Compete by Bursting the Bubble
How MinuteClinic Met the Unmet Health Care Needs of Millions—Cheaply and Conveniently
MinuteClinic provides medical attention for simple complaints that don’t require a doctor’s attention. Nurse practitioners at MinuteClinic kiosks can administer shots, treat sore throats, prescribe flu medicine, and perform other such basic medical services without a doctor on the premises. MinuteClinic is a classic example of a company whose founders recognized a significant unmet consumer need and seized the opportunity by borrowing an idea from a seemingly unrelated industry. What began as a notion for a few partners in Minneapolis eight years ago has blossomed into a coast-to-coast operation serving more than 500,000 customers a year. And when CVS Caremark Corporation bought the company in 2007, the all-cash payoff for the founders was $170 million.
Why do some people easily spot opportunities where others see only obstacles, if they see anything? The answer begins with the human penchant for living in a bubble—an airtight cocoon of assumptions, beliefs, or worldviews.
The bubble mentality shows itself in a runaway bull market, for example, when speculators who should be thinking about sharply escalating risks are blinded by greed. Convinced that soaring prices will keep going up indefinitely, they keep on buying. And then one day they are blindsided when the bubble bursts.
The good thing about business bubbles, however, is that they invite inventive minds to stick pins in them. MinuteClinic’s founders were bubble bursters, creative guerrillas who thrive on outsmarting complacent companies in industries that run on tired ideas. Bubble bursters come in all cultural shapes and financial sizes, but they share one indispensable trait: They see what others can’t, and they act on it by applying solid practices that everyone else agrees are irrelevant to their industry or company.
Medicine (Mostly) Without Doctors
MinuteClinic’s kiosks are built on this premise: Many common ailments do not require treatment by a physician or a hospital emergency room and can be safely, inexpensively, and rapidly handled by a well-trained nurse practitioner. Stated that way, it sounds more like common sense than a revolutionary idea; after all, it’s no different from Jiffy Lube’s insight that you don’t need a fully trained mechanic to change the oil in your car. But until MinuteClinic’s founders came along, no one in the healthcare field would have dreamed that they could learn anything from the grubby business of auto maintenance. And in practice, MinuteClinic’s road from insight to reality was full of rough spots and barriers.
Here’s how MinuteClinic works: The company’s kiosks are open seven days a week for a total of at least 72 hours. The kiosks clearly post the ailments that can be treated there, along with the fees. Some two dozen medical issues, ranging from allergies and athlete’s foot to sinus infections and suture removal, are treated at prices that seldom exceed $59 a visit, and insurance covers most of that. Children younger than 18 months are not accepted as patients because diagnosis is often difficult in the very young.
Generally, one nurse practitioner staffs each kiosk, and she or he has both a four-year bachelor’s degree and a two-year master’s degree in nursing, plus a license to prescribe drugs. Only verifiable, quickly identifiable illnesses are treated. The company has strict protocols and screening procedures, backed by sophisticated software, to confirm a diagnosis and rule out really serious conditions. Each kiosk also has a physician on call if the nurse has any doubts or concerns, and a report on each visit is faxed to a patient’s primary caregiver.
Most visitors to MinuteClinic are treated within 10 to 15 minutes. But if several people arrive at the same time and stretch the wait beyond 5 minutes, the company has a smart and simple solution: Patients receive pagers that enable them to shop in the surrounding store until they’re buzzed.
Michael C. Howe, a veteran marketer at Procter & Gamble and Helene Curtis, became Chief Executive of MinuteClinic in 2005. Howe, whose resume also includes four years as CEO of fast-food purveyor Arby’s, told me about his hiring: “In the first interview on May 6, I said, ‘Guys, I love the concept; I love it. But you made a mistake—I’m not a healthcare guy.’” That was just fine with those doing the hiring, and less than a month later, Howe was in the driver’s seat. As it turned out, bringing a superb marketer to retail healthcare was just what the doctor should have ordered. The bubble that so often makes medical providers oblivious to customers’ needs was about to meet a sharp pin, much to the benefit of MinuteClinic’s financial health.
When Howe arrived, board chairman Dr. Glen Nelson described his job as building the systems, processes, and structure that would be essential if MinuteClinic was to have a national footprint. Two years later, the company had gone from 19 clinics in two markets to 83 clinics in 10 states, and it received a marriage proposal from CVS Caremark, the largest retail pharmacy in the United States. Now, as part of the CVS empire, which counted more than 6,000 retail and specialty stores in 43 states and the District of Columbia in 2007, MinuteClinic’s bright little kiosks will be visible nearly everywhere.
Healthcare is a very tough industry to change. Physicians call the shots not just within their own practices, but in hospitals and clinics as well. State laws, largely dictated by physicians, control who can provide healthcare. What’s more, doctors have an emotional hold on all of us. We’ve been raised to accept gratefully whatever a physician serves up. Howe likens a doctor to the Wizard of Oz—no one dares to look behind the curtain. When we get our cars fixed, we go to the garage when it’s convenient for us, we ask what’s wrong, and we question, maybe even haggle over, the price. But as Howe pointed out, “With a doctor, you take the first appointment, you wait in the office forever without complaint, you accept what the doctor says without challenge, and you never talk about price.”
