Erik Goldman, Editor & Co-Founder, Holistic Primary Care03.01.13
Two doctors, Raymond H. Murray, of Michigan State University, and Arthur J. Rubel, of the University of California, Irvine, wrote a letter in 1991 to the prestigious New England Journal of Medicine titled, “Physicians and Healers—Unwitting Partners in Health Care,” chronicling the public’s rising interest in “alternative” medicine, and the mainstream’s ignorance of healing options in its own backyard.
“Alternative medicine has many adherents among all social classes. Most physicians are unaware of its popularity, much less that many of their own patients are being cared for by practitioners of alternative medicine,” wrote Dr. Murray and Dr. Rubel. They concluded that doctors and medical institutions would do well to pay close attention.
A few years later, the alarm rang even louder when Dr. David Eisenberg and his Harvard team published a survey showing that close to 70% of U.S. adults used some form of Complementary and Alternative Medicine (CAM), translating into more than 33 million office visits for guidance on nutritional products and herbs. Dr. Eisenberg’s real shocker was his discovery that Americans spent more on CAM than on visits to conventional primary care; the majority of this was out-of-pocket.
It’s hard to remember what life was like in 1991 when Dr. Murray and Dr. Rubel published their letter.
There were no “integrative medicine” departments at medical schools, or fellowships and certifications offering doctors advanced training in nutrition, botanical medicine and other holistic disciplines. Continuing education conferences on these subjects were few.
The National Institutes of Health (NIH) had just created the Office of Alternative Medicine (now the National Center on Complementary and Alternative Medicine) with a micro-budget, a back office and a lot of angry scientists decrying the NIH’s advocacy of “quackery” and “witchcraft.”
There were good researchers exploring nutrition then—as always—but they were marginalized, their work relegated to the realm of “dietetics,” which most physicians ignored. Few were seriously studying supplements.
Naturopaths numbered in the hundreds back then, and practiced under the radar, without licensure. Chiropractors, though more visible, won mainstream acceptance so long as they stuck to back pain. Acupuncture, in medical awareness since President Richard Nixon’s 1972 visit to China, was considered a curiosity; Traditional Chinese Medicine (TCM) as a whole was marginalized; Ayurveda was hardly known.
Even then, most doctors and nurses accepted the general idea that lifestyle factors and diet were prime determinants of health and illness—evidenced by the near-obsession with cholesterol. But the notion that nutrition should have a central role in patient care was still considered “fringe.” With the exception of a small vanguard of brave pioneers, MDs by and large denigrated or ignored anything outside of drugs and surgery. It was the rare MD who recommended—let alone dispensed—supplements in the early 1990s.
The Dietary Supplement Health & Education Act (DSHEA) had not yet been passed in 1991, and supplement/natural products companies were just beginning to recognize—and organize—themselves as an industry. While there were already companies producing high-end nutraceuticals, botanicals and homeopathics for healthcare professionals, the notion of a billion-dollar “healthcare practitioner channel” was beyond anyone’s dreams.
Unprecedented Change
What a difference two decades makes! Today, by best industry estimates, practitioner sales of nutraceuticals, botanicals and other natural products total about $3 billion per year. Growth has been steady at 8-10% over the last decade, slightly outpacing the industry as a whole. Practitioner sales now account for greater than 10% of all supplement sales across all market segments.
There are integrative clinics at nearly all major medical schools. Serious research on nutrition and clinical use of nutraceuticals—though still controversial and often inconclusive—has exploded. While nutrition remains a small part of medical training, today’s students get far more exposure than their predecessors. Opportunities for post-graduate continuing education and certification abound.
This trend is well reflected in the speedy growth of organizations like the Institute for Functional Medicine (IFM). In recent years, IFM’s annual conference has been attracting on the order of 800-900 clinicians, up from 400-500 just a few years ago.
“We are just seeing more of every type of practitioner,” said Andie Crosby, marketing manager for the organization. “MDs and DOs account for nearly 60% of our partners. Nursing professionals, nutrition professionals, DCs, NDs, NPs and other clinicians account for the rest. Perhaps the most dramatic shift is the growing interest in functional medicine internationally. Chronic disease is now a global epidemic and clinicians around the world are seeking more information on the functional medicine model.”
Though progress is slow, and resistance remains, this interest is impacting healthcare at large.
According to a 2010 survey of 2,000 primary care doctors done by my company, Holistic Primary Care, approximately 13% are dispensing supplements. Eighty-six percent use supplements for their own health and 79% recommend or “prescribe” some type of supplement to patients.
Perhaps most remarkable, about 61% of respondents self-identified as “Mainstream/Conventional” in their mode of practice; only 7% identify as fully “Holistic.”
This rapid evolution of the practitioner channel is occurring during a time of unprecedented change and uncertainty in healthcare at large. For example, the passage of the Affordable Care Act (aka ObamaCare), the breakdown and consolidation of conventional care systems, the health IT revolution, the emergence of retail-based quickie-clinics, the rise of nurses as independent practitioners, the growth of concierge and membership practices, the changing medicolegal landscape, and of course the aging and impoverishment of the population and the epidemics of chronic diseases are among the seismic shifts rocking medicine. Few professions have withstood such rapid, relentless change.
All of this has pushed practitioner morale—already faltering by the late 1980s managed care revolution—to an all-time low, evidenced by the recent Physicians’ Foundation survey of more than 13,500 U.S. doctors. More than 80% said they feel medicine is in decline, 77% are pessimistic about the future and more than half are planning major changes in their practices.
Massive Opportunities, Major Challenges
Our industry has an unprecedented opportunity to step forward and take a meaningful place in the healthcare landscape, if—and it’s a big if—we have the collective will, intelligence and intention to do so.
