Healthcare Retail

A floor decal told me I needed it!

2010-02-15T18:05:00.000-05:00

It has to be the local grocers dream to see an army of men come walking through the front door. In fact, when I walk through those automatic sliding doors they don't make that pleasant swooosh sound anymore. Instead, what I hear is the distinct CHA-CHING tone announcing my arrival to management. This is the signal to roll out the entire stock of non-sensical inventory to the sales floor that typically collects dust. They know that guys like me enter their lair without packing the needed weaponry of a shopping list. This provides the image of a small child being presented all the colorful choices of sugary goodness in the cookie of cereal aisle and "needing" all of them.

I offer this self deprivating image of myself as an attempt for pity regarding the result of my recent encounter with the latest tool of marketing. This unavoidable menace calls out to guys like me in a tone unheard by sensible female shoppers. I know this because as I stood there in the cracker aisle it spoke to me, at which time I slowly leaned over to the grandmother type woman holding the store brand version of Ritz and whispered in hear ear, "did you hear it". After removing the jumbo Cheese Wiz can from my forehead, it dawned on me that she did not hear what I did. I could have sworn it was audible to all. It was as loud and clear as could be. "You need all 6 flavors of NEW Triscuit Whole Grain Crackers", come on I can't be the only one that this floor decal is speaking to!

The marketing folks know one simple principal of selling their products, literally force people to make a decision to buy or not to buy. Short of placing a pair of glasses on our faces upon entry that show a miniature commercial every 5 seconds, placing decals and signage in our every path gets the job done. Likewise, the retailers know that the vendors want this space and even provide higher placement costs depending on the particular floor space (location, location, location). They know the shopping habits of every person coming through the door, in averages of course. How is this you ask? Point Of Sale systems (POS) and their ability to report activity right down to which product in which category flies through the registers the most. This, and a mountain of other data, can tell Mr. Retailer and Mr. Vendor where they want to market their products and most profitable items.

There are two lessons to be learned here. One is that of our need to keep pleasant and useful services / products in the typical travel patterns of the hospital staff. Remember they are the real key to successful hospital retail. in addition, we need effective reporting from our POS systems to make absolute effective use of limited retailing space. We do not have the luxury of a 100,000 square foot store. We may only have 1,000 square feet to serve our customers, so we need to make better choices. Our systems will tell us what isn't working and those that are, all in a much quicker time frame to avoid losses. Not to mention that we will know what product that is delivered to the store actually makes its way through the register, and that which has exited "free of charge".

We need to use the lessons of the much larger retailers of main street to make our healthcare spaces efficient and profitable to achieve fiscal responsibility to the mission we are trying to serve. I cannot explain why it is so easy for me to understand the needs related to cost effective operations of the potentially complicated venues for retail in the healthcare community, yet I'm wondering how I will explain to my wife why we have 6 boxes of Triscuits stuffed in the pantry...........and one slightly damaged can of Jumbo Cheese Wiz.

My American Idol??

2010-01-24T09:55:00.000-05:00

Now that January is here I can finally say that the one an only thing I look forward to television-wise is back on the air, no not playoff football or The Super Bowl, but American Idol. The football is good too, but let's be honest, I'm from the Detroit area and we never get real excited about NFL playoffs here. No, the real draw this time of year is the new season of American Idol, and for good reason.........its both scary and inspiring.

It is scary as I watch the obviously misguided "singers" come before the likes of Simon Cowell and Randy, only to be deflated and berated for thier effort at stardom. I literally look away at times as if I am driving past the most horrific and grotesque accident I have ever seen. It is painful and maddening to think that the loved ones and friends of this individual actually tell them that they should try out for such a show. Once you weed out the obvious posers that only want their 15 seconds of fame, you can see that some of these people actually believe they are good.

That's the scary part for me. Scary because I start to think, "is that me", as it relates to this whole retail initiative thing? Am I thinking I really have something to offer the healthcare community that will truly benefit their mission. (Fade to dream sequence) I can see Simon Cowell rolling his eyes and try to suppress his laughter, only to get Randy started by saying "Dog its just not good". I stand there dumbfounded and in shock, not knowing how to respond. Then I wake up and thank God it was only a dream.........wasn't it?

Then walks in this 28 year old, down on his luck, small town farmer, father of six that never had the opportunity to tell his story through the incredible instrument of his voice. He really doesn't know if he is any good, but he is stepping out there and giving it a shot before he is "too old" for the show. His wife and kids are outside the audition room with Ryan Seacrest in anxious anticipation. He steps before the panel of judges and Simon, almost expecting the worst of the day, says "go on then, let's hear it". What follows is the most incredible rendition of Michael Buble's "Home" the judges have ever heard. He gets a resounding 4 "yeses'" (Randy gives it his 100 gazillion yes!), explodes out the door to his screaming family and is on his way to stardom.

O.K., except for the fact that I am not 28, down on my luck, a farmer, a father of 6 and anything close to a singer , I can totally relate to this guy. As I enter another year of effort and pursuit of this passion to work with the healthcare community to capture the "low hanging fruit" of retail revenues, I can finally say that it is getting the "Yeses" it deserves. After the fair share of scary moments, I feel more confident than ever that more and more campuses are willing to see the extreme benefits of such offerings as cafe's, updated gift shops, convenience stores, salons and more. All of this is to the benefit of the staff, visitors, patients and overall campus experience. That's the "stardom" we all need to pursue for healthcare retail.

