P&G ventures into doctor’s office

By David Holthaus

FEBRUARY 4, 2010 — The doctor is in at Procter & Gamble as the company best known for selling detergent, shampoo and diapers ventures outside the consumer products marketplace and into ownership of a nationwide medical group.

P&G has purchased MDVIP, a network of 350 doctors in 28 states that offers a boutique approach to medicine, promising more personal attention to patients in exchange for an annual fee.

For P&G, the venture will bring valuable insight into consumer health care, a huge market that is ripe for growth. Worldwide, over-the-counter health-care products are a $240 billion market, growing 5 percent a year, propelled by an aging population, longer life spans and an increasing interest in wellness.

“We see this as a learning venture as well as a business,” said Nathan Estruth, vice president of P&G’s FutureWorks unit.

P&G invested in MDVIP in 2006, but now owns all of it, and plans to install its own chief executive officer.

Based in Boca Raton, Fla., MDVIP is the largest of what are known as concierge health-care practices. Typically, patients pay an annual fee in exchange for more time and better access with their doctors, who have more time because they limit the number of patients they see.

For $1,500 each year, MDVIP patients receive an in-depth physical examination, a health assessment that includes family and social history, and a plan to improve their health. Doctors continue to bill health insurance firms and collect co-payments. The number of patients per doctor is capped at 600 – compared to the typical 2,000 to 3,000 – and they are promised unhurried visits and 24-hour, seven-day-a-week access.

In Greater Cincinnati, nine doctors belong to the network, including Dr. Jeffrey Craig, one of the Cincinnati Bengals team physicians.

P&G plans to expand the business, which already has grown from 45,000 patients to 115,000 since it became a minority investor four years ago.

The company’s consumer health-care portfolio includes long-time brands such as Vicks cough and cold products, Pepto-Bismol stomach medicine and Prilosec anti-heartburn drug. In recent years, P&G has ventured deeper into more specialized products, such as its Align digestive supplement and its Clearblue pregnancy test.

P&G says it does not plan to market its products through the physician offices but rather use the company as “an incubator for primary care medicine,” allowing it to gather information about patients and physicians, service and prevention. In 2008, for example, MDVIP worked with California-based Navigenics Inc., which P&G owns a stake in, to test that company’s genetic marker that can gauge patients’ predisposition to cancer, diabetes, heart attacks and other conditions.

It’s also talking with General Electric to test some of GE’s diagnostic machines, Estruth said.

MDVIP patients sign a contract that includes an option to permit information-gathering, which P&G says is collected only in the aggregate, not individually.

The MDVIP deal was engineered by P&G’s FutureWorks unit, which seeks new avenues for sales outside of P&G’s mainstream businesses. It’s the P&G unit behind the expansion of Mr. Clean car washes, which are being franchised nationwide.

MDVIP doctors will not become P&G employees, Estruth said, but will continue to own their practices. MDVIP keeps $500 of the $1,500 annual fee and helps with administrative support, marketing, management and legal services.

Craig, a Norwood internist, converted his practice to MDVIP in 2008 because he said he could spend more time with patients. Only about 15 percent of his existing patients agreed to pay the annual fee but he’s since built the practice up to nearly the maximum 600 patients.

Craig said patients like “having the time to talk to the doctor and having an explanation that allows them to become a partner in their health care.” He said about 90 percent renewed the arrangement after the first year.

Critics say MDVIP and other concierge health-care practices can be elitist, skimming off healthy, well-to-do patients and leaving sicker, poorer patients to be cared for by traditional physicians.

“This may add to the growing disparity of health care in this country,” said Dr. Lori Heim, president of the American Academy of Family Physicians. But she said she understands why both doctors and patients would opt for a change. “It reflects the frustration we have with a dysfunctional health care system,” she said.

MDVIP says its pricing is affordable, and the concept attracts not just the well-off but a variety of ages and demographic groups.

Bob Wildermuth, a retired real estate developer in East Walnut Hills, stayed with Craig after the doctor switched to MDVIP. “The extra service you get is probably worth the fifteen hundred bucks,” he said.

P&G has named Daniel Hecht, who was a general manager in its now-sold pharmaceuticals business, to be CEO. MDVIP co-founder Dr. Edward Goldman will remain on the board, as will Bret Jorgensen, the current CEO. Co-founder and current chairman Steve Geller will retire.


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