Redefining retail RFPs in healthcare settings

by Daniel J. Kodner, CEO and Founder, HHP and Lisa Perlmutter, SVP, Healthcare, HHP

Hospital executives are leaving opportunities on the table when it comes to issuing RFPs and RFQs for retail programming. Often, RFPs are written in ways that won’t meaningfully change the status quo. The only way retail can become an asset for hospitals is for a broader vision to be set – one that creates value for all stakeholders.

Based on our market research and client feedback, we’ve identified four best practices for hospital executives to consider when drafting RFPs.

1. Unbundle the foodservice P&L.

  • Status quo: Most hospitals believe there are meaningful synergies in using a single vender for inpatient and retail food service. In that scenario, inpatient naturally gets the attention because it’s the core business of most hospital foodservice operators, while retail goes unoptimized. As a result, retail tends to be revenue positive – but a bottom line negative.
  • A better way: Bifurcating allows hospitals to effectively manage the top line and the bottom line. The procurement process is more targeted from the beginning, and the inpatient and retail operators can each execute on what they do best.

2. Approach retail holistically.

  • Status quo: Retail RFPs tend to focus on one or two pre-defined retail spaces that may be available for new occupants. Having a narrow scope often limits the economic viability for retailers, and means hospitals are left to choose from the usual national brands and miss out on creating a differentiated experience for their community.
  • A better way: Broadening the scope enables hospitals to create a complementary mix of categories and cuisines, provide meaningful opportunities to retailers that would otherwise not be able to enter the healthcare space, and pave the way for tech-enabled innovations. Additionally, thinking about retail as an ecosystem allows larger facilities to serve as distribution centers for smaller sites, alleviating perceptions of inequity among employees.

3. Think beyond the short-term.

  • Status quo: RFPs limit responses to short-term agreements as a means to manage the fear of having unleased space.
  • A better way: Hospital executives can open the door to long-term partnerships with companies that can both provide a superior experience while minimizing risk. A longer-term partnership can be thoughtfully created in a manner that extends the hospital’s team, saving precious staff resources for core business functions, and prevents a constant state of retailer turnover due to lack of support or a limited understanding of the business opportunity.

4. Take the time to assess product-market fit.

  • Status quo: RFPs or the exploration of third-party leases often fail to incorporate employee and consumer feedback. As a result, hospital executives tend to pick “safe” brands that lack imagination and mirror what the competition has.
  • A better way: Hospital executives can leverage partners that invest in getting feedback from the full hospital community – from leadership to front line caregivers to staff members – and ideally from visitors and volunteers as well. Getting comprehensive insight has the dual benefit of identifying well-matched retailers and empowering the workforce to influence their work environment and amenities.

The reality is, the way an RFP is framed strongly influences the responses that come back. For organizations truly looking for innovative solutions and a path to stronger financials, the “rules” need to be redefined up front.