The Impact of Rising Healthcare Costs on Fitness Clubs in North America
In recent years, the rising healthcare costs in the United States have had a significant impact on various industries, and despite technically being one of the main preventative solutions to the problem, fitness clubs are sadly no exception. As gym operators, it is crucial to understand the implications of these rising costs and how they affect our business. In this article, we will explore the challenges faced by fitness clubs due to increasing healthcare expenses in North America while more importantly, highlighting some potential solutions to overcome them.
Understanding the Rising Healthcare Costs
Healthcare costs in the United States have been on the rise for decades, posing significant challenges to individuals and businesses alike. In 2022, the total national health expenditure reached $4.5 trillion, marking a 4.1% increase from the previous year. This translates to $13,493 per person. (CMS). Future projections suggest that the growth in health spending (projected at 5.6% from 2023 to 2032) is expected to outpace the projected GDP growth of 4.3%.
To remove the numbers and simplify this - the US is spending much more on healthcare than it can afford.
Most common Healthcare costs for US Americans include:
Hospital care (31% of national health expenditures in 2022)
Physician & Clinical Services (20% of national health expenditures in 2022)
Prescription Drugs (9% of national health expenditures in 2022)
Long-Term Care & Nursing Care Facilities (5% of national health expenditures in 2022)
Dental Services (4% of national health expenditures in 2022)
Health Insurance Premiums
As more people struggle with financial burdens associated with healthcare, their discretionary income available for gym memberships and fitness-related activities is often reduced. This decrease in disposable income directly affects fitness club revenue and membership numbers.
Apologies for the doom and gloom - the outlook is bleak but the opportunities and solutions are to come!
Implications for Fitness Clubs
Any US viewers reading this, won’t be surprised by any of the statistics mentioned above. And of course, if not approached correctly there are a number of negative implications the increased healthcare spend (and therefore, decreased availability for any other kind of spend) might have on your fitness club.
Declining Membership: Obvious, but serious. As individuals face higher healthcare expenses, they may prioritize their financial resources towards medical bills and insurance premiums rather than gym memberships. This leads to a decline in gym memberships and ultimately affects the revenue of fitness clubs.
Reduced Fitness Spending: Rising healthcare costs can also lead individuals to minimize their fitness-related expenditures, such as personal training sessions, group classes, or additional services offered by fitness clubs. This reduction in spending further impacts the overall revenue generated by fitness clubs.
Negative Impact on Retention: Higher healthcare costs can cause stress and anxiety among individuals, making it harder for fitness clubs to retain their members. Members may be more likely to cancel their memberships or reduce their frequency of visits, resulting in decreased retention rates.
Increased Threat of Competition: With the financial burden of healthcare expenses, individuals may seek alternative, cost-effective fitness options such as low-cost facilities, home workouts or budget-friendly fitness apps. This intensifies the competition faced by fitness clubs, requiring them to find innovative ways to attract and retain members.
So Where Does The Opportunity Lie?
Ok, that’s enough of that. Now for the bit that you have wanted to skip ahead to since the start. The rising healthcare costs of America are unlikely to be solved by fitness operators in the immediate future - although let it be known that they will play a huge part in it!
In 2020, it was reported that 41.9% of US adults suffered from obesity, with 9.2% falling into the ‘severely obese’ category (CDC) It is no secret that exercise facilities can have a direct impact on curbing obesity, therefore positively affecting the number of people suffering from obesity related diseases such as cardiovascular disease, type 2 diabetes, certain cancers, hypertension, sleep apnea.. the list goes on.
While the impact of rising healthcare costs may seem overwhelming, fitness clubs can actually have a much more direct impact on improving healthcare demand than most other entities. Below, we have outlined some strategies worth considering.
Providing Preventive Health and Wellness
Physical health
Regular physical activity is a key factor in preventing chronic diseases such as heart disease, diabetes, and obesity. (CDC) By promoting exercise and healthy living, the fitness industry can help reduce the incidence of these conditions, leading to lower healthcare costs for individuals and the system as a whole
How might this look at your facility? | Benefits |
During onboarding, request family disease history from new members. | Will allow you to provide tailored recommendations and enhance the member experience. |
Host disease prevention educational events for members e.g. ‘How to manage your blood glucose levels to ensure your body is operating optimally’ | Shows members you care about their overall health and diversifies you from local competitors who are unlikely to be offering similar events for members. |
Run low impact, fat loss classes for members who fall into the ‘obese’ brackets based on info gathered during onboarding (e.g. rowing rather than running, water aerobics and elliptical training). | Promotes inclusivity and diversity among your members. Shows that you are focused on improving health outcomes for your members and not just your own bottom line. |
Mental Health
According to the Mayo Clinic, exercise can act as a natural treatment for depression and anxiety by releasing endorphins and other chemicals in the brain that improve mood and reduce stress. (Mayo Clinic) Fitness programs that include mindfulness, yoga, and other stress-relief activities can enhance overall well-being and reduce the need for mental health services, which are often expensive and in high demand.
