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    Columns

    Dynamic Changes in the Health Practitioner Channel

    Significant opportunities are emerging to expand the targeted customer base to more allopathic MDs.

    Dynamic Changes in the Health Practitioner Channel
    Physicians believe supplements have positive benefits but need to know more about them.
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    Gregory Stephens, RD, Windrose Partners06.01.15
    I recently had the opportunity to participate in the 3rd Annual The Practitioner Channel Forum in San Diego, CA. This forum is an executive gathering focused on strategies to capitalize on the rapidly expanding healthcare practitioner market for dietary supplements, nutraceuticals, medical foods and natural products. There were certainly some insightful presentations, but I find the real learning is interacting with other participants, particularly in the panel and roundtable discussions.

    From a sales standpoint, the practitioner channel is often seen as a relatively small segment of the dietary supplement market. However, the growth in this channel is only surpassed by e-commerce. As it grows, the practitioner channel is changing rapidly, becoming more complex and more “pharma-like.”

    As the forum wrapped-up, I made note of several topics of interest: strategies for marketing nutritionals to “mainstream” physicians, product diversion, medical foods and, of course, implications of the recent New York Attorney General’s botanical recall action. Following are my thoughts along with insights from speakers and other forum participants on these issues.

    The New Physician Audience for Supplements
    First, let’s take a quick look at the patient as a consumer. Though their decision to purchase supplements is largely influenced by friends and family (see Figure 1), consumers list their physician as the most trusted source of information for supplements.


    In a Natural Marketing Institute (NMI) survey, consumers rated their physician as the most knowledgeable about supplements (43% “very knowledgeable”) as compared to, for instance, pharmacist (32%) or in-store personnel (10%). Other research has shown that when recommended by their physician, consumers are more likely to trial the recommended product, are more compliant with recommended dosing and use the product longer.

    It is no surprise that physicians see quality as the top attribute in recommending a supplement. In a related survey, nearly 80% of physicians believed that supplements produce benefits but they are concerned about their quality and safety. This is especially important for companies interested in penetrating the emerging market of allopathic physicians, who are concerned the most.

    In his “5 Elements of Quality” presentation at the forum, Michael Levin of Health Business Strategies provided a summary of the key elements of quality supplements.
    • Design: Evidence-based formulation and appropriate dosage form;
    • Authenticity: Ingredient identity is always verified using scientifically valid methods;
    • Potency: Ingredient and finished product potency is verified using scientifically valid methods, through expiration date;
    • Purity: Proven freedom from biological and chemical contaminants;
    • Validation: Evidence of safety and efficacy for intended use.
    After quality and efficacy, physicians are increasingly concerned about the economic viability of their practices. The net impact of healthcare reform appears to be greater on conventionally trained MDs & DOs than on other types of practitioners. Holistic Primary Care’s 2015 Practitioner Survey found the impact of healthcare reform has had a more negative effect on MDs and DOs, with 32% indicating their practice revenue has decreased over the past year; whereas only 20% of non-MD/DO practitioners indicated they experienced a decrease in revenue.

    For comparison, only 9.5% of the combined groups reported an increase in practice revenue during this period.

    Possibly due to the decreases in revenue, MDs and DOs are more likely to be considering practice model changes than other types of practitioners (63% vs. 50%). Not surprisingly, more than half of the practitioners reported interest in dispensing dietary supplements in addition to other cash-only products and services.

    In the Health Practitioner survey, nearly two-thirds of the participating physicians agreed or strongly agreed that supplements have positive benefits but they don’t know enough about them to recommend a specific product or brand.

    Certainly, physician education is important but one key question remains: How do we teach the physicians? This is no small task considering the modest marketing budgets supplement companies have when compared to their major competition in selling to doctors: big pharma.

    It’s important to look at the fundamental needs of the practitioner first. According to ChangeWell CEO Mark Tager, MD, the keys to success in the physician channel are quite similar to those of other health practitioners. Here are some examples:
    • If private pay, docs want referrals of the patients they like to treat. This means helping them expand the top of the funnel.
    • Talk more about their lawn and less about your grass seed. What clinical problem is your product addressing?
    • Balance your science with practical, short, easy to understand, actionable education materials.
    • Build physician customers for life. Train them well; help them build their practice; focus on the patient experience; remember a “practice” is a team, and treating patients is a team sport.
    Medical Foods & The Healthcare Institution Market
    Medical foods are foods that are specially formulated and intended for the dietary management of a disease, disorder or condition that has distinctive nutritional needs, which cannot be met by normal diet alone.