“I think there is opportunity for growth in every sector of the practitioner channel, although MDs are likely the biggest growth segment,” said Mike Katke, co-founder and former vice president of marketing at Metagenics, one of the nation’s leading practitioner channel companies. Now a marketing consultant for Designs for Health, Mr. Katke noted, “More MDs are beginning to look at natural alternatives as their patients are demanding treatments that are less invasive and less toxic.”
Mr. Katke, a featured speaker at the upcoming Health Practitioner Marketing Forum (www.HPMForum.com) April 3-5 in Long Beach, CA, added that, “Both the quantity and quality of science supporting nutraceuticals has grown dramatically. On the manufacturing side we’ve seen broad adoption of GMPs (Good Manufacturing Practices) leading to better and more consistent quality. These trends have led to a growing confidence among consumers and professionals alike, which is obviously good for the future of the industry.”
Kyle Bliffert, executive vice president, Healthcare Practitioner Brands, for Atrium Innovations, also sees strong continued growth. “Many practitioners now understand that patients are taking supplements already, so they are more willing to promote or provide ‘professional’ quality supplements from one of the HCP brands.”
Based in Quebec City, Canada, Atrium has acquired several leading practitioner brands over the last decade, including Pure Encapsulations, Seroyal and Douglas Labs, as well as high profile consumer brands like Garden of Life and Minami.
“Our industry has become a more viable adjunct to conventional medicine,” said Mr. Bliffert. “Witness the growth of the omega 3, vitamin D, glucosamine and other more ‘mainstream’ categories. It seems that conventional practitioners are more accepting of these supplemental modalities.”
The practitioner channel holds great promise in part because pro-level products carry premium prices many times higher than the commodity pricing of the retail space. But that comes with markedly higher expectations for quality, efficacy, safety and customer support, and makes the practitioner space the most challenging industry segment. It’s also the least understood.
Mapping the Uncharted Territory
Despite impressive growth, the channel remains largely uncharted territory with few credible metrics to guide marketing decisions. Moreover, it spans an astonishing variety of disciplines and professional “tribes,” each with its own preferences, sensibilities, language, history, education level and culture. A massage therapist, a doctor of oriental medicine and a cardiologist are very different breeds, with different needs.
Practitioners vary widely in their understanding of nutrition and their embrace of supplements. One of the big marketing challenges is to figure out which practitioner groups will be most responsive. This is especially true with new product launches and novel ingredients.
“We started the Health Practitioner Marketing Forum because we saw a serious lack of good information about what’s happening in the channel and how to meet its challenges,” said Meg Sinclair, publisher of Holistic Primary Care, and co-founder of the Forum, in collaboration with Greg Stephens and Windrose Partners. “We knew the field was expanding and healthcare was shifting, but nobody really had a clear picture of what was going on.”
“Prior to our 2010 survey, there was very little data on MD engagement with nutraceuticals,” Ms. Sinclair said. “People would ask us all the time, ‘How many MDs sell supplements?’ Honestly, we didn’t really know. Nobody else did either. So we set about finding out.”
A highlight of the HPM Forum will be new data from HPC’s 2013 physician survey. “We’re once again surveying 2,000 primary care doctors, and it’s going to be interesting to see what has changed in the last three years,” Ms. Sinclair said. The meeting will address the unique challenges of the practitioner channel, and highlight real-world success stories.
MDs Awaken
Practitioner engagement with holistic medicine, nutrition and supplements is driven by a few key factors:
• Public demand for non-pharmaceutical options
• Declining insurance & federal reimbursement, stoking a need for new practice revenue
• A growing base of scientific support
• Recognition that lifestyle accounts for 70% or more of all disease risk, and that reliance on drugs and
surgery is neither effective nor sustainable
• Clinicians’ own need to re-personalize medicine and feel like “healers” rather than technicians or “providers.”
Naturopaths, chiropractors, TCM practitioners and “alternative” MDs—the original base of the practitioner channel—remain an important part. But everyone interviewed for this article agreed that the greatest growth potential is with MDs.
“When I first started in this channel over 12 years ago, a bulk of our business came from DCs and the few fringe MDs and DOs pushing the envelope and recommending supplements,” said Nate Freeman, senior director of marketing for Ortho Molecular Products, Stevens Point, WI. “It was hard to bend the traditional doctor’s ear to discuss the validity and legitimacy of supplements in the world of pharma.
“Fast forward 12 years and things look drastically different,” he continued. “Now, most of our business comes from MDs and DOs. What changed? The evidence on supplements has grown significantly and doctors feel more confident about recommending them. While drugs are still their primary tools, the side effects, black box warnings and recalls cause doctors to look for natural alternatives that work with the body … not force an outcome upon it.”
There are still many supplement naysayers in conventional medicine, but a doctor who recommends or dispenses no longer elicits an immediate accusation of quackery. “The stigma of recommending supplements is fading,” said Katie Ferren, brand manager for Metagenics, Aliso Viejo, CA.
HPC’s 2010 survey data bear out these perceptions. Two out of three respondents—and half of those who self-identify as conventional—agreed with the statement: “I believe that diseases/conditions can be treated or ameliorated with dietary supplements/natural products.” This is despite DSHEA’s prohibition of statements suggesting supplements can be used to treat disease.
Common Obstacles
Though things are moving in the right direction, there are still obstacles to wider acceptance of and implementation of nutrition-based medicine. These include:
• Ingrained biases against supplements among mainstream practitioners
• Lingering perception that the industry is “unregulated”
• Lack of education about the products and how to use them
• The balkanized clinical landscape
• The high cost of clinical research
• Fierce competition for practitioner time and attention
• The challenge of crafting effective messages that stay within the bounds of DSHEA
• Physicians’ concern about stepping outside “standards of care” and fear of medicolegal consequences.
Practitioner time constraints are one of the biggest challenges, noted Andy Greenawalt, CEO of Manchester, NH-based Emerson Ecologics, the nation’s largest distributor of practitioner-only products. “It’s very difficult for many practitioners to find time to learn about new products, as well as to do the research they need in order to ensure their patients are getting safe and effective products.”
