Home healthcare market may be ripe for retail picking

Drug Store News, Nov 17, 1997 by James Frederick

For most drug chains, the home healthcare and medical device market remains a vaguely intriguing but highly suspect mirage. Most chains have kept it at arm's length as they watch the progress of American Stores. MedMax and a handful of other retailers with the willingness and financial backing to wade into the market for home medical equipment and so-called "aids for independent living."

Most big retail pharmacy operators have been content to stay with only the faster-turning, smaller-ticket healthcare and mobility products, such as home blood-pressure monitors, canes, small-scale bathroom aids and incontinence products. With the exception of American's Osco division, Kroger Co., Kevin Browett's fledgling MedMax operation and a few others they're leaving the higher-priced space-gobbling products, such as beds, wheelchairs and walkers, to the specialty dealers and catalog show-rooms. The same goes for the home care services associated with the aging of America, such as home infusion setups and ostomy fittings.

Hurdles to overcome

It isn't hard to see why. The business of selling healthcare products and home medical devices remains a daunting minefield of complex billing procedures, expensive inventory, patient-service specialists, shifting reimbursement formulas, outpatient care linkups, hard-to-reach patients and crowded competition.

On top of that, drug chains and the hard-pressed pharmacists they employ already have their hands full with the growing prescription dispensing flood and new managed care efforts by their own PBMs. They're also grappling with expanding patient-care programs, new and alternative OTC products, drug-switching programs and other workload issues. Given that, home healthcare products and services aren't high on the priority list for most chain pharmacy people.

The recent Medtrade medical products and home care show in New Orleans made that abundantly clear. Most drug chains continue to shun the conference, although a few send a handful of representatives from their managed care divisions. But I came away from the show with the feeling that it may be time for retail pharmacy to take another look.

That feeling arose swiftly as I spoke with vendors and home care product retailers at the expo. A lot has already been written--both in Drug Store News and elsewhere--about the size and growth potential for home care, self-diagnostic and mobility products as the population ages and Americans take increasing charge of their own health and wellness. But what struck me most powerfully at the show was the realization that this multi-billion dollar field remains in the hands of retail amateurs. In terms of merchandising, marketing, supply-chain management and overall store presentation, any disciplined chain drug operator could run circles around the typical medical product dealership.

Home healthcare has traditionally been a market for specialty dealers linked closely with hospital discharge planners, HMOs and community physician groups. Their stores and showrooms are typically unappealing, poorly merchandised and stocked with clinically packaged products alongside the big-ticket beds, scooters and wheelchairs. The atmosphere is somewhat sterile, clinical and cluttered.

Kevin Browett recognized that when he began planning for the launch of MedMax three years ago. So did people including Kevin Tripp, Dan Salemi and Neal Rider at American Stores when they pushed into broad-scale home care with the opening of the Health `n' Home superstore concept in Glendale, Ariz., in late 1995. Since then, American has tightened the format with a hub-and-spoke approach, opening satellite departments within select drug stores in a handful of markets, supported by a larger Health `n' Home depot and showroom.

Lack of HHC experience is apparent

But what really drove the point home for me was the obvious lack of retail expertise among many of the dealers at the conference. The point was made clearly at a morning workshop presented by industry consultants Jack Evans, who is president of Global Media Marketing and a contributing columnist for Drug Store News; and Ross Rankin, president of Rankin Representations, a medical products manufacturers' representative. In a presentation dubbed "Winning Strategies for Retailing Home Healthcare," Evans and Rankin basically taught the home health dealers in the room a scaled-down course on Retailing 101. The presenters gave their listeners what amounted to a crash-course in subjects including niche marketing, retail displays, category-based merchandising, store layout and planogramming.

There's no question that home healthcare is a headache. But with overall sales already pegged at $20 billion, by some estimates, and growing by double digits, more chain drug operators are likely to see the opportunity that lies beyond the hurdles. After all, the category's customers are already shopping drug stores for their prescriptions.