Now if I can only stop humming the tune "Pants On The Ground" I could regain my focus on my to do list for the week!

Turning Another Page

2009-12-30T12:16:00.000-05:00

Typically I am not a big time reader. Don't take that to mean that I don't read at all, I just have a very hard time sitting down and investing major time to a book larger than 150 pages. This is the result of being a big dreamer and always having "things" on my mind. I actually have had times that I will be reading a great book related to World War II, as was the case yesterday, and begin to make application of the strategies employed in battle to that of my business approach. Minutes into the book I will move over to my office and begin to dig deeper into that train of thought. While that may sound very odd to many, I truly feel that this way that I am wired has served me well as I look over the events of 2009.

The efforts to promote the benefits of certain retail offerings within healthcare can be extremely time consuming and frustrating at times. If a person were to dwell on the many, many speed bumps and detours involved with this initiative it would seem as realistic as an attempt to finish War & Peace over a weekend. Instead, I have seen each chapter of this effort as a learning process. Each one has served me in some way to understand the intricate aspects and needs for each client (or character). Likewise, I don't dwell, or devote, too much on the latest delay. I may have to set that book aside for a while until the time is right again, but that just means that I can turn my focus to another author that has capture a new vision.

As 2010 is about to begin, and we turn the page on another year, I am becoming very excited to dive into some new chapters. I know that they will take us to new places and experiences, which is what I enjoy most from a good book! Oh and one other thing that I failed to mention about my reading habits.............I only like to read NON-FICTION.

Its Finally Here!

2009-12-30T11:09:00.000-05:00

It has been a long time in the making, but the NEW Self Serve Coffee Kiosk from Heavenly Brands, LLC is finally in production (copy & paste document link below in explorer to view). We have worked with some of the best companies in the equipment and manufacturing industries to get to this point. We have spent months in the tweaking and trouble shooting, knowing there is always more to follow, to make sure it was ready for placement. Our sales people will be out making placements as we kick off 2010 to make sure as many clients as possible have the opportunity to offer the best possible coffee, latte, cappuccino, espresso and hot chocolate while capturing fantastic ROI. If you would like to contact them directly, they can be reached at the following email addresses.
gina@theheavenlyroast.com
paul@theheavenlyroast.com

C:\Documents and Settings\User\Local Settings\Temp\Save For Web\TargetPreview.tmp\TargetPreview.html

Wants versus Needs

2009-11-26T08:01:00.000-05:00

It is Thanksgiving morning 2009 and I could not sleep too well thinking of some meetings I have had recently. I should be more concerned with the fact that I finally get to enjoy some good turkey, bean casserole and cranberry sauce........not to mention extra sleep. But this has really been weighing on my mind.

I may have stated this in a previous posting, but based on more recent interaction with healthcare department managers, I feel it needs more explaining.

Within the world of retail there is a real fine line when it comes to what a business wants as opposed to what it really needs to operate in, and most importantly, be profitable in. There are some that feel they need huge expanse and open floor plans to "be safe" for both employee and customer. They want to be sure there is enough room to maneuver a small pickup truck through their aisles and behind the counters. Simple ADA compliances won't do, it must have large distances between the service counter and the candy rack.

People laugh at times when I tell them that one of the best examples of a successful "non-traditional" retail stores is actually a restaurant chain. Cracker Barrel has an average per square foot sales figure of $401.00 in just the retail portion of their stores. Have you seen this space? Yes it is a bit cramped, but it is a fun and appealing place to shop after a stack of hot cakes. This space adds an average of $220,000 to the stores annual sales, and at a very high margin.

What we need to do with the hospital retail spaces is to constantly challenge the wants and needs of the floor space to make sure it is productive. I have seen some of the initial plans for retail in a hospital resemble something that a main street retailer would choke on with concern as to how they will ever be able to get the needed return on investment (ROI) for. The potential for sales per square foot cannot be outpaced by the actual cost it takes to build it and operate the space. If you stretch the space out and end up having to fill the expanse with "junk" that does not sell well and does not have a strong margin potential, you have chased a want and not met a need. Likewise, if your staff now have a very large space they have to traverse to accomplish repetitive tasks, it has become a cost vacuum that was designed without real need or efficiencies considered.

There are simple ways that we can allow for future expanse and shifting of a space with simple design and engineering values. Build our counters on wheels / casters. nothing is "nailed down" or permanent. It is all designed as components and not fixed units. This allows us to meet the current need, with the ability of re-tooling on the fly for future need.

It takes a creative and mission driven approach to really scrutinize these issues to ensure that we are not sucked into the typical mode of thinking. There is a need for greater fiscal responsibility in the times we are in and for the future as a whole.

That said I need to ask myself a difficult question..........is there any rule against pumpkin pie for breakfast? Be Thankful and have a great day!

The Debate

2009-10-14T07:05:00.000-04:00

I recently had an exchange, or debate, with another healthcare professional regarding the retail initiative that I am pursuing. It seemed that there was great concern with the idea of "niceties" taking precedence over the needed money for patient care and/or state of the art medical equipment.

It was her position that she would rather have a stark environment if it meant that she had the best doctors and equipment available to provide the best care at that particular facility. The fact that there may be a nice cafe, salon, gift shop or other food offering available for the staff or visitors was not a real need for her care, or anyone else.

