Afraid that a medical fitness center may drive your club to extinction? Then consider a hospital partnership, which can prescribe success of gigantic proportions.

Hospitals need to expand their continuum of care and reach into the community. Clubs need to expand their membership base and market to new prospects. Herein lies an opportunity.

Since exercise can prevent and treat lifestyle-related diseases, some health care providers are building their own fitness facilities. Currently, hospital-based centers account for 5 percent of the fitness industry, according to the IHRSA/ASD Health Club Trend Report by American Sports Data Inc.

While hospital centers may only occupy a small segment of the market, their not-for-profit status raises concerns with commercial club operators. Fortunately, clubs and hospitals may have more to gain working together than competing against each other. And to some extent, clubs and health care professionals are already partnering. Of the 32.8 million U.S. club members, 9 percent have received some form of rehabilitation or physical therapy prescribed by a medical professional and administered at a club, according to the Health Club Trend Report.

More Than Referrals

Certainly, hospitals can refer rehab patients to clubs — but a partnership can go deeper than that. In fact, instead of building their own fitness centers, hospitals may be better off joining forces with club operators. After all, club professionals not only understand exercise, they also understand how to manage a fitness facility.

“[The hospital] can build its own facility very easily because it has the money, but very rarely does it have the expertise,” claims Steve Schwartz, president of Chicago-based Tennis Corporation of America (TCA). “In my experience, most hospital health clubs fail and they fail because they don't have the expertise.”

Clubs, on the other hand, do have the expertise. By teaming up with an existing health club, a hospital gains a base of potential customers (i.e., club members), as well as an in-place management system.

“From a hospital standpoint, they are able to get in the health, fitness, wellness business at a lower rate and at a lower risk than they would if they were to open their own facility,” says Doug Ribley, the director of Akron General Health and Wellness Center in Ohio, and the recent winner of two national awards from the Medical Fitness Association (MFA) for his commitment in advancing the medical fitness industry. “It makes a lot of sense for a lot of reasons for the hospital.”

Additionally, clubs know how to sell themselves, and hospitals are eager for this knowledge. “Many hospitals have come to the realization that there's a portion of the fitness facility business that is retail-oriented, and the hospitals are not,” states Bob Boone, the MFA's chairman and president.

Motivating Millions

A partnership may bring a hospital fitness expertise and sound business practices, but what does the club get? For one thing, a viable partnership can discourage a hospital from building a not-for-profit competitor. Plus the partnership can lead to new business. As IHRSA reported in 50 Million Members By 2010, the integration of health clubs and health care providers can grow the industry: “Partnerships between the health club industry and the health care industry can prove immensely powerful motivators for millions of people, many of who have never exercised regularly, to become involved in medically based programs and prevention and rehabilitation.”

A hospital partnership can give clubs this medically based programming, but this isn't the only benefit that can lead to new business. A hospital affiliation alone can impress members and prospects.

“Putting a hospital name on a commercial center — right or wrong — brings instant credibility to that center,” Ribley says. “I'm not saying it's right. I'm not saying it's wrong. It's a fact.”

While both clubs and hospitals can benefit from a partnership, it's often up to the clubs to initiate contact. And teaming up with a hospital can be easier said than done. Hospitals are large, many-armed entities, with a board of directors running operations. The hospital culture, as such, is alien to many clubs, particularly smaller facilities. How, then, do these two organizations work together?

Matching Missions

First, clubs need to do their homework before they approach a hospital. “It would be helpful if they understood what the hospital mission is,” Boone says. “Do some research and find out if there is a match between what the facility can offer and the hospital needs. Is there any possibility of matching missions?” For example, a club may offer rehab services that would be useful to the hospital's medical professionals.

Clubs also need to take an honest look at their own reputation. Perception will make or break the deal when approaching a hospital for a partnership. A club known primarily as a muscle shop won't interest the board of directors. Conversely, a club with wellness programs in place, a solid business and a highly educated staff will be very tempting.

“The hospital is very concerned with its image and its brand,” says Sam Young, the president of Tilton Fitness in Atlantic County, N.J.

And he should know. In addition to Tilton, Young oversees Shore Fitness Center and Shore Fitness Club, two for-profit facilities born from a partnership between his club and Shore Memorial Hospital. While this partnership has been successful (Shore Fitness Center received the MFA's 2001 Distinguished Achievement Award for a medical fitness center under 20,000 square feet), Young understands that hospitals won't work with every club.

“They are not going to partner with anyone they feel is going to jeopardize or lower that perception,” he says. “[The club owners] have to ask themselves why they want to do this. If they look at the hospital like the goose that laid the golden egg, they're wrong. Hospitals right now are experiencing their hardest times ever.

“It's not like they're going to come in and throw cash at the health club operator.”

In other words, clubs must approach the relationship professionally without rushing things. The operator should give the hospital time to feel things out. Initially, the hospital and club may decide to work together on a smaller basis, which could eventually expand. For example, Young originally proposed a joint weight-loss program to Shore Memorial Hospital. The hospital's dietitians taught the program, but the sessions took place at Young's club with the help of his trainers. The venture was so successful that it is still ongoing 10 years later.

