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Target: a giant in American healthcare?

|Includes: CVS, Target Corporation (TGT)

Forget hospitals. Forget doctors’ offices. Heck, forget even the Internet.

If you really want to influence people on healthcare, look no further than your local Target store.

It makes sense, when you think about it. Target and its rival Wal-Mart already offer everything under the sun — health clinics, pharmacies, groceries, exercise-related merchandise. You name it, they sell it, and sell it well.

Of Target’s $60 billion in annual revenue, about 10 percent comes from healthcare-related products and services. Target’s reach alone — 1,800 stores across the country; 32 million visits a week — guarantees it unrivaled influence on the American consumer.

“We’ve made health and wellness a key pillar of our company,” Dr. Josh Riff, medical director for Minneapolis-based Target Corp. (NYSE:TGT), told people attending the University of St. Thomas’ annual healthcare conference. “Our huge footprint can have an enormous impact.”

From MinuteClinics (in CVS drugstores; NYSE:CVS) to Target, retailers have emerged as a potent force in the American healthcare system. While hospitals have struggled to break even because of dwindling Medicare reimbursements, retail-driven healthcare has become a $750 billion and growing, highly profitable business, said Tony Paquin, CEO of Paquin Healthcare consulting firm, which advises hospitals.

Paquin says he urges hospitals to generate more revenue by opening retail formats on its property, including gift shops, pharmacies and fitness centers.

“If Wal-Mart can go into healthcare, then hospitals can go into retail,” Paquin said. “It’s logical to leverage the intimate relationships (between hospital and patients) into retail.”

In other words, be more like Target.

The company’s enormous influence on healthcare originates from its reach, and what it sells or doesn’t sell. For instance, Target not only partners with the American Cancer Society to promote the annual Great American Smokeout but carries nicotine cessation products instead of cigarettes.

Last year, Target launched its private label Archer Farms Simply Balanced line of foods that meet certain nutritional standards. Instead of one-time events, the chain has partnered with the Centers for Disease Control to distribute vaccines year-around.

Target pharmacists have the Five Minute Challenge, in which they must interact with patients around the store for at least five minutes. And clinics offer a quick and affordable $75 visit with a nurse practitioner.

Target’s ultimately goal, Dr. Riff said, is to somehow package all of these healthcare-related goods and services under one banner for a specific group of consumers. For example, the company envisions marketing essentials like glucose meters, slippers, exercise gear, fruits and vegetables to diabetics.

“Our vision for the consumer is, how do I take care all of my healthcare needs” at once? Dr. Riff said. “We haven’t quite figured it out yet.”

But if anyone can, it’s Target.

Government may set policy, companies may invent new products, doctors know how to treat patients.

“But it’s retailers who know how to sell it,” Dr. Riff said.



Disclosure: No positions.