My contention was the real world facts that prove those that are not necessarily "in the bed" at our area hospitals need to have work environments (staff) or amenities (visitors) in order to provide a positive experience which then transitions into the contact time with the patient / loved one. I pointed to her own office work environment as an example. I asked her if she had a very uncomfortable chair, grey walls without any pictures, no windows, cement floors......you get the image. Likewise, our hospitals should have venues that provide for that respite and recharge for the benefit of our morale and energy that we carry into the rooms throughout the campus.

In addition, these are areas that provide, if built and managed correctly, for greater gifting and benevolence to those that need it. This is not retail just for the sake of having retail. This is retail that has definite purpose and mission behind it. Anything else that is serving only to offer a good coffee, or worse yet, fill the pockets of an outside entity is not to the full benefit of the patient care.

Are we there yet??

2009-09-24T19:40:00.000-04:00

Now that my kids are all but flown from the nest I find myself missing those long drives with the constant asking "are we there yet?" Just for laughs my wife will ask me that question whenever we are laying out our long term plans for life after our youngest enters college next year. Then the front door flies open and I hear the voice of my 3 year old grandson Carter yelling "where's pappa?" and I am reminded of the joy of being part of something very special.

Likewise I feel very fortunate to be part of the very special growth in the placement of retail venues within healthcare. Although it is a slow process to communicate the need for a retail entrepreneur mindset for the management of a facility dedicated to the healing and care of the sick or injured, it is very rewarding to see their willingness to be open to the idea.

I have had an extremely rewarding summer of sharing our mission with many healthcare executives that are always willing to turn over any rock in search of ways to positively impact patient care, even if it is in the form of a coffee shop. They realize that what we carry a message that is deeply rooted in providing appropriate services to enhance staff retention and visitor satisfaction, but equally important to retain the income for furthering the overall system mission.

As my earlier entries have indicated, we are entering my most desired seasons of fall and winter. I have many friends, and now the addition of another grandson (Brady), to remind me that I am coming closer to my own personal fall and winter seasons. That stated, I remind them that I feel the same energy and stamina I felt when I was chasing my own kids around on the beach after arriving from a long drive to vacation. Likewise, I feel that same level of passion and desire to provide strong guidance to our clients in the addition of retail to their lobbies and atrium's.

I become very agitated as I witness other "consultants" guiding hospitals to implement franchise owned offerings, only to the benefit of the franchise owners. For that reason I am reminded of the other phrase heard in many a family packed vehicle headed down the highway........

"Don't make me come back there!"

2009-06-07T14:35:00.000-04:00

Hospitals in Michigan look to shops for revenue
BY PATRICIA ANSTETT • FREE PRESS MEDICAL WRITER
Don't be surprised to visit a hospital and be able to walk out with a mattress or a Honey Baked Ham. Borrowing a page from airports and shopping, hospital systems are expanding, renovating and taking back their retail and food operations from outside vendors and hospital auxiliaries, or working with volunteers to introduce retail concepts. Amid lean times, they are finding that
there's money to be made from selling plush bathrobes, jewelry, take-out ethnic
foods and birthday cakes.
Henry Ford West Bloomfield, a $350-million hospital that epitomizes the new trend, doesn't open to patients until Sunday, but already is seeing brisk sales to visitors and people with outpatient appointments for hypoallergenic lipsticks, cancer books, plush bathrobes and Mrs. Meyers cleaning products, said retail manager Meghan Rossi. The hospital's Sleep Well store sells hypoallergenic and natural fiber mattresses starting at $3,199 and lavender and aloe-scented pillows at $79 to $109.

St. Joseph Mercy, near Ann Arbor, is midway through an expansion of its food and gift offerings. Last year, the hospital moved a food kiosk that sells specialty coffees, sandwiches and soups to a prime front-door location, a move and expansion that brought $100,000 in revenue from a single location, said Pam Misener, system integration leader at St. Joseph Mercy.

Brighton hospital retail consultant John Johnson is helping with the transformation. His company, Total Management Services Inc., is working on retail overhauls for several of the hospitals in the St. Joseph Mercy Health System, including St. John Hospital Detroit and Borgess Medical Center, Kalamazoo, part of the Ascension Health system of St. Louis.

"I can walk into 25 hospitals and identify millions of dollars in retail opportunity," said Johnson, whose firm is advising several Ascension Health and Trinity Health system hospitals in metro Detroit. He fumes whenever he sees a floral arrangement being delivered to a hospital, seeing it as another lost opportunity. "This is revenue that could help hospitals fighting to break even do that," he said, referring to hard times facing the hospital industry these days. He tells hospitals to expand store space and stock shelves with "price-point appropriate items" that will sell.
Too many shops are filled with items there just because someone's relative is associated with the product, or they lack appeal to a wide age-range, he said. He walks through St. Joseph's gift shop and nixes window-hanging decals, china statutes and luggage, all on sale. He wants more space for flowers, cards and small gifts.
The new services are as much for employees as they are for patients and their visitors, say Misener and Maureen Husek, Beaumont's retail manager. "A large portion of your customers are your employees," Husek said. Last Easter, Thanksgiving and Christmas, Beaumont sold Honey Baked Hams and gave a portion of the revenue to the company but kept the profits from side dishes its kitchen prepared for sale. The cafeteria also sells ethnic take-out foods and pastries that can be preordered or picked up at the last minute, Husek said. "We sell items people can take home; milk, bread, eggs, butter," Misener said. The hospital also will decorate a birthday cake with a special inscription. The idea came from the staff. "It kind of feels nice that we're actually meeting the needs of people," Misener said.

