st
1
Affirmative: Fabry
Change is Coming
Futurescan
2000
A Millennium Forecast of Healthcare Trends 2000-2004
Strategic Implications:
•
Be innovative in creating new customer models, with fresh designs for new ..
facilities. Aim to please “fussy customers” with a high degree of access,
convenience, close in parking, and other consumer amenities
•
Creating loyalty with Baby Boom-age patients may be one of the best long-term
investments for any health care provider.
•
The next phase in consumerism will be the demand for quality
3
Projected Population with Hearing Loss
Population (Millions)
60
50
40
30
20
10
0
1989
2000
2010
2020
Year
2030
2040
2050
Market
4.9%
1.2%
2.7%
4.0%
2
0
2
5
2
0
1
3
Possible Alternative Hearing Aid Distribution Systems
Classic Distribution
System
Manufacturer
Direct Distribution /
Own Stores
Online Direct
Distribution
Semi-Direct
Distribution via MD
Online Retailer with
Local Cooperation
Online Retailer w/o
Local Cooperation
Manufacturer
Manufacturer
Manufacturer
Manufacturer
Manufacturer
ENT
Online Retailer /
Wholesale
Online Retailer /
Wholesale
Audiologist / HIS
Flagship store /
own shops
Local hearing
professional
End Consumer
End Consumer
End Consumer
End Consumer
End Consumer
End Consumer
Health
professional
involved
Health
professional
involved
No health
professional
involved
Health
professional
involved
Health
professional
involved
Health
professional not
necessarily
involved
Costco provides a solution
Costco
• 2nd Largest Retailer in US
• 7th Largest Retailer in the World
• 598 Warehouses in US (40 states+PR) and ROW
(Canada, Mexico, UK, Japan, Taiwan, S. Korea,
Australia)
• Average Warehouse 143,000 sq ft
• Average Revenue $146M/year
• $1000 sq ft/yr Revenue Benchmark
• 10.69% GM, 2% membership fee
Costco: 2011
•
•
•
•
•
•
•
1.9 B TVs sold
103,000 Carats of diamonds sold
$1.3B wine sales ($681 M “fine” wine – DP #1)
$3.9B Produce
$4.6B Beef sales
3.2 M pairs of eyeglasses
35 M prescriptions filled
• Brand loyalty to Kirkland Signature (25% sales goal;
equivalent or better quality to “name” brand, with 20%
saving)
Demographics
Household Income
% > 100k
College Educated
Own Home
Average Age
US
Costco
69.8K
20%
21%
74%
46
95K
41.4%
35.2%
87.8%
50
Costco and Hearing aids
• 446 Hearing Aid Centers (380 in US) in 2011
• Goal of 500/400 in 2012
• 20% Growth in 2011 compared with 2.7%
Industry Growth
• Currently, 390 HA Centers in US dispense a total
of 143,000 Units (~7% of total)
• 85% “premium” products
• $1100 ASP, +GM% than average, while also
exceeding store benchmarks for rev/sq. ft
Costco Staffing
•
•
•
•
•
•
•
•
20% Audiologists
80% Dispensers
Hearing Aid Apprentice Program
No Sales Commissions
90-day trial period
75% Closure rate, 18% RFC (using Industry stats)
On average, 4 patient visits per fitting
REM used for every patient
Costco will make Audiology
better
Satisfied & very satisfied customers have not
grown during the digital revolution
90
80
% satisfaction
70
23
60
23
50
40
40
40
39
39
21
19
21
21
21
24
1991
1994
1997
2000
2004
2008
30
31
30
20
10
0
Very Satisfied
Satisfied
Somewhat satisfied
Impact of Dissatisfied patients
• Deming proved that a dissatisfied customer
tells 16 other people but a satisfied person
only 8 others.
• Negative word-of-mouth has blocked close to
4 million from purchasing our product in the
U.S.
"There is no reason for any individual to have a computer in his home“
Ken Olsen co-founder of Digital Equipment Corporation (DEC)
“Commoditization is
one of the biggest
threats to everyone
involved in business in
the 21st century”
Steve Forbes (2011)
noun \kə- ‘mä-də-tē\ :
a good for which there is demand, but which is
supplied without qualitative differentiation
across a market
nd
2
Affirmative: Pessis
Relax:
It’s Not the End of the Profession
Paul Pessis
What’s the Fuss?
