Blending Healthcare Into Hospitality: Opportunities and Challenges

We’ve been talking to a lot of hoteliers lately and without fail every hotel owner or GM says the same thing, “We want to develop a wellness/medical product as part of our guest services portfolio”. To be clear, this is not a new ask. Hotels have been looking to add ‘medically light’ services for years, but Covid has supercharged their interest by an order of magnitude.

At face value, this makes a lot of sense. There is a growing trend towards healthy living and lifestyles, more people are spending time and money at thematic retreats (yoga, meditation, weight loss), and ‘health’ offers hotels a new channel to boost spend and create differentiation. Hoteliers recognize that adding another food and beverage outlet or spa product will not move the dial, and this lack of good alternatives is driving hospitality into the arms of healthcare.

But administering an IV drip to a guest is a world apart from offering a foot massage or Reiki session. Healthcare brings a new set of regulatory and licensing issues into play, and as a rule hoteliers are not comfortable adding new services that incur liability and cost without a clear upside in front of them.  In our discussions with GMs, the most pressing concerns with delivering health services revolve around four areas: liability, cost, asset utilization and performance.

Without a doubt, the single biggest issue preventing more hotels from offering healthcare services is liability. Hoteliers do not want any additional liability associated with delivering healthcare to guests. They have enough challenges managing leisure guests without the added risk of someone reacting badly to a treatment or getting misdiagnosed. 

Hotels and resorts that have tried to deliver medical/wellness services to their guests often collaborate with a local healthcare provider, but this is often hit and miss because business interests are misaligned.  Hoteliers tend to view the clinic as just another retail outlet, and the healthcare provider never goes all in with its best people or products. The result is a sub-optimal service with sub-optimal performance.

The next issue is cost. Owners are reluctant to spend CAPEX and OPEX to build out and staff a clinic.  They want something that boosts guest spend and gross operating profit without risking capital needed to weather a protracted Covid storm. Hoteliers know the payback horizon if they invest in another F&B outlet; they don’t know what it is for a clinic.

In a related vein, hotel GM’s want to extract more value out of the assets they do have rather than build new ones they don’t have. Hotels are sitting on a mountain of value trapped in assets like fitness centers, restaurants, spas, meeting rooms, etc.  Building a new clinic or wellness center sounds great, but driving more volume through existing assets sounds even better.

Lastly, hoteliers want products that impact performance metrics important to their business (and bosses) – spend per stay, length of stay, average room rate.  They don’t want a novelty; they need a driver that generates longer stays, higher spend and more pricing power. These KPIs drive the business, and any new health/wellness related investment is measured against that yardstick.

So what is the healthcare product that fills the gap? Is it an IV drip clinic in the retail area? Is it an on-site coach and counselor? Is it a doc in a box?

Having worked in both healthcare and hospitality, I believe the model will depend largely on the strategic direction of the hotel company and how deep (or wide) they want to go.  The health product has to be part of the hotel’s portfolio and brand positioning going forward; not just a bolt-on to fill a perceived gap in the product line.

We also see “wellness” reaching a point of saturation, because anything and everything is now being labeled wellness. Our view is that healthy solutions will be a future business driver for hotels worldwide, and the bigger players will develop bespoke, branded, scalable solutions they can deploy network-wide, while the smaller players will most likely try to carve out a position in a specific area and build a reputation for a specialty product or service.

The paths may differ but the destination is the same.  Healthy is here to stay.

 

Intermedika provides strategic advisory support to the hospitality industry.  Our team has deep experience developing and operating hospitals and medical light clinics in hotels and resorts.  We work with hotel owners, operators and investors to develop strategies, products and programs that blend healthcare, hospitality and tourism.

The Hospital Website Disconnect

Today, hospitals have a myriad of online channels they can use to market their services, but still no tool is more efficient or cost effective to reach customers (old and new) than their website.  

Obvious statement? Maybe.

Intermedika has worked with hospitals around the world and it never fails to surprise us how few hospitals use their websites to their maximum potential.  More often than not, we see hospitals skimping on their web platforms using off-the-shelf web designs and stock photos to build a minimally viable product that is ‘just good enough’.  

On the whole, we believe hospitals struggle maximizing their digital channels in large part because there is a disconnect between the online user, the marketing manager and the hospital leadership.  Let me explain.  

The hospital's leaders knows they need a website and as long as they have one that 'works', then good is good enough. They have other, bigger issues to tackle and don't want to overspend on web optimization. Furthermore, they don't see the web as core to the business, like doctors, nurses or medical equipment.

The users of the site (customers) want ease of use and good functionality. The best hospital websites have deep information about doctors, services, programs; a real-time booking system to make appointments; and a system that sends regular updates and reminders to help patients stay current.  The better the site, the more customers use it.  It’s a virtuous cycle.

The manager of the site (usually the marketing department) is tasked to find a qualified but economical vendor to build and manage the site.  As it often the case, bids are requested, proposals are vetted and a vendor is selected with the expectation that in 3-6 months the hospital will have a shiny new website. That never happens. Ever. 

Why is building something so fundamental to the business so hard to do?  We see several reasons.

One, hospitals view the website as a minimal requirement to list their doctors and services rather than a tool for patient acquisition and retention. In a word, they simply underestimate the power of their website and how much value it generates for business and the customer. That is a clear missed opportunity.

Two, hospitals see their website as a ‘marketing thing’ rather than a ‘customer thing’.  Hospitals talk about being patient centric when it comes to clinical services, but not customer centric when it comes to the website. A good customer centric website is ‘sticky’ – a term digital marketers use to measure time on site and repeat usage — and stickiness is a byproduct of good content, good features and good design. It’s a continuous process that takes time and money to get right.  It’s a binary choice — you see it as an investment or a cost.

Three, and most importantly, hospitals typically use external vendors that don’t understand the business to build their websites. Web development companies build sites based on a customer brief that details key requirements, features, look and feel.  Developing a proper brief takes time and expertise, and it should incorporate current as well as  future needs.  If the organization does not have the resources or commit the time to the process, they inevitably build a backward rather than forward looking website.

Here’s an easy way to test that last point. Does your hospital get more appointment requests from patients calling in or logging in? If the majority of your doctor appointments come from your call center or customer service rather than your website (or mobile app), then you are behind the curve.

The importance of online marketing and customer engagement will only grow with time, and COVID has both exposed and reinforced our reliance on digital tech to do everything — schooling, shopping, banking and now doctoring. The choice hospitalists face is clear: either underspend on a tool of the future or overspend on tools of the past.  

Intermedika provides hospitals with support to design and deploy websites and applications that are right-sized for the business, compatible with hospital information systems, and deliver a superior customer experience that drive engagement and action.