Johnson tells hospitals to expand hours and space for retail sales. He hopes to add 30 jobs at St. Joseph's by expanding food kiosk hours and offerings. He tells hospitals not to staff retail operations with volunteers if possible. Many hospitals already are having trouble keeping shops open and close most weekends or even weekday hours, because they don't have enough volunteers, as more work to earn money after they retire.
He asked: "What coffee shop do you know that only has one person working for three
hours and she has to put up a sign saying she'll be back in awhile?"

Its Heating Up Real Fast

2009-06-07T08:33:00.000-04:00

For the record, I am not a Summer person. I do not mean that in a fashion or color sense, I am mainly referencing my lack of appreciation for the HEAT of Summer. Give me a nice cool breeze on a fall day, or for that matter a nice snow fall with the temperature around 30 degrees is pleasant. That said I do love to see the type of heating up that is taking place around the Retail Initiative that many healthcare folks are generating.

There are some that have begun the process of appointing their own "Retail Czars" to handle the potential new revenue cycle. It is equally exciting to see that new hospital floor plans are now including allocations for retail space and staff service areas as part of normal design functions. More of the coffee/cafe programs we promote are now seen as welcomed additions to lobbies and atrium's that had only utilized the sights and sounds of water effects or many unused soft seats. The gathering of the physicians, nurses, executives and volunteers mingling with the visitors and patients is a satisfying vision of community and sharing. Such venues will continue to encourage and promote an improved staff/patient experience throughout the campus.

The approach to the realization of this vision is not a sprint, but a marathon. As is the case with any HOT topic or initiative, there comes a need for thoughtfulness and good planning to maintain and direct its energy to avoid a "snuffing out" of the flame. We have all witnessed great ideas and concepts that had the 100 yard dash approach to their roll out, only to pull a hamstring three quarters of the way into the race. We cannot risk racing to place product or venues just to fill a perceived want. There is a careful Discovery phase that is needed to help identify what the true need and purpose for services are. I wake up every day looking forward to assisting those that desire such careful handling of the valued resources and passionate service for their staff and the patients that enter their doors.

Is Your Mission Best Served by...........?

2009-05-07T09:05:00.000-04:00

There seems to be a tremendous buzz and energy growing on this whole "retail thing". I am constantly being sent information on ways that companies are "serving" the hospital community by providing guidance and management programs. Although it becomes very attractive for hospital management to relieve themselves of the headaches related to the day to day operations of such added services and offerings, it comes at a great cost to the bottom line. This "bottom line" has more to do with the benevolence opportunities as opposed to the hard line profits mentality.

What best serves the mission of the non profit health care community is that of retention of margins after the real cost of doing business. The model of what many of these outside companies provide is a good one, the only problem is that most of the actual return does not stay with the hospital. Here is an actual paragraph from one such company's web site. Items in red added by me (couldn't resist)

"Company X" has secured agreements with world-class coffee purveyors to fund and operate (both at a high cost of goods) specialty coffee stores in hospitals. In addition "Company X" is securing agreements with other, healthy branded retail food and beverage companies (that need to make their money first) to further enhance our (should be "your") retail service options. Beyond the enhanced hospital image, the high-quality retail offerings will allow "Company X" to leverage its Room Service offering to hospitals, driving additional retail volume (This may be crossing a fine line of pushing retail into the rooms of patients. Providing an e-commerce destination for the patient to utilize at their leisure and convenience is one thing, using a Room Service person to "leverage" sales is creepy to me. The retail is first and foremost for your staff and visitors, who each have their own unique positive impact on patient care and recovery as a result of having what they need on campus). These retail concepts can be implemented with no cash outlay by the Hospital (Which can still be done if the hospital owns it, they just need good representation). "Company X" will invest in all design, build-out, construction, equipment, and installation needed to open the retail store and will operate the store upon opening, leaving nothing (this may refer more accurately to a fair share of the revenue as much as anything else)for the hospital to do but enjoy the high quality food, beverages, and environment! (this has an image in my mind of when I had to distract my young son with a pretty red balloon as the doctor had to give him a painful shot in the arm, or better yet the Wizard of Oz reference of not looking behind the curtain,just watch the show up front.

Regardless of how many want to package the approach, anything short of the hospital retaining complete ownership, control and most of the benefits of such retail spaces, it cannot be deemed a Maximum Return Initiative. That's my feeling and I'm sticking to it.

The Tide Is Shifting(?)

2009-04-30T23:57:00.000-04:00

It has been a very busy month of getting the message out to the masses! We have now developed very strong vendor partnerships that will bring tremendous savings to the healthcare systems, and their cost of goods (COG). Pricing is only one small part of the overall plan as a good logistical structure is just as critical. A good cost on a pound of coffee, or a great morning muffin, really means nothing if it cannot get to the Barista or bakery case in time to sell it. Our new e-commerce system will allow each hospital to have specific access and menus developed for their individual product listings, along with specific regionally developed cost structures. Having a single portal location that each hospital can go to and place orders for multiple vendors will expedite the entire process. They will not be inundated with multiple vendor calls or pile of literature to go through. Weekly specials, special promos and seasonal goods will all be part of our monthly notifications. The buying power and cost advantage will be very quickly realized across the line. In many cases we have reduced the COG by as much as 30% on product and general supplies. We had one cafe that was paying over $0.28 for his logo cup/lid/jacket combination. We were able to switch him over to a high end product with one of our partners that reduce that same combo to $0.185!! I'm not a math wiz, but that adds up quick. In addition, we were able to reduce his required minimum orders by 35%, which freed up much of his monthly/quarterly CODB (cost of doing business).
Our clients will be introduced to our vendor partnerships via our marketing packets and email flyer's.

