Why Healthcare Companies Invest in a Direct-to-Consumer Model
In the last few years, we’ve seen well-established healthcare companies – such as Johnson & Johnson and Philips Healthcare – make significant investments in developing their direct-to-consumer channel.
It may seem unusual that these companies, with deep channel relationships, large marekting budgets, and competitive cost structures would invest in such a potentially disruptive channel. So, why are they doing so?
- Control the patient experience. Consumer expectations have increased. Healthcare companies are trying to catch up with the demand. Selling directly to patients gives companies greater control over the patient experience and lets them tailor the experience to their brand.
- Avoid lockout by channel partners. There has been a fair amount of consolidation in the DME and healthcare provider spaces over the last few years. Manufacturers find this trend concerning, as it could increase the leverage that larger players have in supply negotiations. Selling directly to patients can offset this concern by creating a revenue stream without the risk.
- Attractive gross margins. The value chain in healthcare can be quite long, with manufacturers selling to DME retailers selling to providers selling to patients. Each individual in that value chain adds some margin. Upstream participants see the final, increased price for a product and want to capture that value for themselves.
Is developing a direct-to-consumer strategy right for me?
Many healthcare companies, both manufacturers and distributors, are developing a channel directly to patients. Green Feather helps customers evaluate the DTC opportunity and our Feather eCommerce product is designed specifically for healthcare companies looking to grow their direct business. Contact us to learn more.