Clinicians are bombarded by educational information and marketing materials from drug makers, supplement companies, labs, equipment manufacturers, IT companies and service providers. It can be challenging to win and sustain practitioner attention.
This, Mr. Greenawalt noted, was the driver behind his company’s creation of the Emerson Quality Program (EQP), a set of online tools for practitioners designed to take the guesswork and research out of determining the quality of the products they recommend. Emerson tries to do the homework that most clinicians don’t have the time to do.
Ultimately, success in this channel comes down to trust. Marketers do not always appreciate what an enormous level of trust they’re demanding when they ask doctors to recommend their products. In essence, practitioners put their reputations, licenses and livelihoods on the line with each recommendation.
“You don’t get a second chance with healthcare professionals. You have to deliver consistent results that get patients better faster,” said Mr. Freeman, of Ortho Molecular. “It takes patience and a commitment to efficacy that few companies are willing to invest. You can’t microwave the process.”
The Science Game
Good science helps considerably, industry leaders agreed. “The primary change I’ve observed over the last 10 years is the evolution of an evidence-based approach,” said Jeremy Holt, manager of new product development for Ajinomoto USA, Fort Lee, NJ.
“In the ‘old days’ natural products were not expected to have clinical research to substantiate safety and efficacy. Today, many of the really successful companies have made substantial investment in clinical research. Our healthcare clients and their patients are asking for evidence-based products shown to improve a specific condition.” Ajinomoto has a longstanding commitment to research, with numerous clinical studies underway on a number of unique ingredients.
However, good science costs good money—sometimes millions of dollars per trial if it’s large and detailed. There’s no guarantee the data will tell the tale the sponsor wants. The last decade has had its share of nutrients or botanicals that seemed promising based on traditional use, epidemiology or animal studies, but proved less-than-effective when tested in humans.
“One of the biggest challenges is when negative studies are published. They definitely cast a shadow of doubt,” said Ms. Ferren of Metagenics. “For doctors considering supplements in their practice for the first time, it is something that causes confusion.”
Clinicians sometimes generalize negative findings on a particular product to an entire class or even to the whole industry. A negative study on one product gets twisted into a conclusion that, “Herbs don’t work,” or “Vitamins are worthless.”
On the other side, marketers often “borrow” science from one specific branded product to support similar products. Sometimes findings can be generalized, but over-generalization in either direction or extrapolation beyond the bounds of scientific reasoning creates confusion and ruins credibility in the long run.
Paul Coates, PhD, director of the NIH’s Office of Dietary Supplements, believes negative studies are a simple fact of scientific life. While it is true that methodological flaws are sometimes to blame for unexpected negative data, this is not always so. Crying “Foul” after every negative study does little to build the industry’s scientific credibility.
Researchers, marketers and the public often expect nutrients or botanicals to behave like drugs. Dr. Coates believes that applying drug-centric thinking to nutritional research may be misguided. However, this does not mean that the randomized controlled trial is an invalid model for testing supplements, as some industry pundits have claimed.
Mr. Katke said Metagenics’ long-term commitment to research is the foundation of the company’s ultimate multi-million dollar success. “Companies that stick to the science rather than following fads are able to earn the trust of physicians.” Metagenics maintains one of the largest dedicated scientific staffs in the industry, including MDs, PhDs and nutritionists. It also has its own clinic—the Functional Medicine Research Center—to conduct clinical trials and individual case management studies.
Assuming one has good data to support products, the next challenge is to translate the science into a meaningful message that stays within bounds of the law. The structure-function language permitted by DSHEA doesn’t always click with doctors trained to think along disease-treatment lines. When developing marketing materials it is wise to get input from the type of practitioners you hope to reach, as well as from good legal consultants familiar not only with DSHEA but with FDA and FTC enforcement patterns.
To succeed in communicating effectively, you must understand the language, sensibilities and needs of your target market.
Join Up or Drop Out
After years of declining reimbursement, many practitioners fear for the viability of their practices. The average primary care doctor makes $158,000 to $165,000 per year, according to MedScape’s 2012 physician compensation report.
To earn that, they see an average of 19 patients per day; some see as many as 30. The average practice employs 2.3 non-clinical staffers for each practitioner. Doctors in insurance-based practice spend upward of 20% of total work time on non-clinical administrative tasks.
The costs and stress of staying in private practice has forced many to the point where they must make major decisions: Do I sell my practice to a hospital owned network or mega-group practice? Do I opt out of Medicare and insurance and go direct-pay or concierge? Do I take a non-clinical job in industry? Do I leave medicine altogether?
HPC’s 2010 survey showed that nearly 20% of respondents—that’s one in five primary care doctors—are contemplating a major change in their practice situation.
The Physicians Foundation found that while 49% of respondents still own their practices or are partners in an independent practice, 44% are employed by hospitals, large groups or other ownership entities. Many more indies are expected to sell out. We’re rapidly reaching a point where more doctors will be employees than independent clinicians.
That’s a major shift from the 1970s “heyday” of American private practice. The dynamics are similar to the retail space where small, indie stores—the roots of our industry—struggle to stay alive in the shadow of mega-naturals and big boxes. It’s also similar to the situation of small family farmers who sell their land because they can’t compete with Big Agriculture.
Selling the practice and becoming an employee appeals to burnt-out doctors: it guarantees a steady salary, cuts administrative headaches, offers regular hours and the support of a large network. But it has its own devils: greater oversight, corporate bureaucracy and politics and long-term uncertainty.
Some newly employed physicians find themselves suddenly unemployed after initial contracts expire. It’s no fun to be 55 and unemployed, staring at an office you once owned, and competing for jobs with nurses or younger doctors at a lower pay scale.
