Hospitals and medical clinics, faced with tighter reimbursement from insurers, are looking for new ways to make money, and retail is one of them.

“Retail medicine” is a term for any health care related product or service that is not covered by insurance, from aromatherapy oils to acupuncture and massage. Hospitals and medical clinics in the Milwaukee area and throughout the country are expanding their offerings to include a variety of products, from wigs and scarves for cancer patients to specialty cosmetics.

The trend is a way for hospitals to increase revenue from sources other than insurance and government health plans and to expand care outside the hospital, said Gary Paquin, executive vice president of The Paquin Healthcare Company, a health care retail consultant firm based in Celebration, Fla.

“Reimbursements are all going down so much that doctors and clinics and hospitals are having to find a new way to make money,” said Paquin, who has been hired by Columbia St. Mary’s Inc. to propose a retail medicine strategy for the Milwaukee health system in 2008.

The average hospital makes $500,000 annually from retail such as gift and coffee shops, but has the potential of $5 million to $15 million annually with extended retail medicine, Paquin said. The return on investment is higher in retail than in reimbursed health care, with 15 percent to 20 percent returns in retail, compared with 2 percent to 3 percent return in reimbursed health care, he said.

Health care retail is a $400 billion industry in the United States, encompassing services and products from alternative medicine to exercise products, Paquin said. However, distribution of the industry is fragmented. Hospitals want to capture the market and increase revenue by making products and services available to patients.

From The Business Journal of Milwaukee – by Elizabeth Sanders

Popularity: 29% [?]