With this type of collective buying and system power behind you and your healthcare system/hospital location, the tide of profitable operations is (can be) shifting away from the third party retailers that take your best spaces and its strong income potential out the front door and to their bank. Let's make that tide a tsunami shift that goes to your bottom line to the benefit of your true mission.............improve patient care!

Sign Of The Times, Or Time To Sign?

2009-03-24T06:14:00.000-04:00

Many of my presentations are met with tremendous enthusiasm for the concept of a retail initiative within the particular campus/system that I am visiting. They can see the benefits of offering their staff, visitors and patients a much desired, and in some cases a much needed, service. They see the extremely lucrative potential to generate tens of thousands of dollars in profitability to the benefit of the operational "bottom line" or "gifting" to the hospital. With that being the case, what causes such extensive delays in at least signing up for one coffee station. is it the cost? I have a hard time thinking that the initial cost is the problem as we have proven with our benchmarks that the ROI on the initial study would be almost immediate (less than a year), in healthcare terms. But just to be sure we did not have any such hurdle to navigate, we designed the program to be a virtual "no capital required" program to the first 10 coffee stations.

Now I have to ask, "Is this a sign of the times?" A time that causes us to freeze at the idea that something could actually still generate a positive income? A time where any remote risk is so amplified that it creates a "constipation" of decision making? A time when, even provided the tool of success for free, there is so much budgetary tension that any appearance of an investment will cause outcries similar to that of an AIG bonus pay out?

While I understand the need for caution and protocols when inviting such venues into our healthcare world, why is it so easy for some systems to throw the keys to a third party retailer and say "here, you take this ball and run with it and we will watch you take the money to the bank"? I see this occur almost every week and it drives me insane.

Since a recent article ran in the Detroit Free Press regarding the retail concepts in healthcare, I have received no less than 20 calls and emails from people that are clamouring to be part of the program. These are companies that see the potential and want to invest in it.

The hospital community can benefit greatly with the appropriate guidance. It MUST BE appropriate and purposeful to the mission at hand. I cannot emphasize enough the importance of remembering who we serve and where we serve them. This is not a mall, Sam's Club or Home Depot. This is a hospital that serves a community in a manner that should be respectful of what those that come through the front doors are dealing with on a daily basis. This includes the physicians, nurses, environmental services, administration and volunteers. We want our front line people to experience just as much of a positive experience as those that you treat or nurture within the beds of the facility.

I believe that there is a real need that the hospital community is realizing more and more in these difficult/different times. It is a need to make the hospital experience more comforting and
appealing for the staff and visitor communities. This is so evident in almost every design element being implemented throughout the country. The first impression areas of atrium's, lobbies and vestibules are critical spaces to create that immediate comfort and "AAAAAAHHH" appeal. My dentist even knows this. I hated going to my dentist, until he put in a huge plasma TV, big comfortable recliners, field stone and wood finishes and a big area rug. This could almost describe someones living room........which is the idea. I am so de-stressed when I go in that I almost forget where I am (almost!). This is more of "the Sign Of The Times".

Our business plan provides for a net operating income of $500,000.00 annually for every 5 coffee stations MINIMUM. Can you imagine what a well designed, size appropriate and managed retail program could generate? I think it is "Time To Sign!", but that is just my 25 years of retail marketing experience talking.

I just remembered, I have a dentist appointment today. AWESOME!

Productive Travels & The Competition

2009-03-01T21:28:00.000-05:00

It has been quite a while since I have been able to sit down and update the blog page, but it has been a productive time in the field. For the last week and a half I have been able to develop some very strong relationships with vendors that will greatly benefit our clients. During the Coffee Fest in Chicago we were able to secure some great information, and validate our initiative to improve the buying power for the health systems. The approach is one of true Owners Representation and not one built on compensation from the vendor partners. It will create an environment of transparency and accountability for service from the vendor, without an incentive for the hospital system rep to promote any particular brand or vendor.

In addition, my travels to the west have solidified that the opportunities for implementation and change are vast within the healthcare community. I found campus after campus that did not have viable coffee/cafe settings to deliver high quality products or services. In turn they could not provide strong financial returns for the campus / system. Those that had offerings, were occupied by third party groups that were under performing due to placement or service. It was very inspiring to see this opportunity to still help such locations.

Our people in Arizona and Nevada have been sending over the same type of feedback on a regular basis. A recent visit recap from the Ohio market by a team member had virtually the same content.

I recently was shown some information related to some other consultant groups that have positioned themselves as guides for the retailing within healthcare. Here is an excerpt from my response to them on the issue of our competitors.

