What are the right -- and wrong -- lessons for healthcare leaders to take from the retail industry?

An article in this week’s Wall Street Journal got me thinking about commonalities between healthcare and the retail industry (and between patients and customers), as well as Big Tech’s arrogance in thinking they can dominate any industry they decide to enter. The article specifically addressed Amazon’s repeated failures in the brick-and-mortar space, and included this mind-blowing quote from retail industry consultant Nick Egelanian:?

“I don’t think they really understand retail.”

Really? Amazon doesn’t understand retail? We’re talking about the “Everything store” where you can order just about anything in the world from the comfort of your couch, and often have it dropped off at your door the following day. The company that decimated bookstores before going on to decimate toy stores. The king of online retail in a world that’s increasingly online. The company whose founder repeatedly topped Harvard Business Review’s annual list of best CEOs (until 2019 when HBR added ESG criteria to their calculation and Bezos dropped way, way down on the list). How could anyone possibly say that Amazon doesn’t understand retail?

Because of two sticky facts. One is that brick-and-mortar retail isn’t going anywhere. It still accounts for about 85% of all retail sales. And the other fact is that Amazon is absolutely s*** (pardon my British) at running brick and mortar stores. A couple years ago I visited an Amazon Go grocery store on Kensington High Street in London. I found it a strange, impersonal experience. On entering the store, you first check in with your phone (i.e. with your Apple Pay). Then you go about your shopping, putting items into your basket while creepy spy cameras throughout the store monitor your every move. Then when you’re done, you just walk out of the store. No check out line. Not even a self checkout. I guess it’s supposed to feel efficient and convenient, but for me it just felt uncomfortable. Part of me worried that I might be accused of stealing something if there were any sort of glitch with their cameras and image analysis software, and the other part of me worried that they might charge me for something I hadn’t actually taken (or perhaps did take but then put back on the shelf). Maybe there’s a way (an app?) to double-check your Amazon Go purchases before leaving the store — but if so, is that really more convenient than reconciling your items at a checkout counter? Also: other than the technology, it was just a boring, generic grocery store.

Compare this to shopping at Trader Joe’s, operated by the same German family-owned company that owns Aldi, with decades of retail grocery experience under their belt. Trader Joe’s products are distinctive and not too expensive. Their Aloha-shirted employees are friendly and engaging and pretty much everywhere you turn. Yes, you have to go through a traditional checkout line at the end, but the checkers are fast and efficient. And did I mention friendly?

I also shop for groceries at other places. There’s a Kroger store that I frequent near my house in Utah, with a much wider (if less fun) selection. I enjoy my occasional trips to Costco, though I've tired a bit of the limited selection and large sizes. When I lived in London, two of my go-to stores were Aldi and Marks & Spencer Simply Food. The first when I was feeling frugal, and the latter when I was in the mood for more upscale products. (There was also a Sainsbury’s nearby for when I needed a broader selection.)

My point is that customers’ retail needs and desires can’t just be reduced to the checkout process. There’s also product selection, location, vibe, employees, and on and on. Some of these are physically tangible factors that can’t be replicated online. Others are amenable to hybrid models, as when I shopped for a jacket in a physical Marks & Spencer store, but placed the order on their website because I’m 6’8” tall and their tall sizes are online-only (with fast, free delivery). All of this creates opportunities for retail companies to focus and differentiate on factors that customers care about.

So what lessons should the healthcare industry draw from Amazon's failures in physical retail?

1. Patients vary at least as much as shoppers do. Which means there are many different ways to meet patients’ needs and expectations. (Corollary: no one model of care delivery is going to be optimal for all patients and all circumstances.) A 30 year old with a busy career who just needs an occasional prescription refill might love the convenience of a virtual visit, even with a provider they’ve never met before. But that’s very different from another 30 year old with a chronic health condition who needs a trusted partner in navigating their health journey, or an 80 year old with multiple complex conditions. You should be skeptical of any healthcare company who implies that their particular innovative care delivery platform can do everything for everyone.
2. Human connection is central and therefore strategic. This is even more true of patients than it is of retail customers. Organizations need to view their healthcare workers as an asset, not a liability to be engineered away. That doesn’t mean you can’t carve off certain tasks such as requesting a prescription refill as either tech-enabled or self-service. But it does mean that humans will personally perform key processes, and organizations should give careful thought to optimizing these human interactions. Trader Joe's' decision to restock shelves during daytime hours in order to increase interactions with customers is a nice example on the retail side. In healthcare, one area of low-hanging fruit is appointment scheduling. Most health systems centralize scheduling into call centers for "efficiency." But those remote scheduling clerks often do a suboptimal job, leaving patients and providers frustrated. Better to let each clinic manage their own scheduling, using the same employees who greet patients at the desk when they arrive. Repeat patients tend to build relationships with front desk staff, and scheduling through someone you know just feels better than talking to some anonymous person. More importantly, front desk staff know a lot about the clinic’s providers and patient flow and can do a better job handling last-minute requests, changes, and special needs than remote call center staff do. Which I predict would improve overall efficiency in addition to satisfaction.
3. Healthcare is as physical in nature as it is information-driven. The role of tech should be to seamlessly improve the physical experience, not interfere with it. In retail, a good phone app can tell me which aisle a product is on, or give me additional info on the product. In healthcare, my patient portal makes it fast and easy to check my lab results. In contrast, Amazon’s spy cameras that they use to get rid of the checkout process, sort of like those absurd Forward Health pods where patients had to communicate with an AI bot rather than a human doctor, are completely unhelpful.
4. If a successful company like Amazon doesn’t understand brick-and-mortar retail, why would anyone think they would understand a totally different industry such as healthcare? I remember a few years ago when Amazon announced they were hiring Atul Gawande to run a new healthcare company in partnership with JPMorgan Chase and Berkshire Hathaway. Most of my healthcare friends and colleagues were convinced that Amazon was about to put traditional hospitals and doctors and laboratories out of business. Instead, Haven never got off the ground and then folded within a couple years. This Harvard Business Review article blamed the failure on the messed-up health insurance market, but I find that argument nonsensical. The whole point was that Haven was going to change the market. The more likely causes were that Amazon/JPMorgan Chase/Berkshire Hathaway leadership didn’t understand healthcare enough to have realistic expectations, and Gawande, while a brilliant writer and presumably brilliant surgeon, was out of his depth in trying to steer these behemoths in a useful direction.

Bottom line: To succeed in healthcare, as in retail, you have to build and continually refine your service around the needs and desires of a set of patients/customers. Technology per se isn’t a differentiator; it can certainly be useful when used thoughtfully, but misapplied tech can make things worse.

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