Retail health should try to think outside of the ‘big box’

By Neal Batra, principal, and Andy Davis, principal, Deloitte Consulting LLP

A long and frustrating wait at a Minnesota urgent care clinic 25 years ago led the father of a young boy to come up with an innovative care model. The idea was to open a clinical space in a retail environment.¹ While retail health promised patients a convenient and more affordable experience, the model has generally not lived up to expectations. Some retail health operators have scaled back or shuttered their clinics.²

Here’s why: The retail health model, at least to this point, seems to have made only minor tweaks to a complex legacy model. Only the location has changed. For consumer-centered health care to work in a retail environment, the business model should offer convenience, innovation, affordability, and be meaningfully different than the traditional urgent care model.

Innovation could be the key to reimagining retail health

Industries from banking to shopping to entertainment have made efforts to become digital, highly personalized, and consumer-focused. As consumers grow accustomed these experiences, their expectations for access and convenience could extend to health care. Convenience (e.g., better office hours, no need to travel to an office) is the main reason consumers said they opted for a virtual health visit, according to a new report from the Deloitte Center for Health Solutions. For the retail health model to reach its potential, each component of the traditional health care model—payment, location, services, delivery—might need to be deconstructed and reimagined with the consumer in the center.

Innovation is typically used to describe new products or advanced technologies. But innovation also applies to the transformation of business models. Deloitte developed a framework that can lead to game-changing breakthroughs. The 10 Types of Innovation are divided into three broad categories—configuration, offering, and experience—that can be applied to most industries, including health care. All great innovations throughout history comprise some combination of these 10 elements.

For retail health to be able to disrupt the health care sector, innovators should target three core elements: The existing health care configuration, the core products or services being offered, and the consumer experience. Here’s an overview of how those elements could be applied to retail health:

1. Configuration: This category focuses on an enterprise's innermost workings and business systems. The retail health model intended to change where care is delivered by meeting consumers outside of a traditional health care environment. However, the configuration is generally not set up to engage with consumers who are healthy and want to stay that way. In addition, while the location might be convenient, the space in the back of a retail store tends to be limited, and the clinics are often staffed by just one clinician. That means services might only be convenient if the patient is not stuck behind others waiting for an appointment. Retail health could be in a brick-and-mortar location, it also could be virtual or a hybrid (where the in-store experience links to the consumer’s online experience).

• Profit model: The first retail clinic model changed the traditional payment model. Rather than submitting claims to a health insurer, patients paid a flat $35 fee.³ That profit model has generally reverted back to mirror the traditional primary care payment model; the clinicians tend to be a part of a health plan’s network. Successful profit models tend to reflect a deep understanding of what customers and users cherish and where new revenue or pricing opportunities might lie. Cash payments, micro payments, and new payment structures could all be explored to help improve flexibility, access, and tailored experiences that suit the varying health needs of multiple consumers.
• Network: This element defines how an organization connects with others to create value. Retail clinics are often part of a health plan’s provider network. But that model could constrain innovation. Network innovations can allow organizations to take advantage of other companies’ processes, technologies, offerings, channels, and brands. How might clinics operate effectively, and profitably, outside of a traditional provider network?
• Process: Consumers are unlikely to pay for something if it is not perceived as being a better value than a traditional health care service. Retail health operators should determine what consumers value and then work toward processes that reflect consumer aspirations. Process innovations should be something that competitors can’t replicate. The result should be a service that provides more value to consumers than what is typically available through a traditional health care visit. Convenience is only one element of process innovation.

2. Offering: This category focuses on the organization’s core products or services. The health care business model hasn’t changed much since the 1950s. While the retail clinic model changed the location of where care is delivered, the model remains closely aligned to the urgent care model. The tests and services offered tend to be identical, the interactions between the patient and clinician are traditional, and the data captured is the same.

• Product system: These innovations are rooted in how individual products and services connect to create a robust and scalable system. Product system innovations can lead to ecosystems that captivate and delight customers and defend against competitors. A retail clinic, for example, might connect with healthy consumers by taking advantage of complementary products sold by the host store.
• Product performance: This type of innovation involves entirely new products or services. These innovations should address the value, features, and quality of a company’s offerings. Imagine an interactive experience where a shopper completes a self-health check-up at a kiosk. The results of the check-up are sent to the shopper’s phone along with AI-generated recommendations to address a health issue, or to prevent future ones. This could encourage shoppers to think about their health outside of a medical setting and integrate it into their everyday shopping experience.

3. Experience: These types of innovation are focused on more customer-facing elements of an enterprise and its business system. In addition to treating illnesses, retail health should target well-being and be built around consumer preferences. Many of them already offer vaccinations. Deloitte’s 2024 Health Care Consumer Survey found that almost three out of four consumers would consider going to a retail clinic for a vaccine.

• Service: With the exception of vaccinations, retail clinics typically do not promote health and well-being services. A reimagined retail health model would take advantage of the retail setting. A quick finger stick, for example, might determine a shopper is deficient in iron, and immediately generate coupons for supplements or foods that are rich in iron. Other devices throughout the store might offer nutrition advice or healthy recipes. A consumer with high blood pressure, for example, might receive text messages for low-salt recipes. Service innovation should elevate routine services into compelling experiences that make customers want to return.
• Channel: AI-driven virtual assistants might be used to augment traditional clinicians in a re-imagined retail health environment. Non-traditional care providers, such as nutritionists, might encourage shoppers to focus on their well-being.

The innovation framework was built around the idea that there are distinct types of innovation that can be orchestrated to create something entirely new. To truly disrupt the health care model, the retail health model should do more than relocate the urgent care model. A reimagined health care model should be focused on convenience and be built around the consumer. In addition to treating illnesses, an innovative retail health model should help consumers maintain or improve their overall well-being.

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Endnotes:

^{1_{The advance of the retail health clinic market, Mayo Clinic Proceedings, November 2011}}

^{2_{What to make of the seismic shifts in retail health care, American Hospital Association, August 20, 2024}}

^{3_{The Emergence of retail clinics, The Journal of Urgent Care Medicine, October 2006}}

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