Earlier this month, Truman Medical Centers began moving ahead with a strategic plan that few other hospitals in the United States are attempting — it announced it will open its own grocery store.
TMC, a two-hospital system based in Kansas City, Mo., and the Hospital Hill Economic Development Corp., a local organization focused on urban economic development, completed a transfer of land from the city of Kansas City, where they will build the $11.5 million, 35,000-square-foot grocery store.
The store, which is expected to open in the middle of 2014, will offer produce, meats, dairy items and ethnic foods from an array of local businesses, urban farmers and community gardens. TMC will become one of the only hospitals in the country to operate its own grocery store, and there is a clear goal in mind: Eliminate the food desert within the hospital's service area, and fight chronic conditions by instilling a culture of good nutrition.
For John Bluford, president and CEO of TMC, the grocery store concept was a no-brainer. His non-profit system is the largest safety-net provider in Missouri and has a high proportion of patients with chronic health problems, such as diabetes and sickle cell anemia.
Here, he explains how the grocery store went from abstract to concrete, how TMC plans to manage the finances associated with a grocery store and how this project is aligned with TMC's mission.
Question: How did the grocery store project originate? Who proposed it, and how was it able to reach fruition?
John Bluford: It's an extension of our farmer's market. We've been running a farmer's market for three years, and it's in a nice patio environment on the campus of the hospital, almost literally under my office. So we started this farmer's market because the hospital is adjacent to the traditional food desert environment that everyone is talking about now. There is a big lack of grocery stores in a two- to three-mile radius.
The farmer's market has been a resounding success. It takes place once a week on Wednesdays, from April to late November, and we get up to 600 customers on that day. We sell from 3,000 to 4,000 pounds of fruits. It's pretty awesome, and it's well-attended. Sixty percent of the people who come are staff, 20 percent are patients and 20 percent are community members. Over the years, the community and patient volume has been picking up, and I expect this year, the community volume will be in 25 to 30 percent range.
Some of our physicians are actually writing prescriptions for our patients to go to the farmer's market. That led us to say, "If this is such a great idea, why not have a full-service grocery store?" There was a lot of buy-in from the physicians and board members, and the business community supported it as well. [The grocery store] really supports our mission — to create a healthier community.
Q: How do you see the grocery store project working out? It has a cost of $11.5 million upfront — what does the system see as the financial benefits?
JB: The $11 million to $11.5 million builds a physical plant, stocks it with groceries, takes care of the infrastructure and refrigeration, and includes one year of operating expenses. We don't have to worry about costs for the first year. The pro forma supports around $200,000 per week in sales, and $200,000 per week in sales will support $6 million to $7 million of our debt financing. So that's what's driving the business element of what we're doing. Just like most grocery stores, if we make a 1 to 2 percent margin, we're doing well, and that's what we're hoping to do.
Q: So do you see the grocery store more as a financial issue or a societal issue — or both?
JB: It's neither, and it's both. The context is this: Social and economic determinants drive healthcare outcomes as much as providers determine them. We need to address all of these issues. It's first and foremost a healthcare issue.
Much of the morbidity in our patient population is due to chronic diseases, like hypertension, diabetes, obesity, congestive heart failure and, in our particular community, sickle cell. And the point of the matter is, out of 100,000 patients we see annually, more than 60,000 have one or combinations of these diseases. So it's really our sweet spot to [treat chronic conditions]. Here again, everything has to be tied back to our mission — improve the health of our community. We need to make a deep dive in treating these chronic diseases, and all of those diseases I mentioned have a strong nutritional component to the solution. It really is a natural fit for us.
Q: What can hospitals do to mimic this strategic plan? And how will chronic conditions impact hospitals' finances over the next several years?
JB: These are great questions. I tie it back to the social and economic determinants of healthcare.
There are multiple opportunities for healthcare institutions, including hospitals, to get engaged in their communities: education, nutrition, workforce development, dealing with housing, working collaboratively with the public health department, declaring violence as a public health concern, etc. All hospitals can write down this list and pick out two or three [issues] easily. Those could have a direct impact on the patients and constituents they serve. I think we might be on the leading edge of the nutritional front, and I really like what one of our sister institutions, Integris Health, is doing. They have managed a charter school, so that's the kind of commitment and investment that we all need to make.
For the second question, you could ask: Aren't you in effect taking business out of the hospital? Will some of these interventions lead to a healthier population? The answer to those is definitely and hopefully. Our mission suggests that we need to create a healthier population. How can these kinds of interventions be parleyed into reimbursement streams supported by the insurance industry and society as a whole? These kinds of concepts will be more commonplace, and eventually there will be support through financing mechanisms. And that financing needs to come from a society that values health as opposed to treating illness.
I think these last two questions are where the money is in a number of different ways. It's creating a healthier, more productive society and a higher quality of life. I think these things that I mentioned from housing to education to food establishments speak to the quality of life for a greater population. This will lead to stronger communities and stronger neighborhoods.
