Paul Zane Pilzer, world-renowned economist, projected in his book, The Next Trillion, tremendous opportunities in the emerging "wellness" industry and predicted that wellness will occupy an additional one-seventh or the "next trillion" of our economy. He confirmed that wellness is the business in which the fortunes of the new millennium will be created, and distribution will be where most of that wealth occurs. Physicians, chiropractors, therapists, health professionals or wellness practitioners can utilize medical wellness programs to provide real solutions for today's changing health care environment.  

            Before jumping into this potentially "rich" market, every rational decision to build a new wellness program should be preceded by an investigation of the feasibility of the project. Such a process provides assurance that is needed to study and confirm that the market exists and can be successfully developed for a new wellness venture. Before a new wellness center develops facility standards, it should have a clear conceptual plan along with goals and desired outcomes. The future success for any wellness development will be quantitative research.

 

Planning Ahead for Business Success 

            A new wellness facility team, like any team, must plan for success. It is recommended that the detailed planning stage of the project be initiated as early as possible. The first step in the essential planning process is to conduct a market feasibility evaluation. As a result of this feasibility process, these plans should start with the project goals, target market and site selection.

 

Planning-to-Do List

          In beginning to conduct a detailed market feasibility analysis, it is very important to review demographic data and select the best site for the success criteria and desired goals. Set outcome goals to identify the business and wellness goals for the proposed center; meet with all key stakeholders to fully understand the reasons for building a center and preliminary financial objectives; evaluate the overall facility, service areas and program plan to clarify how the wellness center and programs will help contribute to the goals of the overall plan. The following process is just one example used to estimate utilization of a wellness facility:

 

Market Area The primary market area is defined as within a drive time or a radius of the proposed facility. The recommended trade area is generally a 10- to 15-minute drive time. Although geographic barriers will always exist, experience with projects confirms that the people most likely to join a center are those living or working in close proximity to the facility. I highly recommend using a drive time analysis for the evaluation. Consultants will review the project site locations and conduct a site analysis. They should evaluate the location for potential users based on demographics, convenience and accessibility. Radius or mile rings studies can be completed if the drive time analysis is not available.

 

Estimates and Local Extrapolation Proprietary membership, enrollment rates, estimated penetration from census-related reports, data mining and household surveys are reviewed and analyzed. These results are applied to the local community level using demographic projections and data mining. Rely on consultants, design firms, wellness industry data sources, surveys, benchmarking databases and nationally recognized market analysis demographic database tools to analyze: the number of households within varying proximities of the proposed facility site; the average income levels of households within varying proximities from the proposed facility site and the correlation of household income to the acceptance threshold of member dues and other fees; the average number of individuals per household as well as median age of the highest potential prospective members; industry studies that document the average distances users and members are willing to travel to join a wellness center; recent community census data and projected population statistics, including household size, income level, age and education; interviews with physician and other practitioners to determine the potential for medical referral memberships; and estimated community and employee usage for various recreational activities.

 

Discounting Memberships There are many different types of programs included in the estimate (e.g., health clubs, municipal facilities, gyms, exercise facilities in strip malls and freestanding studios with equipment and programs not equivalent to a wellness model). Income analysis can be applied to the potential members in order to estimate those people who may belong to these fitness facilities that are characterized by limited programs and low prices. 

 

Effects of Local Competition Every new project should conduct competitive or community analysis of the comparable operations in the target area. This community assessment determines key information about the area's existing wellness centers.  A "professional shopper" technique is used to assess direct competition. A good competitive analysis will include the following: the location of competitive centers and their distance from the proposed wellness center along with the estimated memberships and the age of competing facilities. Any new facility or programming components should be included with the size and amenities of the competing facilities, and the summary will

identify facility features along with membership options and member dues, initiation fees and other costs.

 

Corrections Based on Experience and Marketing Research Even after all attempts to discount potential memberships through the market evaluation and the competition analysis, there will be a group of people who would be expected to participate, but do not purchase as predicted.

 

Enrollment Over Time Many factors can affect the decision to purchase a membership, including disposable income, health status, concern for one's appearance, family needs and one's propensity to be an early joiner. These factors interact to create three groups. The first consists of memberships that will be sold during the pre-opening stage through standard marketing techniques. Another set of memberships will be sold through more intensive marketing during the first 24 months of operation. These members are high users and avid fitness proponents, but are risk-averse. Some users will wait and will be the "late joiners." These people tend to be followers of earlier joiners, responding to word-of-mouth recommendations. This latter group requires more specialized and innovative marketing approaches. It should be noted that each lifestyle cluster will have its own pattern of enrollment over time.

 

Addition of Medically-related Memberships It has been determined that 20% to 30% of fitness center members are introduced to the facility because of medical needs, such as cardiovascular disease or orthopedic problems. Experience with wellness operations indicates that physicians who are associated with the facility will use the programs as an integral part of medical treatment.

 

Comparison of Successful Wellness Centers Develop a comparison of successful wellness centers in the market area to help determine facility and program components to consider in the center. This is a great benchmarking tool and process and future marketing resource for memberships.

 

 Look for the fourth installment of our 9-part Wellness Center Development series in the May issue covering the "how-to" in building your business plan.

 

Christopher Breuleux is the Founder and President of the Medical Wellness Association and has consulted with over 200 organizations. For more information about wellness centers, visit www.medicalwellnessassociation.com.

Follow  

How much of your time would you estimate you spend growing your business?