Reaching Healthcare Practitioners With Natural Products

Examining the myriad opportunities in the healthcare practitioner market.

ByGina Nick

The practitioner market is made up of over one million MDs, osteopaths, na­turopathic physicians, veterinarians and other allied healthcare professionals, including nurse practitioners, physician assistants, chiropractors, acupuncturists, pharmacists, Ayurvedic doctors, Traditional Chinese Medical doctors, nutritionists and dietitians. According to Nutrition Business Journal (NBJ), San Diego, CA, and other sources, sales in the practitioner market have surpassed growth in traditional consumer-focused channels. In fact, sales in the health practitioner market increased 14% from 1997 to 2001, compared to the 7% growth rate for the entire supplement market during that same time period. Further, the practitioner market is estimated to grow at a rate of 10% over the next three years, while the total market growth estimate continues at 7% through 2004, according to the Freedonia Group. This demand marks a grand opportunity for nutritional supplement companies, particularly those whose sites are already shifting toward the qualified healthcare practitioner market.

This new column will discuss the various issues surrounding the approach to the healthcare practitioner market. It will also serve as a forum for developing a strategy that will most effectively maximize the growth of nutraceuticals in this channel.

Getting into the Healthcare
Practitioner Market

Sales growth is a necessary, but certainly not a sufficient, reason for pressing forward into the healthcare practitioner market. The nutraceuticals industry has much to offer, which has been hindered by the traditional approach to the marketplace. The medical community has an entrenched wariness that can now be overcome due to the growing acceptance of complementary and alternative medicine (CAM), which was initiated by its use in Europe, its recent introduction into medical schools in the U.S. and the rapidly growing interest from the National Institutes of Health (NIH). The NIH has not only opened a separate division to investigate CAM (the National Center for Complementary and Alternative Medicine-NCCAM-with a 2004 budget of over $116 million), it has also established a Botanical Research Center, which doled out $1.5 million to 15 medical schools to integrate CAM education into their curricula. Furthermore, California, always a national leader into new directions, has just adopted licensing standards for naturopathic physicians.

Interest and acceptance of CAM is growing for several reasons. First is the increasing cost of medical care in the U.S. The second reason relates to the fact that current medical treatments cause side effects that are generally proportional to their effectiveness. (Unrealistic as it is, the public expectation is for harmless treatments and painless cures.) The third reason has to do with the apparent hiatus in medical progress as it takes on chronic diseases and cancers. The miracles of half a century of antibiotics, immunizations, phe­­­­nomenal surgical techniques, transplantation and pharmaceuticals have created an expectation for other diseases that remains to be realized. Although the revolution in molecular biology promises more miracle treatments, more and more people seem to be turning their attention toward prevention rather than cure. In other words, nutrition solutions are attracting growing interest.

It would have been impossible to penetrate this market much earlier than the present. America is only now opening its eyes to Europe to recognize the advances it has made in multiple areas. Of particular interest is its integration of CAM into traditional medical practice. Furthermore, it has been only recently that medical costs have become an issue of national importance—a crisis if you will. Add to that the growing expectations of the American public and you have a true sea change that can carry with it the traditionally resistant attitude of the healthcare community. Not a small part of this sea change is the flow of healthcare dollars that is repositioning many providers closer to the changing center of the currents.

The $32 billion the U.S. spent on CAM in 2002 has attracted considerable attention, as one-third of all Americans are trying CAM therapies as well as nu­traceutical products. Practitioners, always looking out for their patients’ best interests as well as their own, are being motivated to take a closer look at this area. The Wall Street Journal recently released a report stating that in the past two years the number of medical centers with CAM clinics rose to nearly 100, up from less than 12 in 2000. Additionally, hospital profits dropped 38% between 1997 and 2001, forcing these healthcare institutions to take note of what is in public demand and to seek new revenue sources. CAM therapies such as massage, acupuncture, guided imagery, relaxation, meditation, mind-body work and biofeedback are working their way into hospital settings where they are generating substantial profits. The number of hospitals offering CAM services more than doubled between 1998 and 2001.

The National Cancer Institute (NCI) and many major cancer centers like Memorial Sloan-Kettering are actively pursuing CAM modalities as adjuncts to traditional treatments. These include acupuncture for post-surgical pain, massage for dermal side effects, several modalities for nausea and a storehouse of botanicals for possible anti-tumor activity. Outside the hospital, nutraceuticals are leading the way, but other forms of CAM will prosper in out-pa­tient settings as well due in large part to lower overhead costs. Sales of products represent a significant revenue source for many clinics, and often make the difference between profit and loss. However, this presents a stumbling block to many physicians in view of the fact that it is considered a conflict of interest. Pharmacists have also objected strongly to physicians filling prescriptions from their own offices.

Academic institutions are generally finding that without research funding, their CAM operations are not profitable. Nevertheless, 91 of the 125 U.S. medical schools now offer some form of complementary and alternative medicine as part of a required course, with leading medical colleges such as Yale, UCLA and Columbia University taking this trend toward CAM use in the general population quite seriously. Even the traditionally reluctant health insurance industry is beginning to realize the benefits of covering certain CAM modalities. Two major studies have demonstrated cost savings from CAM—one conducted by American Specialty Health Plans (ASHP), the other by Alternative Medicine Integration (AMI). The ASHP study involved nearly two million patients and showed that those with both medical and chiropractic coverage cost the plan significantly less for back and neck pain. The AMI study found a 50% reduction in cost for patients with dual coverage.

It is certainly to the advantage of this industry that CAM treatments have risen to their current stature, almost exclusively out-of-pocket. As funding sources expand, the growth will be even more remarkable. Health insurance premiums rose almost 14% last year alone, and that does not include reduced coverage, co-payments and deductibles. Insurance coverage is certainly a mixed blessing, because with coverage comes control, negotiated reductions in fees, licensure requirements, delayed and de­nied payments and a host of other intrusions. This industry has done well without insurance coverage, so it shouldn't be in any great hurry to assume that yoke.NW