TMC, a two-hospital system based in Kansas City, Mo., and the Hospital Hill Economic Development Corp., a local organization focused on urban economic development, completed a transfer of land from the city of Kansas City, where they will build the $11.5 million, 35,000-square-foot grocery store.
The store, which is expected to open in the middle of 2014, will offer produce, meats, dairy items and ethnic foods from an array of local businesses, urban farmers and community gardens. TMC will become one of the only hospitals in the country to operate its own grocery store, and there is a clear goal in mind: Eliminate the food desert within the hospital's service area, and fight chronic conditions by instilling a culture of good nutrition.For John Bluford, president and CEO of TMC, the grocery store concept was a no-brainer. His non-profit system is the largest safety-net provider in Missouri and has a high proportion of patients with chronic health problems, such as diabetes and sickle cell anemia.
Here, he explains how the grocery store went from abstract to concrete, how TMC plans to manage the finances associated with a grocery store and how this project is aligned with TMC's mission.
Question: How did the grocery store project originate? Who proposed it, and how was it able to reach fruition?
John Bluford: It's an extension of our farmer's market. We've been running a farmer's market for three years, and it's in a nice patio environment on the campus of the hospital, almost literally under my office. So we started this farmer's market because the hospital is adjacent to the traditional food desert environment that everyone is talking about now. There is a big lack of grocery stores in a two- to three-mile radius.
The farmer's market has been a resounding success. It takes place once a week on Wednesdays, from April to late November, and we get up to 600 customers on that day. We sell from 3,000 to 4,000 pounds of fruits. It's pretty awesome, and it's well-attended. Sixty percent of the people who come are staff, 20 percent are patients and 20 percent are community members. Over the years, the community and patient volume has been picking up, and I expect this year, the community volume will be in 25 to 30 percent range. Some of our physicians are actually writing prescriptions for our patients to go to the farmer's market. That led us to say, "If this is such a great idea, why not have a full-service grocery store?" There was a lot of buy-in from the physicians and board members, and the business community supported it as well. [The grocery store] really supports our mission — to create a healthier community.
Q: How do you see the grocery store project working out? It has a cost of $11.5 million upfront — what does the system see as the financial benefits?
JB: The $11 million to $11.5 million builds a physical plant, stocks it with groceries, takes care of the infrastructure and refrigeration, and includes one year of operating expenses. We don't have to worry about costs for the first year. The pro forma supports around $200,000 per week in sales, and $200,000 per week in sales will support $6 million to $7 million of our debt financing. So that's what's driving the business element of what we're doing. Just like most grocery stores, if we make a 1 to 2 percent margin, we're doing well, and that's what we're hoping to do.
Q: So do you see the grocery store more as a financial issue or a societal issue — or both?
JB: It's neither, and it's both. The context is this: Social and economic determinants drive healthcare outcomes as much as providers determine them. We need to address all of these issues. It's first and foremost a healthcare issue.
Much of the morbidity in our patient population is due to chronic diseases, like hypertension, diabetes, obesity, congestive heart failure and, in our particular community, sickle cell. And the point of the matter is, out of 100,000 patients we see annually, more than 60,000 have one or combinations of these diseases. So it's really our sweet spot to [treat chronic conditions]. Here again, everything has to be tied back to our mission — improve the health of our community. We need to make a deep dive in treating these chronic diseases, and all of those diseases I mentioned have a strong nutritional component to the solution. It really is a natural fit for us.
Q: What can hospitals do to mimic this strategic plan? And how will chronic conditions impact hospitals' finances over the next several years?JB: These are great questions. I tie it back to the social and economic determinants of healthcare.
There are multiple opportunities for healthcare institutions, including hospitals, to get engaged in their communities: education, nutrition, workforce development, dealing with housing, working collaboratively with the public health department, declaring violence as a public health concern, etc. All hospitals can write down this list and pick out two or three [issues] easily. Those could have a direct impact on the patients and constituents they serve. I think we might be on the leading edge of the nutritional front, and I really like what one of our sister institutions, Integris Health, is doing. They have managed a charter school, so that's the kind of commitment and investment that we all need to make.
For the second question, you could ask: Aren't you in effect taking business out of the hospital? Will some of these interventions lead to a healthier population? The answer to those is definitely and hopefully. Our mission suggests that we need to create a healthier population. How can these kinds of interventions be parleyed into reimbursement streams supported by the insurance industry and society as a whole? These kinds of concepts will be more commonplace, and eventually there will be support through financing mechanisms. And that financing needs to come from a society that values health as opposed to treating illness.
I think these last two questions are where the money is in a number of different ways. It's creating a healthier, more productive society and a higher quality of life. I think these things that I mentioned from housing to education to food establishments speak to the quality of life for a greater population. This will lead to stronger communities and stronger neighborhoods.
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