What MinuteClinic saw that others either didn’t see or simply ignored were the fault lines in the system. The healthcare challenge in America today is enormous, and patients might be running out of both patience and the money needed to pay soaring fees. The old doctor-driven mode of delivering healthcare is under siege. Indeed, more people use the Internet to make themselves smarter about their physical problems. They are also asking physicians to explain diagnoses and treatments with more candor and clarity. What might come as a surprise to some is that more than a few doctors seem happy, even relieved, to oblige.
At the same time, health insurance costs have skyrocketed while eligibility declines, leaving scores of millions of Americans uninsured. In many parts of the country, patients—even those in great pain—must spend hours waiting for care in hospital emergency rooms. It’s no exaggeration to say that you risk your life if you get sick or injured at night or on a weekend.
Howe’s strategy was shrewd and, in hindsight, obvious: MinuteClinic would address parts of all these dysfunctions by biting off the easiest, least complex chunk of the healthcare market. The company’s success actually derives from a critical understanding of both medical and retail value, a lively blend that Nelson and Howe bring to the table. They have taken a crucial step toward making healthcare standardized, convenient, and affordable. That’s a goal that might never be fully attainable—open-heart surgery and cancer care, for instance, aren’t ever likely to be off-the-shelf offerings. But there’s no reason why the MinuteClinic model couldn’t be applied, with precautions and modifications, to a whole range of ailments and procedures that have become standard practice in healthcare.
Nelson, who oversees the constant upgrading of the company’s healthcare delivery, has also built bridges to the medical community, reassuring his peers that MinuteClinic has high standards of care and strong safeguards to prevent mistakes. He has even developed partnerships with other, more traditional caregivers, including a few hospitals that have invited MinuteClinic to set up kiosks in their facilities. For these enlightened hospitals, it’s a boon to have nurse practitioners take over simple chores that would otherwise tie up doctors and add to their long lines of “emergency” patients. These days, MinuteClinic is even getting patients referred to its kiosks by overworked doctors and hospital emergency rooms.
As for Howe’s contribution from the retail side, he describes his input as “teaching the nurse practitioners to be service oriented and patient centric.” For example, in handling complaints, “we’re teaching people not only how to remediate the complaint,” he says, “but to embrace it as a learning experience.” Although a complaint can destroy a career in the healthcare field, a complaint in retail can be beneficial because it tells people on the front line what the customer wants. It provides a chance to improve service.
The next logical step, Howe told me, was to instill greater sensitivity in the nurse practitioners so they could head off complaints before they erupted into full-blown problems. For example, Howe urges them to pick up on customers’ body language, including the folded arms and constant checking of watches that signal impatience.
As for marketing the business, Howe sums up his mission in these words: “Reach and teach.” The company needs to “emotionally reach consumers” to communicate the value of MinuteClinic, he says, and “teach them what it is and isn’t, and how best to use it.”
The biggest challenge Howe and his company face is the regulatory minefield laid down by state medical lobbyists trying to defend their turf. The rules go back to the nineteenth century, are immensely complicated, and vary from state to state. In most states, they add up to a monopoly on medical care and represent old assumptions about where knowledge and skills reside, which boil down to this: “Only a business run by physicians can treat you.” But state by state, MinuteClinic is chipping away at the regulations and successfully opening new clinics. Howe is optimistic. He thinks reform is inevitable, and history would seem to support that view. Not surprisingly, Howe is also confident that MinuteClinic will soon be a household name.
Get Smart
• Widen your lens. By viewing the healthcare industry in a retail context, the founders of MinuteClinic were able to identify an anomaly and offer an alternative.
• Make friends. Your number-one goal, of course, is to outsmart your competitors. But after you’ve done that, it’s time to think about cooling things down. Conflict resolution frees up a lot of energy and resources that can be devoted to the business.
• Execute on the change. Identifying a problem and finding an out-of-context business practice to emulate is only the first step. Next comes the careful implementation of your idea.
• Redefine the culture. You can’t take anything for granted when you create a bubble-bursting business model. You need to establish a culture that will support what you’re trying to achieve.
Questions to Ask Yourself
• Are you looking beyond your industry to discern how to deliver more value to your customers?
• Which customer needs are going unmet within your own industry? Can you find a similar problem that has been solved in another field? Could that model be modified to work for you?
• Have you made a hard assessment of how your customers rate the performance of your company and industry?
• Can you change your business model in ways that will point the entire industry toward better performance?
• Would your customers and company benefit from collaboration with other companies, even your competitors?
• What changes to people, processes, and technology would be required if you changed your business model?
• What cultural and behavioral changes would you need to make within your company?
• Would your people be able to adapt?