppliers is something that grocery stores and mass-merchandisers are less naturally equipped for. 

How will drugstores create retail clinics that are seamless online? The rise in telehealth and digital encounters has been foretold for more than 25 years now.  Now, the 2020 pandemic is finally triggering more widespread acceptance.  Patient needs and expectations are potentially making it inevitable for payors to cover remote services.

CVS telehealth clinic visits surged during early stages of the pandemic. This is a hugely important topic to study, extending the reach of drugstores to encompass home delivery.  Somewhere it is a gigantic opportunity for user experience research, mapping what lies within this white space.

The stakes for traditional drugstores are very high.  They could wither as a result of multiple forces.  Centrifugal forces may include diminishing interest in brick-and-mortar retail, failure to compete effectively against local health systems, or slowness to successfully expand their online platforms.  Add to this the risk that drugstores miss out on understanding their unique differentiation from grocery stores and mass merchandisers.  But they could also thrive if they are able to understand what patients really value from their experience now.  Speed, convenience innovations, and smart/engaging pharmacists could help produce the kinds of customer experiences that result in service leadership and repeat business.

-Published September 3, 2020