Blog | 8/24/2023
Changing the Channel: Retail Healthcare Considerations for Medical Technology Manufacturers
By: Andrew Millar and Darcy Krzynowek
Retail healthcare businesses are putting substantial effort into expanding the scope of their healthcare services.
Health Advances research suggests these efforts are not in vain-- meaningful proportions of patients prefer to access certain medical services and technologies (not just drugs) in retail locations.
Notable examples of technologies that leverage the retail channel include several chronic care management technologies as well as tests for screening and diagnosis.
Each technology will have a different set of drivers and barriers for the retail channel, so launching a new channel initiative takes careful consideration on the part of medical technology innovators.
Retail Channel Buzz
Much has been said and written about the growing role of retail pharmacies, among other emerging delivery channels, in providing healthcare in the US. Whether it’s CVS’s continued evolution of HealthHub, Walgreen’s challenges with VillageMD, or another vaunted partnership, headline-grabbing announcements have led to considerable speculation about how this trend will shake out in the future. But in the near-term, it begs the question: do patients really want to access more products and services in the retail setting, and if so, what does that mean for medical technology manufacturers?
Real Patient Demand for Retail Behind the Buzz
Since the pandemic, Health Advances has done significant research on the patient demand for accessing certain technologies and services in new channels, including retail locations. Unsurprisingly, every patient is different. Some want as much of their care as possible to go through a primary care provider at a physician or health-system-owned practice. Others, though, would sooner drop-in to a corner CVS for many products and services if they could. And while it varies by technology too, we see that up to a third of patients would prefer to access care related to certain types of products in the retail channel if it were available.
Of note, in our research, we often see that younger patients (i.e., ages 50 and under) are more interested in accessing care and medical technology through the retail channel which makes sense given that this population may be more likely to have busy schedules and lack strong primary care relationships. They also may be more comfortable with digital scheduling common in the retail setting.
Technologies Changing the Channel
While we’re not aware of any Da Vinci robots being placed at MinuteClinics yet (and hope to not see this), there are some early signs of medical technologies evolving their channel strategies to better meet patient demand.
One of the most notable examples has been continuous glucose monitors (CGMs). Market incumbent Dexcom started off supplying CGMs through durable medical equipment suppliers (DMEs), but soon after Abbott entered with Freestyle Libre in 2017, Abbott shifted the market into the pharmacy channel. Both players saw retail pharmacies as a way to enhance patient access and by 2021, over 50% of CGMs were going through the pharmacy channel,. On the other side of the counter, we see CPAP for sleep apnea, where both Philips and ResMed are distributing some supplies via big retailers.
Both CGMs and CPAP supplies are physical products with consumable components. For these products, physicians can initiate patients and then direct them to a retail location. This means retail locations can supply these items without drastically changing their service offerings. But consumable device manufacturers are not the only ones interested in the retail channel – or, for that matter, the only technologies the retail companies are interested in.
There appears to be significant interest in expanding offerings related to screening or diagnosis. Examples include colorectal cancer screening tests, and home sleep tests among others. These perhaps make sense because they need to reach extremely broad at-risk or prevalent patient populations – a task that retail pharmacies and clinics – with their 60,000 locations, strong digital infrastructure, and easy appointment-making, seem well-equipped to do. The challenge, however, is then building out the services that make these tests actually meaningful (i.e., patient selection, interpretation, and follow-up). Manufacturers of diagnostic tests and equipment thus face an added layer of complexity when weighing their retail opportunity.
The extent to which these initiatives succeed in improving access and outcomes remains to be seen, but they are all worth watching and learning from.
Thinking Through Your Retail Opportunity
Certainly retail care channels are not going to be right for every technology and there’s a lot to consider in making that decision at a product-level, including but not limited to:
- Do patients feel comfortable accessing this technology in particular in a new channel?
- Will payers reimburse for the technology if prescribed/administered/delivered in a new channel? If not, is there a viable self-pay path?
- Are channels themselves actually interested in providing the technology?
- Do the channels have the requisite provider infrastructure to support the technology, or can they at least facilitate patient flow to somewhere that does (particularly for diagnostics)?
- How easy to use is the technology?
At Health Advances, we frequently help medical technology companies identify channel opportunities to expand their reach. Thoughtful patient research, conversations with retail channel stakeholders, and analysis of analog technologies can all prove helpful in prioritizing and setting expectations around new channel initiatives. By paying attention to new channels, we hope to see more medical technology companies rise to the challenge of meeting their patients where they are, or, for at least some portion of patients-- where they want to be.
 Health Advances research
 Health Advances research
 Company filings, earnings calls and, analyst reports.
 CPAP = Continuous Positive Airway Pressure
About the Authors
Darcy Krzynowek is a Vice President at Health Advances and a leader in the MedTech Practice. Darcy has over 20 years of life sciences consulting experience with expertise in DME and consumer devices. She also leads Health Advances’ market insights efforts including consumer/patient qualitative and quantitative research.
Andrew Millar is a Director at Health Advances, leading projects for medical technology companies and investors.
Vivek Mittal, Arushi Agarwal, Sheela Hegde and Tracy Walters also contributed to this article.