At the same time, current healthcare dynamics are pushing some doctors to opt out of all third-party payers, in favor of direct-pay or concierge (aka membership) practices in which patients either pay cash for services or annual membership fees. Again, it’s similar to retail where artisanal food stores offering premium goods and attentive service thrive despite the recession.
Concierge and direct-pay, once the province of the privileged, is becoming increasingly democratized. According to the American Academy of Private Physicians, there are upward of 5,000 practices. MedScape estimates that 1% of all doctors are in concierge, and 3% are in cash-only practices. HPC’s data showed 8% of primary care physicians are in cash-pay, 1% in concierge and 36% in mixed models that receive revenue from third-party payers, augmented by cash-pay services.
Of the 20% of HPC respondents who were considering a major practice change, 45% were pondering cash-pay and 35% were looking at concierge options.
In both cases, the shift out of third-party systems enables doctors to cut their overhead by a tremendous margin, often by 50% or more. It also enables them to spend more time with fewer patients, and banishes overseers from the exam room. But these models require entrepreneurial spirit, marketing know-how and willingness to take risks—three traits that many doctors lack.
Direct-pay and concierge practitioners are a good potential market for nutraceuticals because: A) they practice outside insurance constraints; B) to succeed they must focus on customer service and client convenience; and C) they are often looking for new revenue streams. However, the total numbers are still small, and some of these doctors remain conventional in their practice style, even if they’ve embraced an unconventional practice model.
Why Don’t More Doctors Dispense?
Practitioners who dispense supplements do so for various reasons. For naturopaths, nutraceuticals and herbs are basic tools of the trade and having a dispensary—or effective online dispensing system—is a cornerstone of practice. The same is generally true for TCM and Ayurvedic practitioners. Chiropractors were early adopters of office-based dispensing, which allowed them to diversify the options they can offer and to increase their total revenue.
The recent surge of MD dispensing is driven by two factors: a pressing need for more revenue, and a recognition that patients are going to take supplements no matter what. By dispensing, doctors make it convenient for patients to obtain top quality products, sparing a lot of run-around and trial and error.
Revenue-wise, most dispensing doctors mark up products by 20-100%. In a large practice, this can add tens of thousands in additional revenue. Interestingly, in HPC’s 2010 survey, 11% of dispensing doctors said they’re selling products at cost. The main reason for this is to dispel any concerns about conflict of interest.
The HPC 2010 survey showed a variety of reasons for not dispensing, including: ethical concerns, lack of space to stock products, no perceived demand from patients and fear that office-based retailing could erode patient trust.
Some doctors believe it is unethical to sell any sort of products to patients for profit—a view forwarded by the American Medical Association and other medical trade groups.
These concerns are relatively easy to address: a physician can still dispense at cost, as a convenience and a service to patients. But the ethical objections may mask a general discomfort with “retail” in principle. Some practitioners have a natural entrepreneurial instinct, but many others have aversions to anything business-like. They simply don’t like the idea of being “vendors.”
Those averse to dispensing can still become strong product advocates if they are aware of the true quality differences between practitioner-only lines and the cut-rate retail lines. In the HPC survey, 21% of respondents said they have discussions about supplements with patients at least once daily, and 39% said they had multiple discussions every day. Sixty-two percent agreed with the statement that: “If I knew that some supplements/natural products were manufactured with higher quality standards, I would recommend or ‘prescribe’ them more often.”
Among clinicians open to dispensing, implementation issues may be the biggest barrier. While dispensing may be a basic part of naturopathic and chiropractic practice, most MDs don’t have a clue how to set up a retail business.
“Most doctors would admit that lifestyle medicine is the best solution for their patients, but implementing and leveraging the power of lifestyle medicine isn’t easy. They need a systematic program that helps them put their knowledge into action,” said Mr. Freeman.
To help with this, Ortho Molecular Products, Metagenics and many other practitioner channel companies have set up turn-key programs, often centered on specific disorders or conditions, that facilitate a clinician’s ability to engage patients with appropriate supplements for several months. In many of these programs, practitioners need not stock product in their offices; once patients are enrolled, they receive the products directly from the companies.
This approach requires considerable practitioner education and intensive customer support, but it pays off in the long-term. Anything that takes the headaches and the unpredictability out of the equation will be well received by busy clinicians.
Erik Goldman is the editor of Holistic Primary Care-News for Health & Healing, a quarterly medical news publication covering the field of holistic healthcare for an audience of roughly 65,000 primary care physicians. He is also co-founder of “Heal Thy Practice: Transforming Primary Care,” an annual conference focused on business models for integrative healthcare practices. He is currently collaborating with Greg Stephens & Windrose Partners to develop the first Health Practitioner Marketing Forum, an educational gathering on opportunities and challenges in the healthcare practitioner channel. For more information contact Erik at: 212-406-8957 or Erik@holisticprimarycare.net.
Leading executives and marketing experts offer their perspective on the greatest opportunities in the practitioner channel.
Dan Lifton, CEO, Quality of Life Labs/Maypro: “There will be continued growth with primary care MDs, who will get further squeezed financially, and will continue to seek additional revenue streams. I also think the practice of combining supplement regimens with genetic screening and other tests will continue to expand.”
Evan Zang, director of sales, Southwest Region, Vital Nutrients: “The new graduating MD group represents the largest opportunities for sales. As the old guard MDs retire, they will be replaced by physicians who are getting a better, more well-rounded education in nutrition.”
Jeremy Holt, manager of new product development, Ajinomoto USA: “Weight management is an ever growing concern both globally and here in the US. We have also had a tremendous amount of success with our sleep aid product, Glysom. The more targeted products, meant to address a particular health concern, seem to have a higher success rate.”
Jeff Hilton, president, Integrated Marketing Group: “The big growth is definitely in condition-specific supplement formulas targeted toward cognition, cardiovascular, joint and immune function. I also see an increase coming in diagnostic lab testing to assess patient health.”