• 30 million Americans have hearing loss
• Market penetration for hearing aid purchases
has remained stagnant for years
• Costco is about a “bargain” purchase PRICE prevails
• Good distribution model:
– “Best Practices” is good for the profession
– Part of free enterprise
So We Hear….
• 20% growth in Costco HA sales for 2011
– Most growth is noted “upfront” for a start-up
– 18% return for credit; hmmmmm…..
• Average Costco warehouse – 143,000 sq ft
– What’s the size of their audiology space?
Typical Costco Hearing Aid Space
Hey, Do You Like the Sign?
Dr. Kasewurm has more space in her bus, than a
Costco Hearing Aid Center
“If they don’t come to you, go to them!”
http://www.prohear.net/our-award-winningpractice
…and they love Costco!
Baby Boomers
• Costco has Baby Boomer loyalty because:
– Baby Boomers want consistency, good service,
and a reasonable price
• Baby Boomers span an 18-year
population explosion (1946-1964)
totaling ~77 million citizens
• One baby boomer will turn 65 every
8 seconds!
Not All People Shop “PRICE”
• COSTCO is “free” advertising for YOUR practice
– People are curious; raises interest
• Challenges the so called “7-Year” syndrome
• Curiosity peaks: but most will contact you first, especially if a
prior user – don’t let them pull the Costco trigger!
• Opportunity knocks: make a positive out of a negative
• Don’t underestimate the intelligence of the consumer
– Relationship building with the hearing professional
breeds confidence on the part of the consumer
– PRICE is frequently not the decision-maker
• Differentiate your practice from Costco
Differentiate
• May require rethinking your business model
– Profit is no longer defined as:
“the selling price minus the cost of goods”
• Time to unbundle?
– Charge for professional services; some insurance
companies, other than Medicare, pay for them
• Examples:
– Earmold impression; each: V5275
– HAE: 92591
– Cerumen Management: 69210
Result: This adds revenue that is often “forgiven”
The Bottom Line
• Can a practice compete with Costco and still
achieve its desired profit margin?
– It can be competitive
– Its brand has to offer something different than Costco
– Costco “spikes interest” by setting the stage so your
practice can “make it happen”
– Is it necessarily a bad thing to “purge” price shoppers?
• They are often the most
time-consumptive and
chronically needy
The Psychology of the PRICE SHOPPER
• What have you done for me lately?
• They often need multiple visits to be
“convinced” that they are doing well and then,
we are undermined by “my friend says…”
• “Free” follow-up visits are not cost effective
• Do you perform outcome measures to assess
patient satisfaction?
– What promotes loyalty?
Breaking the Code
• Costco is smart: they have identified an
underserved market
– They intrigue customers with price and confidence,
especially with the “KIRKLAND” brand
• Good wine must mean good hearing aids
• What is your brand?
– How do you retain your patient base?
– What do you measure?
– How do you market new patients ? Medical referrals?
• Identify what works for your business culture
and promote it
Eavesdropping
• FRIEND ASKS: “Where did you get your hearing aids?”
– Costco hearing aid user response: “from Costco”
• “Really, what did you pay?”
– “I played golf earlier this morning and had a great round”
• Laughter: “You should have paid more!” Buy your
toilet paper at Costco, but for healthcare, you should
have seen MY audiologist
– “Yes, I am grateful to Costco for creating the environment
for me to accept my hearing loss, but I now realize that
global hearing healthcare trumps price”. Next time…”
Patient satisfaction studies do not support that Costco
has a hold on the market – they are an “option”
Y
•
•
•
•
You Have the POWER!
Provide FRIENDLY quality service
Walk-ins are not your enemy
Verify hearing aid performance
Are the gimmicks really needed?
– Does popcorn, treats, etc., guarantee patient loyalty?
• Practice your scope of practice with unmatched
skill sets:
Professionalism breeds patient confidence and
attracts the type of clientele who are loyal and
willing to pay for the services rendered
Gyl’s Quotes For Success –
Her Branding
•
•
•
•
Creating the Ultimate Customer Experience
ANYTHING Is Possible
Service With a Smile - A Necessity Not a Luxury
Attitude Really is Everything
So What Is the Obvious?
• SIZE doesn’t matter!
• You can only control your own BOX…
• Quality competition is good for everyone
– Don’t “discount” your options
Let Costco “aid” you in being successful
2nd Affirmative Rebuttal
Fabry