A few things to remember about "companies X & Y":
· Their expansive client list in the area of retail is not focused solely on Healthcare.
· Their clients receive guidance that is not solely directed towards the ownership of the hospital for the bulk revenues, despite what they claim. Please note their quote at the top of the Real Estate tab….“Being a landlord has never been easier!”
· The word on them is that they ultimately guide the hospitals towards some of their “retail partners” to have the space and pay the hospital a lease rate with percentage of sales. Scary familiar.
· They create spaces that consume vast amounts of capital to build BEFORE it even gets to the implementation of the systems, training or product placement. One of my current clients originally called around and many of the “clients” stated that the spaces and the selections implemented were under performing “ghost towns”.
· They are crazy expensive and a big reason (I am finding out) why most systems are afraid to look at retail. Their costs are immense on the front side and they typically charge a large fee for each hospital. This makes for a difficult and long ROI process.
· The “on going guidance / assist” is extremely self fulfilling. I would call out items such as their “Private Label” partners. This clearly has some ownership on their part, so how can they advise honestly if it is not the best product to use when they are paid on its implementation?
· TMS is not paid by the prospective vendors, designers, architects, builders, etc. Beyond the cost effective management fees, (which are part of the initial business plans) we are paid on the successes and increased volumes of the space.
· They do not approach the entire project as a true Owners Advocate. Not to overkill this, but the designs and vendors are costly on the capital side, while diverting much of the profit away from the clients.
· I can speak from personal experience that our approach of being referred to some of the largest systems from inside their own networks is working very well. The last three people that I have spoken to have never heard of either group.

My approach has been one of “less is more” right now. I purposely downplay the initial roll out of any retail as it relates to size and investment. It has been my experience over the many years of trying to implement much larger initiatives that you cannot overwhelm the clients with your grand vision. For me the image that was on the Internet a few years back of the python that tried to eat the huge alligator down in Florida is what happens to a client when you try to put too much on the table from day one (it was not pretty I can tell you). Start them off by showing the bigger potential via a simple coffee cart and/or portable café. Feed their financial minds with a true success on a smaller scale and use it as a building block. Let the bigger picture become their vision, but keep them on track.

I know you have heard this before, but I love to use this as an example of using what already exists to accomplish a goal.
When Gatorade was launching its smaller size beverage line (a long time ago) with hopes to get into the convenience stores, we were in Chicago trying to come up with a way to get it in the doors of the coolers next to the pop guys. There were some guys from California that suggested the leasing of an army of trucks plastered with the logo to get it out there. I suggested that we partner up with the guys that hated the pop guys as much as they did and use their trucks that are already going to these stores. That began a national initiative to align with the beer distributors, who had the adjacent doors. We gave them free product to put wherever they could, and paid them to do it. The rest is history as they say. I was also able to use this same system to launch Tropicana and Ocean Spray juice brands. We used what was already in existence and accomplish the goal with far less capital.

We have the appropriate audiences for what we are trying to accomplish. We need to stay true to our mission and constantly display our passion for its adherence; to the benefit of the client. I am very confident that this will “separate the wheat from the chaff”.*

* SEPARATE THE WHEAT FROM THE CHAFF - "Distinguish the wanted from the unwanted, the valuable from the relatively valueless. It is what one did literally in the ancient agricultural practice of winnowing, one form of which was to expose, say, wheat to the wind so that the chaff blew away and the grains remained. The thought appears metaphorically in the Bible, where John the Baptist, speaking of the one 'that cometh after me,' continues (Matthew 3:12) 'Whose fan is in his hand, and he will thoroughly purge his floor, and gather his wheat into the garner; but he will burn up the chaff with unquenchable fire.'." From "The Dictionary of Cliches" by James Rogers (Ballantine Books, New York, 1985).

More Road Trip Experience

2009-02-17T13:06:00.000-05:00

I have spent 5 more days, and will continue over the next two weeks, visiting a variety of hospitals. I tried to focus my efforts on those that already have a coffee and gift shop offering.

The trend of having the "coffee stand" / vending operated by either a third party from outside of the system, or by the food services provider (Sodexo, Aramark, etc) under a total outsourcing umbrella seemed to be the overriding trend. In every case it was painfully obvious that these are not the core business interests for these folks. Some major flaws that speak directly to opportunity (REVENUES) lost would be.......

Vending:

An average of 40% empty slots on the vending machines. These are items that are the best sellers, obviously if they are out of stock, so we can't sell what is not there. If this were to occur on a regular basis, it could cost the hospital substantial revenue over a given year.
An average age of machinery that seemed to be over 20 years. Not to mention that the cleanliness of the equipment as a whole was NOT hospital standards by any means. I watched as people approached the machines and were turned away by the "look" of them. I know this because I was taking some quick surveys. More lost sales.

Coffee Shop:

Without exaggeration I witnessed, in every location, coffee offerings that were substandard compared to what the various systems have spent on the surrounding spaces. They were so contradictory, that they stood out for the wrong reasons.
They were not well kept in the least. They looked disorganized and unclean. Coffee stains on the front counters, the "back of house" (in full view) had cups, coffee dispensers and supplies scattered like there was a fire drill just moments ago and it was all left as is.
Most did not offer anything more than a basic coffee product by a third party brewer like Starbucks, Paramount or Douwe Egberts. This screams of high cost of goods by the way. No espresso, lattes or smoothies.
The worst violation of maximizing revenues was the fact that most of these offerings only operated on limited hours Monday-Friday and were closed weekends. A few only operated from 8a.m.-1:30p.m. At one such location I was standing in the gorgeous lobby, with 25-30 other people sitting in the comfortable chairs (these don't make money either) at 3:30 p.m. This was within 10 feet of the closed, filthy coffee cart.

I need to point out that the approach in offering such things needs to be campus specific and the need for hours may vary accordingly, but it does not take much to figure out when to be open.

The credibility for this initiative grows with every hospital I visit, as does my passion for capturing these badly needed revenues for the advancement of quality patient care.