Andy Greenawalt, CEO, Emerson Ecologics: “There are many practitioners who are not recommending supplements to their patients who should be. For example, if gastroenterologists routinely recommended probiotics, many of their patients would experience improvement right away. Cardiologists and fish oil are another example. This continues to be our greatest opportunity for growth in this channel.”
“Alternative medicine has many adherents among all social classes. Most physicians are unaware of its popularity, much less that many of their own patients are being cared for by practitioners of alternative medicine,” wrote Dr. Murray and Dr. Rubel. They concluded that doctors and medical institutions would do well to pay close attention.
A few years later, the alarm rang even louder when Dr. David Eisenberg and his Harvard team published a survey showing that close to 70% of U.S. adults used some form of Complementary and Alternative Medicine (CAM), translating into more than 33 million office visits for guidance on nutritional products and herbs. Dr. Eisenberg’s real shocker was his discovery that Americans spent more on CAM than on visits to conventional primary care; the majority of this was out-of-pocket.
It’s hard to remember what life was like in 1991 when Dr. Murray and Dr. Rubel published their letter.
There were no “integrative medicine” departments at medical schools, or fellowships and certifications offering doctors advanced training in nutrition, botanical medicine and other holistic disciplines. Continuing education conferences on these subjects were few.
The National Institutes of Health (NIH) had just created the Office of Alternative Medicine (now the National Center on Complementary and Alternative Medicine) with a micro-budget, a back office and a lot of angry scientists decrying the NIH’s advocacy of “quackery” and “witchcraft.”
There were good researchers exploring nutrition then—as always—but they were marginalized, their work relegated to the realm of “dietetics,” which most physicians ignored. Few were seriously studying supplements.
Naturopaths numbered in the hundreds back then, and practiced under the radar, without licensure. Chiropractors, though more visible, won mainstream acceptance so long as they stuck to back pain. Acupuncture, in medical awareness since President Richard Nixon’s 1972 visit to China, was considered a curiosity; Traditional Chinese Medicine (TCM) as a whole was marginalized; Ayurveda was hardly known.
Even then, most doctors and nurses accepted the general idea that lifestyle factors and diet were prime determinants of health and illness—evidenced by the near-obsession with cholesterol. But the notion that nutrition should have a central role in patient care was still considered “fringe.” With the exception of a small vanguard of brave pioneers, MDs by and large denigrated or ignored anything outside of drugs and surgery. It was the rare MD who recommended—let alone dispensed—supplements in the early 1990s.
The Dietary Supplement Health & Education Act (DSHEA) had not yet been passed in 1991, and supplement/natural products companies were just beginning to recognize—and organize—themselves as an industry. While there were already companies producing high-end nutraceuticals, botanicals and homeopathics for healthcare professionals, the notion of a billion-dollar “healthcare practitioner channel” was beyond anyone’s dreams.
Unprecedented Change
What a difference two decades makes! Today, by best industry estimates, practitioner sales of nutraceuticals, botanicals and other natural products total about $3 billion per year. Growth has been steady at 8-10% over the last decade, slightly outpacing the industry as a whole. Practitioner sales now account for greater than 10% of all supplement sales across all market segments.
There are integrative clinics at nearly all major medical schools. Serious research on nutrition and clinical use of nutraceuticals—though still controversial and often inconclusive—has exploded. While nutrition remains a small part of medical training, today’s students get far more exposure than their predecessors. Opportunities for post-graduate continuing education and certification abound.
This trend is well reflected in the speedy growth of organizations like the Institute for Functional Medicine (IFM). In recent years, IFM’s annual conference has been attracting on the order of 800-900 clinicians, up from 400-500 just a few years ago.
“We are just seeing more of every type of practitioner,” said Andie Crosby, marketing manager for the organization. “MDs and DOs account for nearly 60% of our partners. Nursing professionals, nutrition professionals, DCs, NDs, NPs and other clinicians account for the rest. Perhaps the most dramatic shift is the growing interest in functional medicine internationally. Chronic disease is now a global epidemic and clinicians around the world are seeking more information on the functional medicine model.”
Though progress is slow, and resistance remains, this interest is impacting healthcare at large.
According to a 2010 survey of 2,000 primary care doctors done by my company, Holistic Primary Care, approximately 13% are dispensing supplements. Eighty-six percent use supplements for their own health and 79% recommend or “prescribe” some type of supplement to patients.
Perhaps most remarkable, about 61% of respondents self-identified as “Mainstream/Conventional” in their mode of practice; only 7% identify as fully “Holistic.”
This rapid evolution of the practitioner channel is occurring during a time of unprecedented change and uncertainty in healthcare at large. For example, the passage of the Affordable Care Act (aka ObamaCare), the breakdown and consolidation of conventional care systems, the health IT revolution, the emergence of retail-based quickie-clinics, the rise of nurses as independent practitioners, the growth of concierge and membership practices, the changing medicolegal landscape, and of course the aging and impoverishment of the population and the epidemics of chronic diseases are among the seismic shifts rocking medicine. Few professions have withstood such rapid, relentless change.
All of this has pushed practitioner morale—already faltering by the late 1980s managed care revolution—to an all-time low, evidenced by the recent Physicians’ Foundation survey of more than 13,500 U.S. doctors. More than 80% said they feel medicine is in decline, 77% are pessimistic about the future and more than half are planning major changes in their practices.
Massive Opportunities, Major Challenges
Our industry has an unprecedented opportunity to step forward and take a meaningful place in the healthcare landscape, if—and it’s a big if—we have the collective will, intelligence and intention to do so.
“I think there is opportunity for growth in every sector of the practitioner channel, although MDs are likely the biggest growth segment,” said Mike Katke, co-founder and former vice president of marketing at Metagenics, one of the nation’s leading practitioner channel companies. Now a marketing consultant for Designs for Health, Mr. Katke noted, “More MDs are beginning to look at natural alternatives as their patients are demanding treatments that are less invasive and less toxic.”
