Compassionate concept teams with hospitals
Attorney Jeffrey Kolton helped Women's Health Boutique charter new territory into hospitals.
When Jeffrey Kolton’s wife, Barbra Marcus Kolton, died of breast cancer in 2001, he was determined to make a positive difference in other cancer patients’ lives. He created a memorial fund to open a boutique in Barbra’s honor in the hospital where she was treated—Virginia Hospital in Arlington, Va.—catering to cancer patients.
“The oncology ward in the hospital left a lot to be desired as far as comforts,” Kolton explains. For example, “they didn’t have any ‘accessories’ available for cancer patients, like wigs, powders, etc., which forced caretakers to take time away from the patient to find these items at specialty stores.”
So Kolton contacted Stephen Hammerstein, CEO of the International Center for Entrepreneurial Development (ICED), owner of the Women’s Health Boutique franchise. The boutiques sell hard-to-find medical items like mastectomy and other post-surgical undergarment fitting, wigs and turbans, maternity support items, orthotics and intimate apparel in a discreet setting.
Kolton’s original idea was to become a Women’s Health Boutique franchisee, using the $30,000-plus fund to pay for the franchise fee and subsidize startup costs. “However, the hospital wanted to be in control of the store,” he says. “The new idea was for the hospital to become the franchisee and use my funds to help underwrite startup costs.”
This entered uncharted territory, as a hospital had never before been a franchisee of the concept. Kolton, a franchise attorney who is now a principal with Franchise Market Ventures, was asked to represent Women’s Health Boutique in negotiations with the hospital.
“We needed to think outside the box to adapt Women’s Health Boutique’s franchise model to work within a medical facility framework,” Kolton says. “We looked at what would change operationally by housing the facility within a hospital—leasing issues, employee issues—(many would be volunteers), marketing/advertising issues, and financial disclosure issues —most hospitals are well-funded, but guarded about their financials.”
Steve Hammerstein of ICED bought into Women's Health Boutique because it fit an underserved niche.
Kolton helped create a nontraditional franchising agreement to locate the concept in health care facilities. “Women’s Health Boutique is working with several hospital chains, and this approach will be its primary growth vehicle moving forward,” Kolton says.
Daina Pitzenberger, Women’s Health Boutique president/CEO, says the concept first presented the franchising idea to hospitals in 2000. “We had just launched our new sales/marketing campaign, and the timing was right when Jeff called,” she says.
A primary reason for the new strategy to locate in hospitals, Pitzenberger explains, was Medicare froze distribution supplier numbers for up to 18 months in some regions. “The only way you can bill Medicare is by obtaining one of these numbers,” she says. The moratorium put a halt to new Women’s Health Boutique retail locations in some areas, because the stores count on Medicare for 45 percent of their sales. Women’s Health Boutique accepts Medicare, Medicaid and other private insurances for many of its products, such as prostheses and wigs.“That put a stop to our franchise sales development,” Hammerstein says, “and led to additional investment in developing our focus of placing boutiques in health care facilities.”
Pitzenberger adds that targeting hospitals with more capital and larger support systems fulfills the concept’s needs and the hospitals’ needs, as hospitals look to generate new revenue due to Medicare and reimbursement cuts.
| Women's Health Boutique|
Franchise fee: $30,000, plus $17,000 for training and startup services
Initial investment: $190,000
Royalty: 7 percent
Ad fund: None
Women’s Health Boutique operates 10 retail locations and one store at Lancaster General Hospital in Pennsylvania. Two stores will open this year: Trinity Medical Center in Birmingham, Ala., and St. Vincent’s Women’s Hospital in Indianapolis. The Virginia Hospital Women’s Health Boutique will open next February. Pitzenberger predicts opening at least six boutiques annually and sees potential in more than 2,000 U.S. health care facilities.
Two sisters launched Women’s Health Boutique in 1988 after their mother died of cancer. ICED, a Cypress, Texas-based holding company for nine franchise brands, including ComputerTots and Kwik Kopy, acquired Women’s Health Boutique in 1996. Hammerstein was impressed with the founders’ passion and financial investment. He wouldn’t disclose what ICED paid for the concept, but says they’ve invested significantly and could see a return on their investment within another two years.
“Sometimes decisions are not made merely on the numbers,” Hammerstein says. “This is a very service-oriented concept that fulfilled something that was not there and we liked that.