The story of why COVID-19 is driving Scott Gillespie and Saco Sport & Fitness to make the health and fitness industry more credible, successful and essential.
Scott Gillespie is on a mission.
That mission is to help the health and fitness industry serve more people, more effectively.
“Far too many people have joined our clubs in hopes of improving their health, and failed, because we did not provide them the right kind of support,” said Gillespie, the owner and president of Saco Sport & Fitness in Saco, Maine. “If you extrapolate IHRSA’s attrition data back 10 years, it is arguable that about 50% of Americans have joined and quit a fitness center. We need to ask ourselves, ‘How could we have better served that massive group, and innovate to find better products and programs to serve those 150 million previous and potential customers?’”
According to Gillespie, this involves a significant redirect to the industry’s efforts.
“We have become really good at helping fit people get fitter or maintain their levels of fitness,” explained Gillespie. “I think our industry’s opportunity coming out of COVID-19 is to get so much better at helping the unfit, the sedentary, the challenged and the borderline sick — to prevent them from becoming more unhealthy, and to help them have healthy, active and productive lives.”
The key to this, explained Gillespie, is becoming more outcomes-based as an industry — i.e. providing customers with proven, measurable results. It also involves partnering with the media, medical community and policymakers to gain more credibility, and ensure health clubs are considered “essential” during future crises like COVID-19.
According to Gillespie, the pandemic uncovered and highlighted the fitness industry’s biggest liability: the public’s perception of its lack of professionalism and ability to serve patrons safely.
“The medical community, policymakers and the media characterize us as crowded and hard to clean,” said Gillespie. “They do not think of us as part of the healthcare continuum. They lump us in with retail and food and beverage, believing we serve predominantly fit people in crowded groups.
“I believe this is our industry’s biggest challenge. It can also be our biggest opportunity. If we can use this time to build credibility with the medical community, policymakers and the media, we can then use that credibility to open new markets and serve a much broader group of customers.”
Gillespie is setting the example at Saco Sport & Fitness. The organization brands itself as an “outcomes-driven health club” that specializes in creating and guiding members into programming that helps them improve their overall health.
“Our certified health coaches successfully engage over 50% of new members into paid programming to support their healthy habit adoption,” said Gillespie. “Fitness programs include group exercise, small group training and personal training. We also believe in the importance of including nutrition to accelerate and expand member results. We employ two full-time registered dietitians who serve clients individually and in groups, billing insurance for their services, reducing members’ out-of-pocket costs. We also serve corporations seeking to reduce their health insurance costs by improving employee health.”
In addition to being a boon for customers, the ability to bill insurance for certain services proved to be a game-changer for Saco Sport & Fitness in light of the pandemic.
Saco Sport & Fitness closed on March 17, 2020 — a week before being ordered to — based on the recommendation of a local infectious disease doctor. Without knowing how long the closure would last, the brand immediately laid off 58 people and looked at every expense line item to conserve cash reserves.
Saco Sport & Fitness chose to freeze all memberships while closed and not bill members, believing it was not right to charge for services they were not providing. “We also thought continuing billing would accelerate cancelations,” said Gillespie. “The downside: Our revenue dropped to almost zero.”
However, there were a few exceptions. For example, because Saco Sport & Fitness was successfully billing insurance for the services of its registered dietitians, it was able to transition to telemedicine billing and continue charging full price for those sessions.
“We transitioned to telemedicine in a week and were able to continue to bill full insurance rates for the services,” said Gillespie. “Although some clients are not as comfortable in the telemedicine world, we maintained almost 80% of our client base both in group and individual formats. It was a blessing to be able to maintain that, because that is a significant revenue source for us.”
Over the past few years, the idea of insurance reimbursements has been alluring, but oftentimes elusive, for many fitness organizations.
According to Gillespie, the key is to employ registered dietitians versus nutritionists, and gain a deep understanding of your state’s insurance and healthcare laws. He said it can be a long road for those who go down it.
“First, it’s important to differentiate a dietitian from a nutritionist,” explained Gillespie. “Although nutritionists are oftentimes very good and well-meaning, there is no national standard of care. There’s no test or certification or licensing process, so nutritionists are not recognized by the medical community. Thus, they are not billable through insurance. Registered dietitians, on the other hand, are licensed medical professionals. They’ve been taught, passed tests and provided a standard of care the medical and insurance world recognize as valuable, credible and worthy of reimbursing.”
Once you have the correct professionals on staff, the next step to successful insurance billing is applying to be a preferred provider for all payers. “That includes getting National Provider Identification numbers,” explained Gillespie. “It includes applying for any of the insurance companies that may pay for these services to become a preferred provider for them. This is very state-dependent. With any state, there are unique insurance cultures and guidelines as to what they will and will not pay for.”
The good news, said Gillespie, is that insurance reimbursements in certain states are becoming easier for health clubs to gain access to.
