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1 st Affirmative: Fabry. Change is Coming Strategic Implications: Be innovative in creating new customer models, with fresh designs for new.. facilities.

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Presentation on theme: "1 st Affirmative: Fabry. Change is Coming Strategic Implications: Be innovative in creating new customer models, with fresh designs for new.. facilities."— Presentation transcript:

1 1 st Affirmative: Fabry

2 Change is Coming

3 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 Futurescan 2000 A Millennium Forecast of Healthcare Trends

4 Population (Millions) Year Projected Population with Hearing Loss

5 Market 4.9%1.2%2.7%4.0% million

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7 Possible Alternative Hearing Aid Distribution Systems End Consumer Audiologist / HIS Classic Distribution System End Consumer Manufacturer Flagship store / own shops Direct Distribution / Own Stores Manufacturer ENT Semi-Direct Distribution via MD End Consumer Online Retailer / Wholesale Local hearing professional Online Retailer with Local Cooperation End Consumer Manufacturer Online Direct Distribution End Consumer Online Retailer / Wholesale Online Retailer w/o Local Cooperation Health professional involved No health professional involved Health professional not necessarily involved Manufacturer

8 Costco provides a solution

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10 Costco 2 nd Largest Retailer in US 7 th 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

11 Costco: 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)

12 Demographics USCostco Household Income69.8K95K % > 100k20%41.4% College Educated21%35.2% Own Home74%87.8% Average Age 4650

13 Costco and Hearing aids 446 Hearing Aid Centers (380 in US) in 2011 Goal of 500/400 in % 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

14 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

15 Costco will make Audiology better

16 Satisfied & very satisfied customers have not grown during the digital revolution

17 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.

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21 "There is no reason for any individual to have a computer in his home“ Ken Olsen co-founder of Digital Equipment Corporation (DEC)

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23 “Commoditization is one of the biggest threats to everyone involved in business in the 21 st century” Steve Forbes (2011)

24 noun \kə- ‘mä-də-tē\ : a good for which there is demand, but which is supplied without qualitative differentiation across a market

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28 2 nd Affirmative: Pessis

29 Relax: It’s Not the End of the Profession Paul Pessis

30 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

31 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?

32 Typical Costco Hearing Aid Space Hey, Do You Like the Sign?

33 Dr. Kasewurm has more space in her bus, than a Costco Hearing Aid Center “If they don’t come to you, go to them!”

34 practice

35 …and they love Costco!

36 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 ( ) totaling ~77 million citizens One baby boomer will turn 65 every 8 seconds!

37 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

38 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: – Cerumen Management: Result: This adds revenue that is often “forgiven”

39 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

40 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?

41 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

42 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”

43 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

44 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

45 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

46 2 nd Affirmative Rebuttal Fabry

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