Mr. Katke, a featured speaker at the upcoming Health Practitioner Marketing Forum (www.HPMForum.com) April 3-5 in Long Beach, CA, added that, “Both the quantity and quality of science supporting nutraceuticals has grown dramatically. On the manufacturing side we’ve seen broad adoption of GMPs (Good Manufacturing Practices) leading to better and more consistent quality. These trends have led to a growing confidence among consumers and professionals alike, which is obviously good for the future of the industry.”
Kyle Bliffert, executive vice president, Healthcare Practitioner Brands, for Atrium Innovations, also sees strong continued growth. “Many practitioners now understand that patients are taking supplements already, so they are more willing to promote or provide ‘professional’ quality supplements from one of the HCP brands.”
Based in Quebec City, Canada, Atrium has acquired several leading practitioner brands over the last decade, including Pure Encapsulations, Seroyal and Douglas Labs, as well as high profile consumer brands like Garden of Life and Minami.
“Our industry has become a more viable adjunct to conventional medicine,” said Mr. Bliffert. “Witness the growth of the omega 3, vitamin D, glucosamine and other more ‘mainstream’ categories. It seems that conventional practitioners are more accepting of these supplemental modalities.”
The practitioner channel holds great promise in part because pro-level products carry premium prices many times higher than the commodity pricing of the retail space. But that comes with markedly higher expectations for quality, efficacy, safety and customer support, and makes the practitioner space the most challenging industry segment. It’s also the least understood.
Mapping the Uncharted Territory
Despite impressive growth, the channel remains largely uncharted territory with few credible metrics to guide marketing decisions. Moreover, it spans an astonishing variety of disciplines and professional “tribes,” each with its own preferences, sensibilities, language, history, education level and culture. A massage therapist, a doctor of oriental medicine and a cardiologist are very different breeds, with different needs.
Practitioners vary widely in their understanding of nutrition and their embrace of supplements. One of the big marketing challenges is to figure out which practitioner groups will be most responsive. This is especially true with new product launches and novel ingredients.
“We started the Health Practitioner Marketing Forum because we saw a serious lack of good information about what’s happening in the channel and how to meet its challenges,” said Meg Sinclair, publisher of Holistic Primary Care, and co-founder of the Forum, in collaboration with Greg Stephens and Windrose Partners. “We knew the field was expanding and healthcare was shifting, but nobody really had a clear picture of what was going on.”
“Prior to our 2010 survey, there was very little data on MD engagement with nutraceuticals,” Ms. Sinclair said. “People would ask us all the time, ‘How many MDs sell supplements?’ Honestly, we didn’t really know. Nobody else did either. So we set about finding out.”
A highlight of the HPM Forum will be new data from HPC’s 2013 physician survey. “We’re once again surveying 2,000 primary care doctors, and it’s going to be interesting to see what has changed in the last three years,” Ms. Sinclair said. The meeting will address the unique challenges of the practitioner channel, and highlight real-world success stories.
MDs Awaken
Practitioner engagement with holistic medicine, nutrition and supplements is driven by a few key factors:
• Public demand for non-pharmaceutical options
• Declining insurance & federal reimbursement, stoking a need for new practice revenue
• A growing base of scientific support
• Recognition that lifestyle accounts for 70% or more of all disease risk, and that reliance on drugs and
surgery is neither effective nor sustainable
• Clinicians’ own need to re-personalize medicine and feel like “healers” rather than technicians or “providers.”
Naturopaths, chiropractors, TCM practitioners and “alternative” MDs—the original base of the practitioner channel—remain an important part. But everyone interviewed for this article agreed that the greatest growth potential is with MDs.
“When I first started in this channel over 12 years ago, a bulk of our business came from DCs and the few fringe MDs and DOs pushing the envelope and recommending supplements,” said Nate Freeman, senior director of marketing for Ortho Molecular Products, Stevens Point, WI. “It was hard to bend the traditional doctor’s ear to discuss the validity and legitimacy of supplements in the world of pharma.
“Fast forward 12 years and things look drastically different,” he continued. “Now, most of our business comes from MDs and DOs. What changed? The evidence on supplements has grown significantly and doctors feel more confident about recommending them. While drugs are still their primary tools, the side effects, black box warnings and recalls cause doctors to look for natural alternatives that work with the body … not force an outcome upon it.”
There are still many supplement naysayers in conventional medicine, but a doctor who recommends or dispenses no longer elicits an immediate accusation of quackery. “The stigma of recommending supplements is fading,” said Katie Ferren, brand manager for Metagenics, Aliso Viejo, CA.
HPC’s 2010 survey data bear out these perceptions. Two out of three respondents—and half of those who self-identify as conventional—agreed with the statement: “I believe that diseases/conditions can be treated or ameliorated with dietary supplements/natural products.” This is despite DSHEA’s prohibition of statements suggesting supplements can be used to treat disease.
Common Obstacles
Though things are moving in the right direction, there are still obstacles to wider acceptance of and implementation of nutrition-based medicine. These include:
• Ingrained biases against supplements among mainstream practitioners
• Lingering perception that the industry is “unregulated”
• Lack of education about the products and how to use them
• The balkanized clinical landscape
• The high cost of clinical research
• Fierce competition for practitioner time and attention
• The challenge of crafting effective messages that stay within the bounds of DSHEA
• Physicians’ concern about stepping outside “standards of care” and fear of medicolegal consequences.
Practitioner time constraints are one of the biggest challenges, noted Andy Greenawalt, CEO of Manchester, NH-based Emerson Ecologics, the nation’s largest distributor of practitioner-only products. “It’s very difficult for many practitioners to find time to learn about new products, as well as to do the research they need in order to ensure their patients are getting safe and effective products.”
Clinicians are bombarded by educational information and marketing materials from drug makers, supplement companies, labs, equipment manufacturers, IT companies and service providers. It can be challenging to win and sustain practitioner attention.
