‘Medtail’: How COVID-19 Accelerated the Convergence of Retail and Medical

With traditional retailers struggling, “medtail” — medical services offered in a retail style — could soon be popping up in shopping centers, commercial districts and office buildings, experts say.

The idea of putting a healthcare facility in most office buildings would’ve seemed excessive even three months ago. Now – with up to 25,000 storefronts predicted to close this year and a growing emphasis on preventative care – it’s just another way life could change as a result of COVID-19.

“Just like there’s a Starbucks on every corner, there’s the potential for a clinic in every office – provided they’re marketed as beneficial and as part of a framework of wellness,” said Todd Puckett, a licensed clinical professional counselor and founder of Skycrest, which provides performance and life enhancement services to executives and other high-performing businesspeople.

Even if clinics don’t end up in every office building, they could soon be on a lot more city blocks, based on some recent trendlines. COVID-19 has supercharged the bets corporate America was already making on healthcare – including Walgreens’ $1 billion investment in July to put hundreds of full-service doctors’ offices in its stores.

These moves are partly about a pivot to value-based models and preventative care, but they’re also about the convergence of retail and medical, what’s now being called “medtail.” That convergence and what decision-makers should know about it as they rethink the workplace are the focuses of Chapter 6 of Work, Wellness & Space.

Out Goes Retail, in Comes Medtail?

The convergence, experts say, presents a multi-pronged opportunity, especially with many traditional retailers closing up shop amid COVID-19. “If a place is no longer a restaurant or a shoe store,” said Ari Klein, executive managing director of Cushman and Wakefield, “it has to be something else.”

That’s where healthcare, specifically medtail, can slot in – a transition that helps surviving retailers in commercial areas because they won’t face as many empty storefronts nearby. But, more importantly, it can improve people’s overall wellness at an important time.

“There’s a real opportunity for medical, commercial real estate and wellness to come together,” said Jack Siragusa, first vice president of the CBRE Retail Advisory Group in Chicago.

People are increasingly likely to seek medical care in retail locations. That’s evidenced by Walgreens’ bet on VillageMD that includes 500 to 700 full-service doctors’ offices in stores across the country – with “hundreds more” to be built. This realignment was already starting, but the pandemic has made it more important than ever that medical services be of the one-stop-shop variety, experts said.

But the shift does not end with increased offerings or services – it ends when care is able to be accessed by anyone who needs it, wherever they need it. The success of medtail operations like VillageMD – certainly when compared with the struggles of bricks-and-mortar retailers – shows a path forward.

“Medtail moving into a lot of spots left empty by traditional retailers is already happening across the country – and Oak Street Health and VillageMD are strong examples of how that trend will continue,” said Willie Hoag, principal at Tether Advisors. “Beyond the benefits of simply filling space, this has a lot of potential to make us a healthier society.”

Changing Attitudes – in Real Estate and Beyond

Medtail’s success, however, will require reframing commercial real estate and tenant expectations. In the past, as discussed in a May webinar by the International Council of Shopping Centers, landlords hesitated to bring medical into tenant mixes. They worried it would attract sick people, depressing businesses such as fitness centers and gyms, which often operate in busy commercial centers.

But it’s important not to paint all healthcare with the same brush, experts said. During the webinar, Chad Pinnell, managing director, Healthcare Solutions at commercial real estate company JLL, said that 80 percent of health visits are “well visits or low-acuity visits.” And Jamie Goldberg, vice president of Real Estate & Development for One Medical, a membership-based primary care practice, said it was helped patients to put healthcare establishments in a “convenient, welcoming environment,” and that doing so wouldn’t spell doom for surrounding businesses.

“When they are coming in for primary care of chronic condition care, they are still able to go to restaurants or other shops within the center,” Goldberg said.

At the same time, more traditional tenants might be willing to recalibrate their expectations. As one executive at a major fitness company explained last spring, “In exchange for rent relief tenants are increasingly willing to back off lease specifications that restricted healthcare facilities from entering the tenant mix.” Beyond tenants, the owners of commercial properties – faced with a down economy – might get creative by bringing in a broader mix of tenants into existing spaces. “Smart landlords are looking at what concepts are going to survive,” Siragusa said.

Survival is also on the minds of decision-makers who run businesses across the country, some of whom might be tempted – especially given the continued realities of remote work – to lean on the increased use of telemedicine. But some experts disagree. “Make no mistake,” Dr. Jim Januzzi, a cardiologist at Massachusetts General Hospital, told the Boston Globe in April, “the very nature of medicine is to see a patient in person.”

That’s an important reminder for decision-makers prompted by the pandemic to reevaluate the very nature of the office and factors like proximity to medical care for employees. COVID-19 “has exposed so many fissures, fractures and true deserts, not just in healthcare but across the board,” said Jason Madsen of Ascend Medical.

“We no longer have the luxury of ignoring those,” he said. “I am hopeful that some systemic change comes out of this.”

So far – and possibly given the craziness of the past several months – tenants and prospective tenants haven’t been rushing to landlords asking whether there’s a medical clinic in their buildings, experts say. That’s probably because of questions about handling employee privacy concerns in a world where clinics are just a few doors from the office, said Pete Billmeyer, co-founder and managing principal Bespoke Commercial Real Estate.

“There is some separation between work and healthcare, where people still want privacy,” he said. “The idea of walking out of a clinic and colleagues seeing you might be uncomfortable. It would depend on the level of medicine and the nuances of the company.”

For decision-makers, dismissing privacy concerns would be a mistake – but so would ignoring the importance of proximity to medical services for employees, Hoag said. Even when offices can eventually reopen safely, it’s highly unlikely that employees will go back to their pre-COVID stance on health and wellness.

“Clinics don’t necessarily need to be in the same building, but employees will want them woven into the fabric and flow of their everyday lives,” Hoag said.

The Conflicts Around Medtail

As is our practice with Work, Wellness & Space, we identify social conflicts surrounding each chapter’s theme. Regarding medtail, conflicts include:

·         Privacy Versus Proximity: Can companies walk the line between providing nearby access to medical services and employee privacy? If no balance can be found, will employees ask to work from home more knowing that they’re less likely to run into colleagues on their way in or out of sensitive medical appointments? And will employers be amenable to the request?

·         Can a Renewed Emphasis on Health and Wellness Last? The pandemic exposed many issues with America’s healthcare system, prompting an emphasis on holistic, preventative wellness. But will it continue long term? Will the system to improve proximity to care – and will employers find ways to help employees in that regard?

·         Not Relying Too Heavily on Telemedicine: Some employers might figure they can avoid having to be close to healthcare because of telemedicine’s surge as a result of the pandemic. But experts point to the importance of in-person care. How can organizations design strategies that allow employees to fully leverage both telemedicine and face-to-face medicine?