Written by: Shawn Janus
As National Director | Healthcare for the USA, Shawn's focus is to cultivate a strong, value-driven platform in the healthcare space, allowing Colliers to raise the bar in delivering innovative and successful solutions to our healthcare clients. Check out his post on Colliers Knowledge Leader here.
Looking back over the last year, it’s hard to ignore the multiple shifts that occurred in healthcare – many were underway before the onset of the pandemic but were accelerated under the conditions of quarantine.
The pivot to virtual care necessitated the growth of telehealth offerings and sweeping patient information digitization. Of course, 2020 also saw quite a few notable mergers and launches across the healthcare industry.
However, one of the biggest shifts was the rate at which retailers entered the healthcare market or expanded their existing healthcare offerings.
How We Got Here
Retail was hit hard by the COVID-19 shutdowns: massive furloughs, permanent store closures and increased vacancies in shopping centers. This battering from the economic downturn and the drop in consumer spending forced many retailers to adapt their model and find opportunities for business expansion.
According to an analysis conducted on the Bureau of Labor Statistics Consumer Expenditures Survey, today, Americans spend 101% more on healthcare than they did in 1984 – and it continues to rise. Retailers recognize this and want to get a piece of this consumer spend.
In the coming year, healthcare will continue to act as a safe harbor for retailers looking to right the ship in tumultuous seas. This ongoing intersection between industries could play out many different ways.
Here’s what I predict for the growing crossover between retailers and healthcare in 2021.
First Testing, Soon Vaccinating
One way retailers forayed into healthcare in 2020 was by offering services specific to the COVID-19 outbreak itself.
Almost immediately, companies like Target, Walgreens and CVS opened up their locations as free testing sites for the virus. CVS alone administered six million tests between March and September. Walmart also hopped on this train, offering in-store COVID-19 tests in March and now has its shelves stocked with new take home test kits.
Now that vaccinations from Moderna and Pfizer are in distribution, it is likely that retailers will shift, or expand their existing testing services, to provide COVID-19 vaccinations when they are available.
For retailers, “providing vaccinations is also a way to encourage customers to come back to stores and could help win over some new shoppers—but only if retailers provide a seamless experience without ‘long lines and chaos’.” (Via AdWeek)
Medical Malls on the Rise
Minute clinics, pharmacies and mini health centers have become mainstays at big box stores over the years. But in 2021, healthcare services will take over retail real estate at an even higher rate.
Retail landlords were hit hard by the wave of store closures and resulting tenant vacancies in malls. To fill these gaps, landlords scouted healthcare tenants as a way to provide an ongoing source of stable cash flow.
“The retail apocalypse presents opportunities for hospitals and health systems looking to grow. Retail sites are ideal for redevelopment since they typically have adequate utilities, parking and entitlements (zoning) for hospital and health care users.” (Via Hall Render 2020 Healthcare Real Estate Year in Review)
Many of these spaces will hold reimagined medtail (medical + retail) spaces, such as “super clinics”, “micro-hospitals” and other specialty care.
Expanding Contactless Healthcare
Limiting human contact was the theme of 2020. Curbside pickup, grocery delivery and contactless payment were a few of the ways retailers provided safe transactions for their customers.
In 2021, we may see a wave of new partnerships to enable contactless healthcare flows, or new contactless healthcare technologies developed by large retailers. This opportunity goes beyond telehealth services and virtual appointments. For patients who need to be treated in-person, hospitals and clinics are scrambling to replace check-in kiosks prone to cross contamination and are looking for new patient monitoring systems that reduce nurse exposures and save on PPE (via Becker’s Hospital Review).
In July, CVS signed a contract with PayPal and later became the first national retailer to offer contactless Venmo and PayPal technology at checkout registers. It is likely that more retailers will partner with care providers or expand their own offerings to facilitate contactless healthcare delivery.
Not Every Venture Will be Successful
While retailers like Walmart have seen success from its healthcare expansions – such as its COVID-19 testing, new insurance company and launch of Walmart Health clinics, others have not been as successful.
We’ve recently learned of Haven Health’s fate, which was the joint venture of the moguls leading JP Morgan, Berkshire Hathaway and Amazon. Just three years after launch, it is shutting down.
Haven Health’s goal was to provide better healthcare services and insurance at a lower cost to workers and families, but the main reasons it failed was its inability to dominate the market and the timing of the pandemic, as many healthcare centers are and will be wary of new risk contracts.
In 2021, a safe prediction is that there will be more missteps from big retailers trying to get a piece of the healthcare market.
I know I’ll definitely be watching to see how both “Google Health” and Amazon HealthLake fare.
What are your predictions for retailers in the healthcare market?