This, Mr. Greenawalt noted, was the driver behind his company’s creation of the Emerson Quality Program (EQP), a set of online tools for practitioners designed to take the guesswork and research out of determining the quality of the products they recommend. Emerson tries to do the homework that most clinicians don’t have the time to do.
Ultimately, success in this channel comes down to trust. Marketers do not always appreciate what an enormous level of trust they’re demanding when they ask doctors to recommend their products. In essence, practitioners put their reputations, licenses and livelihoods on the line with each recommendation.
“You don’t get a second chance with healthcare professionals. You have to deliver consistent results that get patients better faster,” said Mr. Freeman, of Ortho Molecular. “It takes patience and a commitment to efficacy that few companies are willing to invest. You can’t microwave the process.”
The Science Game
Good science helps considerably, industry leaders agreed. “The primary change I’ve observed over the last 10 years is the evolution of an evidence-based approach,” said Jeremy Holt, manager of new product development for Ajinomoto USA, Fort Lee, NJ.
“In the ‘old days’ natural products were not expected to have clinical research to substantiate safety and efficacy. Today, many of the really successful companies have made substantial investment in clinical research. Our healthcare clients and their patients are asking for evidence-based products shown to improve a specific condition.” Ajinomoto has a longstanding commitment to research, with numerous clinical studies underway on a number of unique ingredients.
However, good science costs good money—sometimes millions of dollars per trial if it’s large and detailed. There’s no guarantee the data will tell the tale the sponsor wants. The last decade has had its share of nutrients or botanicals that seemed promising based on traditional use, epidemiology or animal studies, but proved less-than-effective when tested in humans.
“One of the biggest challenges is when negative studies are published. They definitely cast a shadow of doubt,” said Ms. Ferren of Metagenics. “For doctors considering supplements in their practice for the first time, it is something that causes confusion.”
Clinicians sometimes generalize negative findings on a particular product to an entire class or even to the whole industry. A negative study on one product gets twisted into a conclusion that, “Herbs don’t work,” or “Vitamins are worthless.”
On the other side, marketers often “borrow” science from one specific branded product to support similar products. Sometimes findings can be generalized, but over-generalization in either direction or extrapolation beyond the bounds of scientific reasoning creates confusion and ruins credibility in the long run.
Paul Coates, PhD, director of the NIH’s Office of Dietary Supplements, believes negative studies are a simple fact of scientific life. While it is true that methodological flaws are sometimes to blame for unexpected negative data, this is not always so. Crying “Foul” after every negative study does little to build the industry’s scientific credibility.
Researchers, marketers and the public often expect nutrients or botanicals to behave like drugs. Dr. Coates believes that applying drug-centric thinking to nutritional research may be misguided. However, this does not mean that the randomized controlled trial is an invalid model for testing supplements, as some industry pundits have claimed.
Mr. Katke said Metagenics’ long-term commitment to research is the foundation of the company’s ultimate multi-million dollar success. “Companies that stick to the science rather than following fads are able to earn the trust of physicians.” Metagenics maintains one of the largest dedicated scientific staffs in the industry, including MDs, PhDs and nutritionists. It also has its own clinic—the Functional Medicine Research Center—to conduct clinical trials and individual case management studies.
Assuming one has good data to support products, the next challenge is to translate the science into a meaningful message that stays within bounds of the law. The structure-function language permitted by DSHEA doesn’t always click with doctors trained to think along disease-treatment lines. When developing marketing materials it is wise to get input from the type of practitioners you hope to reach, as well as from good legal consultants familiar not only with DSHEA but with FDA and FTC enforcement patterns.
To succeed in communicating effectively, you must understand the language, sensibilities and needs of your target market.
Join Up or Drop Out
After years of declining reimbursement, many practitioners fear for the viability of their practices. The average primary care doctor makes $158,000 to $165,000 per year, according to MedScape’s 2012 physician compensation report.
To earn that, they see an average of 19 patients per day; some see as many as 30. The average practice employs 2.3 non-clinical staffers for each practitioner. Doctors in insurance-based practice spend upward of 20% of total work time on non-clinical administrative tasks.
The costs and stress of staying in private practice has forced many to the point where they must make major decisions: Do I sell my practice to a hospital owned network or mega-group practice? Do I opt out of Medicare and insurance and go direct-pay or concierge? Do I take a non-clinical job in industry? Do I leave medicine altogether?
HPC’s 2010 survey showed that nearly 20% of respondents—that’s one in five primary care doctors—are contemplating a major change in their practice situation.
The Physicians Foundation found that while 49% of respondents still own their practices or are partners in an independent practice, 44% are employed by hospitals, large groups or other ownership entities. Many more indies are expected to sell out. We’re rapidly reaching a point where more doctors will be employees than independent clinicians.
That’s a major shift from the 1970s “heyday” of American private practice. The dynamics are similar to the retail space where small, indie stores—the roots of our industry—struggle to stay alive in the shadow of mega-naturals and big boxes. It’s also similar to the situation of small family farmers who sell their land because they can’t compete with Big Agriculture.
Selling the practice and becoming an employee appeals to burnt-out doctors: it guarantees a steady salary, cuts administrative headaches, offers regular hours and the support of a large network. But it has its own devils: greater oversight, corporate bureaucracy and politics and long-term uncertainty.
Some newly employed physicians find themselves suddenly unemployed after initial contracts expire. It’s no fun to be 55 and unemployed, staring at an office you once owned, and competing for jobs with nurses or younger doctors at a lower pay scale.
At the same time, current healthcare dynamics are pushing some doctors to opt out of all third-party payers, in favor of direct-pay or concierge (aka membership) practices in which patients either pay cash for services or annual membership fees. Again, it’s similar to retail where artisanal food stores offering premium goods and attentive service thrive despite the recession.
