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Boutique Medicine Venture Generates Marketing Intelligence for Procter & Gamble

Consumer products giant acquires 100% ownership of concierge medicine company

Clinical laboratories and pathology groups may soon be serving physician practices owned by Procter & Gamble (P&G) (NYSE:PG). That’s because the consumer products giant now owns 100% of MDVIP, a nationwide concierge practice of 350 doctors in 28 states.

The deal is noteworthy because it further expands Procter & Gamble’s presence in healthcare. In 2006, P&G invested $325 million in a joint venture with Inverness Medical (NYSE:IMA). The joint venture announced its intention to develop and market diagnostic test kits for use by consumers that can be sold in retail outlets. At the time, The Dark Report wrote that, “P&G’s interest in consumer self testing is based on its belief that consumer demand for health services and healthcare products will soar in the coming decades.”  (See The Dark Report, June 4, 2007, “ Inverness Buys Biosite, Has New Venture with P&G” )

Consumer products giant acquires 100% ownership of concierge medicine company
The acquisition of MDVIP was brokered by P&G’s FutureWorks unit, which is charged with finding new ways to create sales outside the company’s main business lines. It was four years ago when P&G purchased a 48% interest in MDVIP, which has increased the number of patients it serves from 45,000 to 115,000 since that time.

As a concierge medical practice, MDVIP takes a boutique approach to patient care. Its physicians limit the size of their practice to 600 patients, rather than the usual 2,000 to 3,000 patients. This allows MDVIP’s physicians to give their patients greater attention than is typical in other types of physician practices. Patients pay MDVIP an annual out-of-pocket fee to receive preferential treatment, including longer office visits, 24-hour access to doctors, an in-depth annual checkup and health improvement plan.

Under the MDVIP business model, physicians retain their private practice and P&G takes one-third of the $1,500 patient fee. In exchange, Procter & Gamble helps physicians with administrative functions, marketing, management and legal services.

Presumably, this venture is equally important to P&G as a source of market intelligence as well as a source of revenue from patient fees, wrote David Holthaus in a story published on Cincinnati.com. Patients willing to pay cash for special health services represent a premium market for makers of over-the-counter health-care products. That’s because these patients tend to be better off financially. They are also health conscious and willing to pay cash for products that help them stay healthy.

The market for over-the-counter health products globally is a $240-billion and growing by 5%. Driving this strong growth are an aging population, longer life spans and increasing interest in wellness, noted the Cincinnati.com article.

Writer Holthaus said P&G does not plan to market its products through the physician offices. Rather, it will use the company as “an incubator for primary care medicine,” allowing it to gather information about patients and physicians, the types of services provided, and what preventive services are effective. MDVIP patients sign a contract allowing P&G to gather marketing information, which P&G promises to collect in the aggregate, not individually.

It is likely that P&G is looking for opportunities to market relevant products to these patients as a compliment to the healthcare provided by the concierge doctor. Pathologists and lab managers may be surprised to learn that P&G, for example, already owns a stake in California-based Navigenics Inc., a company organized to sell genetic testing to the consumers using a web site. In 2008, MDVIP worked with Navigenics to test a genetic test that included markers for gauging a patient’s predisposition to cancer, diabetes, heart attacks and other conditions.

It is notable that a company historically involved in marketing consumer products in retail outlets is steadily investing in companies that provide different types of healthcare services and products, including clinical laboratory tests. For example, its involvement with both Inverness Medical and Navigenics is a strong sign that Procter & Gamble believes that opportunities in molecular diagnostics and consumer self-testing will be significant.—P. Kirk

Related Information:

P&G ventures into doctor’s office

More Doctors Consider Concierge Medicine as Healthcare Reform Looms

The Dark Report, June 4, 2007, Inverness Buys Biosite, Has NewVenture with P&G

2 responses to “Boutique Medicine Venture Generates Marketing Intelligence for Procter & Gamble”

  1. Bill says:

    This is a really stupid move that shows a total lack of clear strategic thinking. P&G is a mass market company. What good is market research for P&G of consumers who are affluent enough to afford concierge medicine? Seriously, the consumers who can afford this are probably not the same people strolling through Wal-Mart for Oil of Olay, Pantene, and a tube of Pringles.

    An incubator for “primary care medicine?” – get real. This is no more an incubator for primary care medicine than Nordstrom is an “incubator” for the beauty aisle in CVS.

  2. Donna says:

    We need new approaches to healthcare. This innovative approach fills a need. One of the reasons for medical malpractice is thepiling on of patients due to the current system. There are many opportunistic pharmaceutical companies creating false bloodwork statistics to create a need for their products… Thus may well be a breath of fresh air and a return to doctors being doctors again. Bravo!!! Free market reigns!

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