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Developing Medical Wellness Facilities

2006: Volume 3, Number 1

Christopher Breuleux, PhD, RMT

President, Medical Wellness Association

 

Physicians, chiropractors, therapists, health professionals or wellness practitioners can utilize medical wellness programs to provide real solutions for today’s changing health care environment.

Before jumping into this exciting market, every rational decision to build a new wellness program should be preceded by an investigation of the feasibility of the project.

Such a process provides assurance that is needed to study and confirm that the market exists and can be successfully developed for a new wellness venture. Before a new wellness center develops facility standards, it should have a clear conceptual plan along with goals and desired outcomes. The future success for any wellness development will be the market research and business plan.

Winning with Wellness
The recommended Medical Wellness approach with each successful medical wellness center is similar to the approach a coach takes when assembling a team for a winning season: Planning, Pre-season, and Season. The time- proven process taken during the planning process will ensure the successful development of the new wellness center.

There are several important tasks for developing a successful wellness center and program:

Planning
A new wellness facility team, like any team, must plan for success. It is recommended that the detailed planning stage of the project be initiated as early as possible. The market study and plan is often completed by a professional consultant. The first step in the essential planning process is to conduct a Market Feasibility Evaluation. As a result of this feasibility process these plans should start with the project goals, target market and site selection.

Specifically they should include some technical analysis of the following components:


• Define Project Mission and Goals
• Market Analysis
• Member and User Profile
• Demographic Analysis
• Competitive Analysis
• Comparison of Successful Centers
• Program Plan
• Facility Space Program
• Wellness Center Model and Profile
• Financial Proforma and Schedules
• New Center Project Time Line


Pre-season
Critical tasks to prepare for a winning season in any new facility include market research, space and facility design, equipment selection, hiring and training of staff, a successful marketing and pre-sales program and the effective development of all wellness programming that will set the tone for customer service and retention.

In my experience, the complex and vital processes during these stages play a large part in determining the success of the program. It is recommended to initially use a consultant with proven wellness experience and expertise during the planning and pre-season process.


Season
When the doors to your new facility open, the season begins. This is when professional and effective management will improve the health and wellness of the community, guests, and members; and help maximize programs, participation, and revenues while minimizing expenses.

The professional market study will include financial forecasts, budgets and executive recommendations. This process will allow the program and staffing plans to lead a successful wellness center operation (season). It has been my professional experience that this process is a blueprint for success. Behind each successful project is the experience and expertise of the planning team. How the programs and services come together and functions is determined during the critical feasibility study and business plan process.


Planning for Business Success
A new wellness facility team, like any team, must plan for success. It is recommended that the detailed planning stage of the project be initiated as early as possible.

The first step in the essential planning process is to conduct a market feasibility evaluation. As a result of this feasibility process, these plans should start with the project goals, target market and site selection. In beginning to conduct a detailed market feasibility analysis, it is very important to review demographic data and select the best site for the success criteria and desired goals. Set outcome goals to identify the business and wellness goals for the proposed center; meet with all key stakeholders to fully understand the reasons for building a center and preliminary financial objectives; evaluate the overall facility, service areas and program plan to clarify how the wellness center and programs will help contribute to the goals of the overall plan.

The following process is just one example used to estimate the feasibility of a new wellness facility:


Determine Market Area — The primary market area is defined as within a drive time or a radius of the proposed facility. The recommended trade area is generally a 10- to 15-minute drive time. Although geographic barriers will always exist, experience with projects confirms that the people most likely to join a center are those living or working in close proximity to the facility.

I highly recommend using a drive time analysis for the evaluation.  Consultants will review the project site locations and conduct a site analysis. They should evaluate the location for potential users based on demographics, convenience and accessibility. Radius or mile rings studies can be completed if the drive time analysis is not available.


Estimates and Extrapolation — Proprietary membership, enrollment rates, estimated penetration from census-related reports, data mining and household surveys are reviewed and analyzed. These results are applied to the local community level using demographic projections and data mining. 

Rely on consultants, design firms, wellness industry data sources, surveys, benchmarking databases and nationally recognized market analysis demographic database tools to analyze: the number of households within varying proximities of the proposed facility site; the average income levels of households within varying proximities from the proposed facility site and the correlation of household income to the acceptance threshold of member dues and other fees; the average number of individuals per household as well as median age of the highest potential prospective members; industry studies that document the average distances users and members are willing to travel to join a wellness center; recent community census data and projected population statistics, including household size, income level, age and education; interviews with physician and other practitioners to determine the potential for medical referral memberships; and estimated community and employee usage for various recreational activities.

An income analysis can be applied to the potential member profile in order to estimate the population who may join a new facility based on planned programs, services and price elasticity.


Effects of Competition — Every new project should conduct competitive or community analysis of the comparable operations in the target area. This community assessment determines key information about the area’s existing wellness centers. A “professional shopper” technique is used to assess direct competition. A good competitive analysis will include the following: the location of competitive centers and their distance from the proposed wellness center along with the estimated memberships and the age of competing facilities. Any new facility or programming components should be included with the size and amenities of the competing facilities, and the summary will identify facility features along with membership options and member dues, initiation fees and other costs.


Corrections Based on Research Experience — Even after all attempts to
discount potential memberships through the market evaluation and the competition analysis, there will be a group of people who would be expected to join, but do not participate as predicted. This is where a seasoned consultant with proven experience is most valuable.


Impact of Medically-related Memberships — It has been determined that 20% to 30% of fitness center members are introduced to the facility because of medical needs, such as cardiovascular disease or orthopedic problems. Experience with wellness operations indicates that physicians who are associated with the facility will use the programs as an integral part of medical treatment.


Comparison of Successful Centers — Develop a comparison of successful wellness centers in the market area to help determine facility and program components to consider in the center. This is a great benchmarking tool and process and future marketing resource for memberships.


The following chart provides the different market research methods and assessments.

Research Methods & Assessments
Demographic survey evaluation Market feasibility assessments
Telephone interviews Brand image analysis
Focus groups Product/service utilization
Direct mail surveys Advertising effectiveness
Customer intercepts New product/service development
Mystery shops Customer satisfaction
Inactive/former customer surveys    
       

 

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(C) 2006 The Medical Wellness Association