Weighing The Options

2009-02-12T09:37:00.000-05:00

As I continue to travel throughout the country, although it is just as obvious in my own backyard of Michigan, I become more and more concerned as to the loss of revenue opportunities for healthcare. I feel compelled to urge the collective healthcare community to "stop the madness" of giving away these revenues that are benefiting, so lopsidedly, the third party retailers.

I am watching as the quality efforts, and millions of dollars, that each of these systems have spent to communicate their mission of care and "branding" of their offerings, in their given communities, benefit those that have not contributed a dime to that fund. I compare this, very loosely, to the Walton family spending the past 50 years building their retail empire and mass traffic flow via extensive investment in technology, marketing and services. Then they say to Procter & Gamble, "we are going to give you prime real estate in our lobby, before the visitors even get into the core of what we offer, and after you cover YOUR cost for being there we will take a small lease rate and an even smaller % of sales".

I am not suggesting that there be an adversarial relationship with the vendor community, just that there be a transparent mindset of sharing for the greater good. I am listing below actual information that shows this type of comparison in real numbers. This information compares what one particular hospital campus agreed to with a third party to what they could have done. The scary aspect to this information is that I am under cutting the annual sales number, to be ultra conservative, when I know that it is more likely that they are generating far more than this. This third party group was given control over the coffee shop, lobby cafe, gift shop and ATM's! Let me know your thoughts. Am I crazy for thinking this way?!

Third Party financials

Annual Revenue: $850,000.00
Square feet 1,250
Annual Lease: $45,000.00 @ $36 PSF/nnn

Annual % of Sales* Given back to hospital: $4,500.00
Total Annual Return for hospital: $49,500.00 / 5.80%

*Based on 3% payback to hospital for any revenue AFTER the first $700,000.00 is realized by third party owner. This is an actual contract structure.

Hospital Ownership w/third party management assist
Annual revenue: $850,000.00
Cost of goods*: $255,000.00
Cost of labor via TMS**: $297,500.00
Total annual return for hospital: $297,500.00 / 35%

*includes all aspects of product and supplies (30%)
**based on a 35% allocation for all labor costs including benefits, taxes, etc.

Need For New Revenue

2009-02-06T09:44:00.000-05:00

In a recent article Detroit Free Press Medical Writer Patricia Anstett cited many statistics related healthcare and the impact of the national economic condition. This provides more fuel to the need for a retail initiative and its potential revenues.

Economy has Michigan hospitals hurting, association warns
BY PATRICIA ANSTETT • FREE PRESS MEDICAL WRITER • February 6

The worst economy in decades is crippling Michigan hospitals, causing large financial losses, layoffs and cuts in programs and construction, the state's hospital association warned in a report Thursday.
"The health care safety net is in dire straits unless there's a new infusion of money," said Lori Latham, spokeswoman for the Michigan Health and Hospital Association.
The report found that:
• Michigan hospitals on average posted a negative 2.9% margin, or losses, in the third quarter of 2008, down from a positive 2.2% margin, or earnings, the same period in 2007.
• Losses from providing free care, picking up unreimbursed costs for people with government programs and bad debt reached a record $2 billion last year.
Hospitals reported an 8% increase in uncompensated care in the third quarter of last year, compared with the same period the year before.
• Fifteen of the state's 144 nonprofit hospitals were forced to lay off at least 1,320 workers last year, and more layoffs are expected.
The report does not list the number of employees the 144 hospitals have.
• Between 1999 and 2007, the number of Michigan residents covered by private insurance plummeted by 727,000 people.
• More people rely on costly emergency department care. In 2007, the most recent data available, Michigan hospitals recorded 4.5 million emergency visits, a 3% increase from 2006.
• Michigan's Medicaid program, which reimburses hospitals for care at the lowest rates for any health insurer, hit a record 1.6 million recipients in 2008 and is projected to rise another 3% this year.
The association went to the unusual step of releasing information about hospital losses in last year's third quarter to alert the Legislature that hospitals need help, Latham said.
One possible source could be new federal Medicaid money the state expects to get in President Barack Obama's economic-stimulus legislation. It awaits U.S. Senate action.
To see the report, go to http://www.mha.org/ and click on the newsroom menu's Reports and Publications folder. Contact PATRICIA ANSTETT at panstett@freepress.com.

Road Trip

2009-02-02T14:52:00.000-05:00

I had the opportunity to make a road trip with a Service Line leader for a major health system this past Saturday. We spent almost 5 hours visiting various campuses, both in his system and outside of it, to get a feel for what was happening in the world of retail.

It did not take long for him to become "ill" as to the level of opportunity that was being missed. This was just as apparent to him at his own locations as it was the "competition". One such example was that of a coffee shop occupying a newly remodeled area of the hospital. The appeal of the space was extremely contradictory to the rest of the beautifully appointed finishes and elevations. It appeared to be assembled with recycled components from elsewhere on campus. As we inspected further we realized that the shop was serving basic food service quality coffee, served in gas station style cups and did not offer espresso, cappuccino or any specialty drinks. In addition we were watching as a very good amount of foot traffic passed by a coffee shop that was closed. This was due to the fact that the volunteers that operate most of the schedule do not work weekends.

The Gift Shop's were no less disheartening. When we approached the receptionist to ask where the Gift Shop was located, she pointed behind us about 30 feet to a small door. The signage was definitely too small and the windowless, single door was the only view into what they had to offer. I asked if it was a temporary space and she stated that it was the newly remodeled space. In this case the shop was owned by a third party, and it was painfully obvious in their product offerings.