Concierge and direct-pay, once the province of the privileged, is becoming increasingly democratized. According to the American Academy of Private Physicians, there are upward of 5,000 practices. MedScape estimates that 1% of all doctors are in concierge, and 3% are in cash-only practices. HPC’s data showed 8% of primary care physicians are in cash-pay, 1% in concierge and 36% in mixed models that receive revenue from third-party payers, augmented by cash-pay services.
Of the 20% of HPC respondents who were considering a major practice change, 45% were pondering cash-pay and 35% were looking at concierge options.
In both cases, the shift out of third-party systems enables doctors to cut their overhead by a tremendous margin, often by 50% or more. It also enables them to spend more time with fewer patients, and banishes overseers from the exam room. But these models require entrepreneurial spirit, marketing know-how and willingness to take risks—three traits that many doctors lack.
Direct-pay and concierge practitioners are a good potential market for nutraceuticals because: A) they practice outside insurance constraints; B) to succeed they must focus on customer service and client convenience; and C) they are often looking for new revenue streams. However, the total numbers are still small, and some of these doctors remain conventional in their practice style, even if they’ve embraced an unconventional practice model.
Why Don’t More Doctors Dispense?
Practitioners who dispense supplements do so for various reasons. For naturopaths, nutraceuticals and herbs are basic tools of the trade and having a dispensary—or effective online dispensing system—is a cornerstone of practice. The same is generally true for TCM and Ayurvedic practitioners. Chiropractors were early adopters of office-based dispensing, which allowed them to diversify the options they can offer and to increase their total revenue.
The recent surge of MD dispensing is driven by two factors: a pressing need for more revenue, and a recognition that patients are going to take supplements no matter what. By dispensing, doctors make it convenient for patients to obtain top quality products, sparing a lot of run-around and trial and error.
Revenue-wise, most dispensing doctors mark up products by 20-100%. In a large practice, this can add tens of thousands in additional revenue. Interestingly, in HPC’s 2010 survey, 11% of dispensing doctors said they’re selling products at cost. The main reason for this is to dispel any concerns about conflict of interest.
The HPC 2010 survey showed a variety of reasons for not dispensing, including: ethical concerns, lack of space to stock products, no perceived demand from patients and fear that office-based retailing could erode patient trust.
Some doctors believe it is unethical to sell any sort of products to patients for profit—a view forwarded by the American Medical Association and other medical trade groups.
These concerns are relatively easy to address: a physician can still dispense at cost, as a convenience and a service to patients. But the ethical objections may mask a general discomfort with “retail” in principle. Some practitioners have a natural entrepreneurial instinct, but many others have aversions to anything business-like. They simply don’t like the idea of being “vendors.”
Those averse to dispensing can still become strong product advocates if they are aware of the true quality differences between practitioner-only lines and the cut-rate retail lines. In the HPC survey, 21% of respondents said they have discussions about supplements with patients at least once daily, and 39% said they had multiple discussions every day. Sixty-two percent agreed with the statement that: “If I knew that some supplements/natural products were manufactured with higher quality standards, I would recommend or ‘prescribe’ them more often.”
Among clinicians open to dispensing, implementation issues may be the biggest barrier. While dispensing may be a basic part of naturopathic and chiropractic practice, most MDs don’t have a clue how to set up a retail business.
“Most doctors would admit that lifestyle medicine is the best solution for their patients, but implementing and leveraging the power of lifestyle medicine isn’t easy. They need a systematic program that helps them put their knowledge into action,” said Mr. Freeman.
To help with this, Ortho Molecular Products, Metagenics and many other practitioner channel companies have set up turn-key programs, often centered on specific disorders or conditions, that facilitate a clinician’s ability to engage patients with appropriate supplements for several months. In many of these programs, practitioners need not stock product in their offices; once patients are enrolled, they receive the products directly from the companies.
This approach requires considerable practitioner education and intensive customer support, but it pays off in the long-term. Anything that takes the headaches and the unpredictability out of the equation will be well received by busy clinicians.
Erik Goldman is the editor of Holistic Primary Care-News for Health & Healing, a quarterly medical news publication covering the field of holistic healthcare for an audience of roughly 65,000 primary care physicians. He is also co-founder of “Heal Thy Practice: Transforming Primary Care,” an annual conference focused on business models for integrative healthcare practices. He is currently collaborating with Greg Stephens & Windrose Partners to develop the first Health Practitioner Marketing Forum, an educational gathering on opportunities and challenges in the healthcare practitioner channel. For more information contact Erik at: 212-406-8957 or Erik@holisticprimarycare.net.
Leading executives and marketing experts offer their perspective on the greatest opportunities in the practitioner channel.
Dan Lifton, CEO, Quality of Life Labs/Maypro: “There will be continued growth with primary care MDs, who will get further squeezed financially, and will continue to seek additional revenue streams. I also think the practice of combining supplement regimens with genetic screening and other tests will continue to expand.”
Evan Zang, director of sales, Southwest Region, Vital Nutrients: “The new graduating MD group represents the largest opportunities for sales. As the old guard MDs retire, they will be replaced by physicians who are getting a better, more well-rounded education in nutrition.”
Jeremy Holt, manager of new product development, Ajinomoto USA: “Weight management is an ever growing concern both globally and here in the US. We have also had a tremendous amount of success with our sleep aid product, Glysom. The more targeted products, meant to address a particular health concern, seem to have a higher success rate.”
Jeff Hilton, president, Integrated Marketing Group: “The big growth is definitely in condition-specific supplement formulas targeted toward cognition, cardiovascular, joint and immune function. I also see an increase coming in diagnostic lab testing to assess patient health.”
Andy Greenawalt, CEO, Emerson Ecologics: “There are many practitioners who are not recommending supplements to their patients who should be. For example, if gastroenterologists routinely recommended probiotics, many of their patients would experience improvement right away. Cardiologists and fish oil are another example. This continues to be our greatest opportunity for growth in this channel.”