This week Costco joined the list of retailers looking to capture the hearts and minds of consumers who are frustrated with their healthcare experience. Costco announced a partnership with Sesame, a healthcare marketplace that connects consumers with clinicians across 50 states. Today, Sesame offers both a one-time visit model and a subscription model known as ‘Sesame Plus.’
The Sesame-Costco partnership will offer discounts on one-time services for virtual and in-person visits and related services. Costco members gain access to virtual primary care visits for $29 and online mental health counseling visits for $79. Health checkups, which include a lab panel and a virtual follow-up consult, will cost members $72. They will also receive 10% off all other services, including in-person appointments, subject to availability of clinicians that participate in the Sesame platform.
How does this compare to competitors in this space?
Compared to other retailers running in this space – including Amazon, CVS Health, Walgreens, and Walmart – this approach is light weight. Costco is following a low risk, potentially high reward path that aligns well to its customer’s needs. Costco members are cost-conscious. As healthcare costs are expected to see the biggest increase in a decade for employers, employees are expected to see an increase of 3.3% for premium and out-of-pocket costs.
Costco members will be able to access the discounts by signing into Sesame’s website with their Costco membership info. Members get access to and pay them directly, as providers do not accept insurance for services booked through Sesame. Members can pay with funds from their FSA or HSA. While much more likely happens in the backend, this go-to-market strategy stands in stark contrast to the buying spree many retailers have been on for the past couple of years. Furthermore, this strategy is similar to Walmart-owned Sam’s Club partnership with 98point6 in 2020, which has since evolved to a more robust strategy (note: 98point6 was acquired by Transcarent in 2023).
What do consumers think about retail health?
Consumers continue to demand a better experience that is affordable, easy to access, and eliminates long wait times. When we asked consumers , they told us they look for:
- Affordability (It accepts my insurance),
- Ease (It is easy to schedule an appointment there), and
- Convenience (It is close to my home or work, and I can get my prescriptions there).
When it comes to virtual and in-person services, most consumers received in person at a clinic (73%) rather than via telehealth (19%). While providers can deliver many services virtually, hybrid offerings continue to outperform virtual experiences in our CX Index and are necessary to deliver many services like lab tests, imaging, and vaccinations.
Retailers: Pace Yourself.
While some leaders may emerge in the coming months, the healthcare industry is in for a long haul. Retailers must continue to integrate newly closed healthcare partnerships and acquisitions, and more are likely to come. In this context, they now face an uphill climb on a technical, operational, and strategic level, not to mention the problems posed by data interoperability and a nationwide provider shortage.
As retail health gains traction, it removes consumers from the traditional primary care model – a model that’s long overdue for an overhaul. But the drive toward a retail model is not without potential big impacts for health systems and health insurers alike. In my upcoming research, I’ll be digging into the retail race into healthcare, and how it relates to the Future of Healthcare.
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