We made visits to 5 or 6 locations in a large coverage area. In every case we were able to identify vast opportunities, many could be capture with some very simple, lower cost changes.

It is very important that any campus that has the slightest interest in developing such opportunities do so in a "phases" process. There is much time and careful planning needed in order to create the energy and opportunity. It can be very costly to jump in and over build offerings. Campus and system appropriateness must be a big part of consideration. The initial planning and information gathering could have made better use of what these other campuses are offering. The initiative for this type of retail needs to be practical and purposeful.

2009-01-31T07:09:00.001-05:00

One of the areas that is often overlooked as part of a Retail Services initiative is that of Vending. It can be one of the most lucrative, and easy to fulfill parts, of the revenue flow. It is critical to establish the right vendor relationships in order to structure lucrative logistical and buying procedures.

In one real example* we were able to have discussions with our beverages distributors to investigate how the system could purchase the product in a lower cost bracket. This required some time to develop certain changes in the way the product was received and then filled into the machines. It also required some very strong negotiating with the Service Line Leader's involvement. We were able to develop a mini business plan to show the added volumes for all involved as a result of improving services and providing added locations on campus.

This relatively small change will improve the annual revenue by 13%, or $65,000.00 for just the one campus. This increase is not factoring any of the potential growth in volumes, it is only based on the real savings related to the cost of goods structure using a typical years sales. The multiplier for this type of positive change in a major health system is eye opening. For every 10 such Medical Centers in a system they could realize $650,000.00 in added revenues, just from a cost savings.

*350+ beds & 4,000 campus staff

Retail Services Within Healthcare

2009-01-23T17:00:00.000-05:00

With all of the potential for positive staff, visitor and patient experiences related to the offerings of tasteful and well manged retail services, comes the concern of staying true to mission of healthcare. There seems to be a tremendous amount of angst generated from this topic as it conjures up images of a strip mall within the atrium's of America's healthcare facilities. Or worse, the image of a dancing teenager holding a sign reading "Large Pizza $5.00" drawing attention from the family dealing with a stressful situation.

I have experienced tremendous anxieties on the part of the major stakeholders within many healthcare facilities throughout the country when discussing the possible placement of a Cafe' near the front entry of the hospital. Or even greater concern with the thought of designing a very nice Salon/Spa offering in full view of the general public. I really have found that most of this concern is not directed to the "idea" of offering such services, but rather it is the "manner" in which they are offered. Too many times there is a consultant that comes into the healthcare environment without a full understanding and/or compassion for the impact any function may have with regards to the true mission, Patient Care.

Patient Care is positively impacted with tasteful and useful retail offerings in many ways.

Added revenue resources for "gifting" towards the needy
Added revenue resources = equipment, technology and staff improvement capabilities
Added staff services that equal a much more pleasant, more efficient, working environment. Salon, Cafe', Massage, Vocational Apparels, etc
Added food or beverage offerings that keep family and friends close by for support
Pleasant surroundings through design that provide a "reconnect" for the patient to the outside world. Greenery, Arts, Aroma, etc.
A well trained compassionate staff that becomes an extension of the mission.

These are just a few positive impacts, but it is important to realize that the hospital that attempts to operate such areas like a hospital may fail. It will take a balance of both a healthcare and retail services mindset to truly provide the type of Return On Investment required for such an undertaking.

This is where most facilities fore go the idea of "handling" retail internally and give it to a third party retailer to provide the services. The hospital is "content" to be paid a fair lease rate for the space. This is where the needed control of both operations and PROFITS is lost. Most hospitals have the capacity to fulfill the truly needed services organically, as it relates to product delivery. Where the needed help is required is the area of design, build and management. All three can be delivered for far less than what is typical for what many, not all, healthcare facilities may think. There are three areas that I see as critical to a successful retail program.

Define: Make sure it meets the NEEDS and not just the WANTS of the stakeholders.
Develop: Make sure it does more than just LOOK really nice, it has to FUNCTION well in this environment.
Deploy: Build it economically and on time, train the staff right (and keep training), get the right POS systems (good P&L reporting, etc.)

If you are a non-profit there are certain limitations that I am always advised of. It mainly has to do with the area of Marketing. Yes it is true that you are limited to marketing the offerings within your four walls, but I really do not see a purpose for such things to be added to the costs no matter who you are.

I have a client that operates a 400 bed facility with about 4,500 total staff within and around the campus. We conducted a detailed count of traffic in and out of three main door areas. Using a unit (person) impact system on a scale from 1 to 10 such as the following.......

1 for the patient due to immobility
2 for the visitor due to frequency and time on campus
7 for the staff due to greater levels of mobility and frequency on campus

.........we assessed the total annual units that would pass somewhere near a retail offering to be over 1 million. This of course is counting many people coming AND going, but that is all foot traffic with eyes, ears and noses which equal potential sales and needs to be filled.

It is very important to mention that this space needs to carry with it a design that allows for convenience and flow of a hospital's core businesses. For instance, the typical prescription in most hospitals that I have seen is written and provided to the patient, or family member on the floor where the care is being provided. Upon discharge that prescription fulfillment process should be as easy as picking up the package on the way out the door. This can also be the case with valuable revenues related to HME and DME fulfillment's.

There is so much upswing to the careful and considerate addition of retail services to a facility. The key will be the development of a strong internal team to work with compassionate external guidance.