“Like it or not, Obamacare did dramatically increase preventative care dollars, meaning there’s a pressure and an incentive for payers to invest money to prevent future sicknesses to save a significant amount of money — and nutrition is probably one of the greatest places this can happen,” said Gillespie. “An insurance company paying $100-plus an hour for a registered dietitian’s services is going to be a heck of a lot less than treating the heart attack, diabetes or stroke a person may suffer from should they continue to eat poorly. I think it’s a great avenue for our industry to follow.”
In addition to being a potentially significant revenue source for gyms, employing professionals like registered dietitians is another way the industry can partner with the medical community — and ultimately earn more credibility.
During the early weeks of the pandemic, Gillespie quickly realized how rampant misconceptions about gyms were among the public, media and policymakers. Like many gyms across the U.S., this negatively impacted his business first-hand.
In Maine, gyms were originally scheduled to reopen on June 1, but on May 28, Governor Janet Mills extended that date indefinitely.
Gillespie immediately took action.
“On that day I picked up the phone and called 36 club owners in Maine and founded the Maine Fitness Coalition to leverage our voices to work with the state to get us open safely,” recalled Gillespie. “About half of the clubs chipped in to hire a lobbyist to help us craft our message and get it in front of the right people. With IHRSA’s and many of my REX Roundtable friends’ help, I drafted the first version of a reopening plan for the state. We were successful in getting half the state open in seven days, and the rest of the state open in 14 days. I fully believe had we not formed the coalition and hired the lobbyist we would still be closed.”
According to Gillespie, the role state fitness alliances play in the industry’s future success cannot be understated. And the real power of these coalitions comes down to their ability to leverage consumers’ voices.
“Think about it: what are policymakers’ main jobs? The first job is to get reelected, so voter base is incredibly important,” said Gillespie. “If we’re serving 20 to 25% of the population, that is a significant constituency. If we as an industry can leverage our consumers’ voices to speak on our behalf, based on the value they think we can provide and the safety in which we can provide it, that voice has great meaning. On a state-by-state basis relative to the policymakers’ position on health clubs, I think without a club coalition, the industry will suffer in certain states.”
Kevin McHugh, a close colleague of Gillespie’s and the chief operating officer of The Atlantic Club in New Jersey, echoed how powerful state alliances can be. However, he added each state coalitions’ efforts must go far beyond securing a reopening date and guidelines.
“Over the past six months, many of us across the U.S. have united as one industry and have now started to develop new professional relationships with our governors and local leadership,” said McHugh. “Unfortunately, our focus was on how we could work together to get health clubs reopened. If we want to change the perception our industry has earned over the years, we need to go back to this same leadership within our state and ask them how our alliances or coalitions can work together with the state leadership and provide programs that will positively address population health management for those under-served by our industry, as well as those at risk.”
According to McHugh, this is where outcomes-based data comes into play.
“We can work as one industry in the state to achieve great results and it will be data that will determine how politicians view us in the future,” explained McHugh. “When our industry has a partnership with a governor’s office that has clearly showcased our reach into the health needs and requirements of the community, we can be confident our health and fitness clubs will not be the last to reopen again.”
There are already examples of ways the industry is using positive data to gain more credibility and overcome negative misconceptions, including the “Visits to Virus” data collected in partnership between MXM and IHRSA.
Across 2,873 gyms and 49.4 million member check-ins, just 1,155 COVID-19 cases were self-reported. Clubs across the U.S. are using this data to make the argument gyms are safe and not the main sources of spread — a counter-narrative to that being stated by many national news outlets and policymakers.
According to Gillespie, this is a great example of ways clubs can use data to their benefit. “This could expand to include proving how valuable our services are by collecting and aggregating health data,” he said. “For example, we could measure members’ health status when they join, then 90 days later, after completing guided programming, aggregate the outcomes that show improvements enhancing people’s lives and reducing health care costs — then publish and market that data.”
By leveraging the power of state alliances, consumers’ voices and data, Gillespie believes gyms will be one step closer to being viewed as integral to the healthcare continuum at the local, state and national levels.
“I believe we are now better positioned than ever to tell that story,” said Gillespie. “To put it in perspective, COVID is expecting to take 250,000 lives this year [in the U.S.], five times more than the flu. This is incredibly sad. On another front, the No. 1 killer in the U.S. is heart disease, taking 655,000 lives last year, with diabetes taking an additional 83,000 lives. Those numbers have been increasing every year as people get more sedentary and eat less healthy. These diseases rob people of life and productivity, and take a significant toll on the health care system and all of our wallets.”
With this in mind, Gillespie expressed a challenge to the health and fitness industry at large: “We have many of the answers to turn around so many more lives than we do,” he said. “To do that, we’ll need to evolve our thinking from serving the very small fit market, helping them get fitter, and start to serve the not-yet-fit market. It will require new, innovative thinking and a shift of what a health club looks like. I recall 30 years ago when we had 5% market share. We now have 20%. I believe this is the time for the next quantum evolution of products we offer to grow that to 40 or 50%.”