“It's like a relationship,” Young states. “You go out with each other and decide if you like one another. And then you take it from there.”

Relationship Options

Keep in mind that no two relationships may be the same. Hospitals and clubs can choose different methods of partnership. The hospital may send staff to the club to conduct seminars, workshops, programs and medical screenings. The hospital may lease club space dedicated to medical programming. Or the two parties may come together to build a facility jointly.

With the myriad of choices available, the club must decide which option best matches their experience level and would satisfy the hospital's needs. Then it's time for the pitch. To hit a home run with the hospital board, Schwartz advises club owners to meet with the highest-ranking official within the organization and then lay out a concept.

“Go and sit down and try and convince them that you're a respectable, quality facility,” he says. “Show them how you can work together to accomplish the goal.”

The hospital, if interested in the partnership, will do several things, Schwartz continues. First off, hospital officials will want to see the club and look over its physical condition. The officials will also research the club's reputation in the community and expect to examine the club's financial history.

“Make sure it looks professional,” Schwartz adds.

And looks impressive. After all, a partnership is a business venture for the hospital, which will want the deal to increase revenue. “You have to be fiscally responsible and show the hospital that you can turn a profit,” says Mark Mellen, the operations manager for Pro-Health and Fitness Center (Merritt Island, Fla.), a club owned by the Health First hospital system. “You need to go in with a solid game plan and show the hospital or health care provider that they can benefit from it.”

Along the same lines, health clubs will also expect to make money from the hospital partnership. However, operators who assume the hospital will overload their club with referrals may be in for a bit of a surprise.

“The cross-referral base is low,” says Schwartz. “I'd be shocked if it was 5 percent of total memberships.”

To garner referrals, clubs should establish relationships with individual doctors at the hospital, Boone suggests. But even without referrals, the hospital partnerships can benefit clubs by attracting members who, under normal circumstances, would never work out in a commercial facility. The backing of the hospital makes them feel more comfortable in the club setting, resulting in a greater diversity of club members.

Keeping the Club's Atmosphere

Even though clubs may not receive member referrals directly from their hospital partners, the existing club members often choose the hospital partners for their medical needs. But that doesn't mean the hospitals should try to turn their club partners into smaller versions of themselves. Hospitals are clinical, sterile, while clubs are vibrant. Clubs can add medically based programming approved by the hospitals without changing their whole attitudes.

“What makes a club successful is not great clinical programming,” Young points out. “What makes a club successful is the atmosphere, the excitement, the personalities of the staff.”

On the other hand, hospitals also have their strengths. “A lot of the things that they do the club industry could learn a lot from,” Young says. “The merging of these two cultures is where I think opportunity lies because you're merging the two strengths of these cultures.”


Sizing You Up

Can smaller clubs compete with the big boys for hospital partnerships?
Sizing You Up
Can smaller clubs compete with the big boys for hospital partnerships?

While your family-owned facility offers quality programming, staff and environment, the bigger clubs and chains in the area consistently outgun you when it comes to advertising, media and facility space. So when a hospital system begins scouting for a possible club partner, you wonder if you'll even stand a chance. It's enough to give your club a Napoleon complex.

Does size matter to hospitals? Yes, according to Sam Young (president of Tilton Fitness in Atlantic County, N.J.) and Steve Schwartz (president of Tennis Corporation of America, Chicago). In their eyes, it's extremely difficult for smaller clubs to court hospital partners. Hospitals want to attach their names to recognizable brands, and chains enjoy better brand recognition than the average club. They also bring bigger budgets to the partnership.

Still, other industry leaders don't rule out the little guys. “It basically just depends on the facility and the needs of the hospital,” maintains Mark Mellen, the operations manager for Merritt Island, Fla.-based Pro-Health and Fitness Center.

In some cases, a hospital may prefer a smaller club, which can make decisions without approval from layer after layer of management. “I don't think hospitals are necessarily looking for the big chains,” says Bob Boone, chairman and president of the Medical Fitness Association (MFA). “Often times big chains have their own operating procedures that can limit their flexibility.”

Nimbleness alone won't win a small club a partnership, however. To become a contender for a hospital partnership, a health club must employ professionals who will impress the hospital. “Are there people [on staff] who are going to understand the medical terminology?” Boone asks.

Furthermore, a small club must have an exceptional reputation in its neighborhood. Hospitals want a facility above the ordinary.

“You really can't clothe yourself as the traditional muscle shop gym,” Boone says. “And if [the club] is perceived that way in the community, then you're probably going to not be well received by the medical community. You've got to be more well rounded.”


To Your Health

How do clubs fit into the health care continuum? We'd like to hear your opinions. Please write to us at: Letters to the Editor, Club Industry, One Plymouth Meeting, Suite 501, Plymouth Meeting, PA 19462.
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