According to a survey of 549 physicians (MDs, DOs, NDs) and 94 nurses (NPs, RNs, LPNs) conducted by my company (Holistic Primary Care) earlier in 2014, well over 30% of these primary care practitioners are now dispensing through their own in-clinic formularies, through large distributors, or via secure online fulfillment services. This is up considerably from 13% in 2010 when we did our first practitioner survey.
The growth is encouraging for anyone working in the practitioner channel of the natural products industry. Additionally, 63% of respondents said they are actively seeking new practice revenue streams (up from 43% in our 2013 survey); of these, almost half are considering dispensing supplements as a primary method for generating new revenue.
However, the fact remains that clinicians who dispense remain a minority among healthcare professionals.
Who’s Not Dispensing & Why?
As important as it is to understand the characteristics of clinicians who do sell supplements—the prime customers for practitioner channel companies—it is equally important to get to know those who do not dispense and the reasons for their decisions.
Our survey asked: “If your clinic does not dispense supplements/natural products, why not?” and allowed them to choose from a list of reasons. They could choose as many as were relevant to their situations.
The number one response, cited by 36% of the 366 non-dispensers, was that their employer/administrator does not permit them to do so.
Other reasons for not dispensing included: Ethical concerns (20%); Lack of space to stock products or other logistical obstacles (20%); Concern that dispensing will affect patient trust (15%); Medico-legal concerns (14%); Lack of sufficient knowledge about supplements (12%); No perceived patient demand (11%); Reservations about product efficacy (10%); and safety concerns (9%).
Administrative opposition is clearly the most prevalent obstacle for clinicians considering how supplements fit into their practices. This explains a lot about the current reality in the trenches of healthcare, and it is an important factor to consider. The truth is, many doctors and nurses—especially those working in clinics owned by large hospital systems—are not entirely free to choose how they practice.
This is clear enough when we look at the type of clinicians who are currently dispensing: practice owners or those who are partners in small practices are much more likely to be dispensing than those who work as employees (56% vs. 16%). Not surprisingly, those who work outside insurance-based medicine are more likely to dispense than those who take insurance (43% vs. 29%), as are solo or small practices (10 clinicians or less) compared with large groups or institutional practices (51% vs. 13%).
In this survey cohort, 42% of the respondents are practice owners, 8% are partners in a practice, while 39% are employees in clinics. An additional 11% are working in academia, or working as “freelance” independent contractors (locum tenens, in medical speak).
Our respondents actually skewed more toward practice ownership than national averages. Across specialties, more than half of all physicians in the U.S. do not own their practices, but work as employees. This is in stark contrast to the medical landscape several decades ago, when the vast majority of physicians had private practices.
It is interesting to note that practice owners who do not currently dispense were more likely than employed physicians to cite the patient trust concern as a major obstacle (29% vs. 7%). Doctors who take insurance were more likely to cite ethical concerns than those with insurance-free practices (25% vs. 17%).
Among the subset of 94 nurses in this survey, 18% reported that they are currently dispensing and most of these were nurse practitioners (as opposed to registered nurses, nurse-midwives, etc.).
While nurse practitioners have full authority to practice independently as primary care clinicians in most if not all states, the vast majority of NPs still work as employees like their RN colleagues. In our survey, 66% of nurses were employees.
The numbers may change in the future as more nurses begin to flex their wings in independent practice, but for the moment most of them face the same administrative constraints vis-à-vis supplement dispensing as the physicians.
The Next Frontier
Independent, insurance-free clinicians in full control of their own practices have been the prime customer base for practitioner channel companies for decades, and they will likely remain so for years to come.
But the next frontier for this channel is the vast realm of practitioners working as employees in large group practices and hospital-owned networks. Getting to them means first getting to the medical directors and other administrators who set the ground rules for what the in-network clinicians can and cannot do.
To be sure, a number of professional-only brands as well as product distributors have tried to gain entry into the world beyond the institutional barrier, with very limited success. The massive group practices and hospital owned networks tend to be medically conservative and risk-averse. Since they are, for the most part, insurance based they are not quick to consider modalities that are not covered by insurance plans.
But there are some promising early signals to suggest that things may be changing for the better.
The opening of the Cleveland Clinic’s new Center for Functional Medicine in September is certainly a major step forward. One of the world’s largest and most widely respected hospital systems, the not-for-profit Cleveland Clinic system owns 14 community-based family health centers around its central hub in Cleveland, as well as other hospitals and clinics in Florida, Nevada and Ontario. Combined, Cleveland Clinic employs more than 3,000 doctors and 40,000 non-physician caregivers who collectively treat more than 5 million patients each year.
Last year, Cleveland Clinic recruited functional medicine pioneers Mark Hyman, MD, and Patrick Hanaway, MD, to develop a center based on the principles forwarded by Jeffrey Bland and the Institute for Functional Medicine.
It is the latest in a series of decidedly progressive steps that included establishment of a Wellness Institute, an Integrative Medical Center, a Chinese Herbal Therapy Clinic and a Center for Personalized Healthcare.
The extent to which the new center will include recommendations for or dispensing of nutraceuticals remains to be seen.
Supplementation, often guided by detailed diagnostic testing, is very definitely a component in the functional medicine toolbox, and it would be hard to imagine a true-blue functional medicine clinic that did not include supplements.
At any rate, the emergence of functional medicine at one of the world’s top mainstream medical institutions is worth noting. If successful, Cleveland Clinic’s ventures will likely inspire similar plans at other major healthcare networks.
While hardly a red carpet welcome with free valet parking, developments like this do suggest that for professional-channel supplement brands, the once impenetrable fortress of institution-employed clinicians may not be so totally impenetrable in the future.
Of course, it will remain for the industry to win the trust of administrators and medical directors, through a combination of strong science, impeccable manufacturing, full supply-chain control, high standards of business conduct, and demonstrable clinical and fiscal outcomes. But opportunities may soon emerge that were only dreams a few years ago. Be ready for them.
Want more in-depth analysis of the opportunities and challenges in the healthcare practitioner segment of the nutraceutical industry? Attend The Practitioner Channel Forum, April 22-24, 2015 at the Coronado Island Marriott, San Diego, CA. For more information, visit www.TPCForum.com
Erik Goldman is co-founder and editor of Holistic Primary Care: News for Health & Healing, a quarterly medical publication reaching about 60,000 physicians and other healthcare professionals nationwide. He is also co-founder of the Practitioner Channel Forum, an executive level summit focused on challenges and opportunities in the health practitioner channel. The 2015 Forum will be held on April 22-24, 2015. Learn more at www.TPCForum.com