    In 2013, the institutional market for medical nutritionals (e.g., medical foods) was approximately $1.3 billion. This includes hospitals, nursing homes and home care settings. (See Figure 2.)


    “Specialty Formulas,” which are defined as products targeted and used by a specific disease population, account for about half of institutional nutrition sales. These include, for instance, diabetic products such as Glucerna or Boost Glucose Control.

    Regardless of any product’s regulatory category, marketing nutritionals to healthcare institutions has its own unique nuances. For instance, hospitals value disease management or therapeutic products where benefits are realized in the short-term.

    The average length of a patient’s hospital stay (ALOS) is 4-8 days. Demonstrated product efficacy is of utmost importance in acute care hospitals. This goes beyond the sometimes-small human trials supporting structure-function claims.

    The average length of resident stay in a nursing home is 2 years, of which 72% of residents expire and 38% are discharged to hospitals or home care. Thus, nursing homes and home care settings may place more value on preventive benefits. Prophylactic nutritional interventions are more viable in long-term care settings where a lack of preventive measures can lead to negative clinical and financial outcomes.

    Regardless of the setting, with more than 5,700 hospitals and over 16,000 skilled nursing facilities in the U.S., strategic focus is critical. Institutional marketing tactics differ significantly from the practitioner channel; plus it is difficult to compete with the pharma model, which most medical foods companies follow.

    The Growing Issue of Product Diversion
    The diversion issue in the practitioner channel is characterized by inventory being sold through unauthorized third-party vendors, often online through sites like Amazon.com. It is very challenging to identify the exact diversion sources. The problems of channel diversion of supplements goes beyond simply upsetting customers, it includes loss of revenue, potentially fraudulent claims and other liability issues, brand name erosion, harm to your reputation and ultimately the loss of customers.

    Companies such as Nosco, which shared its capabilities at the forum, can help prevent diversion through a variety of technological tools. These include the use of serialized labels and cartons, and other more sophisticated technologies for layering microprint on labels, using variable data barcodes and UV invisible marks.

    Even if the product barcode is removed, a microprint will be added as a secondary identifier. The microprint can be located in multiple locations and changed over time. This is a good example of partnering with vendors to address such challenging issues.

    Fallout From NY AG Action
    By now everyone is aware that in February New York Attorney General Eric Schneiderman accused four major retailers of selling fraudulent and potentially dangerous store-brand herbal supplements. Retailers included GNC, Target, Walmart and Walgreens. He also demanded that they remove the products from store shelves.

    Claudia Lewis, partner with Venable, addressed recent developments, which include GNC’s retest of its products by a third-party lab that subsequently refuted NY AG’s results.

    Regardless, at the end of March, GNC reached an agreement with the AG whereby it will use DNA testing to authenticate ingredients, before extraction, in store-brand supplements and test for common allergens.

    Additionally, GNC will submit semiannual compliance reports and display signs in stores and online describing the manufacturing process. To date there have been no agreements with the other three retailers.

    On April 2, 14 state attorneys general asked Congress to launch an investigation of dietary supplements. They requested Congress work with FDA regarding identity verification, consumer perception, enhanced and industry-wide quality assurances, and manufacturing/supply chain requirements.

    All industry trade organizations are following this issue closely as the significance to the industry could be as substantial as the passage of the Dietary Supplement Health and Education Act (DSHEA)—just not as positive.

    The health practitioner channel is as dynamic as ever; however, it is undergoing some exciting changes. From the introduction of medical foods, distributing to healthcare institutions, potential reimbursement by third-party payors and expanding the targeted customer base to more allopathic MDs, a wide range of opportunities are emerging.

    With a reputation for high-quality and efficacious products, the practitioner channel provides a solid basis for growth in supplement sales. 


    Gregory Stephens, RD
    Windrose Partners

    Greg Stephens, RD, is president of Windrose Partners, a company serving clients in the the dietary supplement, functional food and natural product industries. Formerly vice president of strategic consulting with The Natural Marketing Institute (NMI) and Vice President of Sales and Marketing for Nurture, Inc (OatVantage), he has 25 years of specialized expertise in the nutritional and pharmaceutical industries. His prior experience includes a progressive series of senior management positions with Abbott Nutrition (Ross Products Division of Abbott Laboratories), including development of global nutrition strategies for disease-specific growth platforms and business development for Abbott’s medical foods portfolio. He can be reached at 215-860-5186; E-mail: gregstephens@windrosepartners.com.
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