How might this look at your facility? | Benefits |
Make yoga classes part of your regular timetable and promote them to members who have suggested an interest in mindfulness. | Shows that you are paying an interest to your members interests and means you are providing a more tailored member experience. |
Offer a ‘mindfulness’ challenge where members agree to take part in a 10 minute meditation every day for 30 days. | Differentiates you from competitors doing the standard ‘fat loss’ or ‘step’ challenges, showing that you are committed to improving the overall wellness of your members. |
Host regular events that bring your gym community together, resulting in members feeling a sense of pride and belonging. | The sense of community generated will foster loyalty among members who will then become your most vocal advocates. |
Health Education
According to the National Health and Nutrition Examination Survey (NHANES), many Americans still struggle with dietary guidelines, which has significant implications for public health. Fitness centers and professionals can provide valuable education on nutrition, physical activity, and lifestyle choices. By empowering individuals with knowledge, they can make informed decisions about their health, potentially reducing the need for medical interventions.
How might this look at your facility? | Benefits |
Host regular nutrition workshops - you might have the expertise in-house or you might have to source this externally, but the value-add to your members is well worth it. | The more educated in nutrition and health a member becomes, the more invested they become, thus increasing the LTV of your members. |
Make your pre-class briefing a learning experience. When you are explaining what you are about to get members to do, tell them why it will be good for them. | As above, an increased understanding of why they should do something, will increase member buy in. |
Send your members regular educational content, on topics that they have indicated an interest in. E.g. someone who has marked an interest in strength training - send them a blog on the most effective training day splits to gain muscle. Someone who has indicated an interest in mindfulness - send them an email detailing the benefits and how to get started. | Receiving personalized content and recommendations not only improves open rates, it shows your members that you are listening to them and you care about facilitating their interests. This can be made easy using a smart content production tool. |
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Healthcare Collaborations
The ‘Fitness Industry’ is undergoing a bit of a rebrand, to an entity which not only promotes physical exercise, but to something which encompasses the wider notion of ‘wellbeing’. Most recently, as embraced by IHRSA, who this year rebranded to the ‘Health & Fitness Association’ By combining your centers physical exercise solution, with a healthcare providers healthcare solution you can ensure that you are keeping up with the industry trends and providing members with access to an ‘all-in-one’ wellbeing solution.
How might this look at your facility? | Benefits |
Collaborate with local doctors, hospitals or clinics who can prescribe exercise programs tailored to individual health needs, and your fitness professionals can help patients adhere to these programs. | Another lead source added to your existing mix, further embeds you in your local community. |
Become a SilverSneakers® provider. SilverSneakers® is a program designed for older adults, often integrated with Medicare plans, providing access to fitness centers and promoting physical activity among seniors. | Allows you to diversify your member base and cater to the wider community. Again, this adds another lead source to your mix. |
Collaborate with insurance companies to offer policies that include fitness club memberships or reimburse a portion of the membership fees. | This partnership can help lower the perceived financial burden for potential members, encouraging them to join and retain their membership. |
Flexible Membership Options
To accommodate individuals facing uncertain healthcare costs, consider introducing adjustable membership plans. These plans could allow members to pause or reduce their membership fees during challenging times, helping them prioritize their healthcare expenses without completely giving up on their fitness goals.
How might this look at your facility? | Benefits |
Ability to ‘Freeze Membership’ for anyone who has sustained an injury, gone traveling for a prolonged period of time, or who just needs a break from their payments. | When they return, they will return to you. And are less likely to be swayed by new membership offers at other centers or by friends who attend other gyms. |
If you are in a college city or town, offer ‘term time’ memberships. | Will make you the attractive option to this segment who otherwise may end up locked into contracts when they aren’t in town. |
Month-to-month membership. | Attracts members who are hesitant to commit to long-term contracts and those with unpredictable schedules. |
Short term memberships for visitors. | Attracts visitors, tourists, or those in town for short periods. |
Discounted family rates. | Encourages group participation and can boost overall membership numbers. |
Offer corporate memberships, particularly if you are operating in a business district. | Attracts working professionals and promotes a healthy workplace. |
Off-peak memberships. | Helps manage gym traffic and attracts budget-conscious members. Can appeal to stay at home parents or retired folks who might not feel comfortable attending at peak times. |
Virtual memberships. | Perfect for members who prefer working out at home or cannot make it to the gym. |
When you add it all up…
We know, and you know that it is not as simple as ‘getting more people to exercise’ - if it was that easy, the obesity epidemic would not exist. This article touches on improving mental health and nutritional education as it is all part of the same puzzle and any good gym would strive to improve the overall health of its members.
The rising healthcare costs in North America undoubtedly pose challenges for fitness clubs, there is no denying that. However, by proactively addressing these challenges and implementing innovative strategies, gym operators can overcome the obstacles and build a thriving business. Hopefully some of the ideas above have sparked a thought at how you might take action towards turning this daunting healthcare outlook into an opportunity for your club.
Fitness operators are uniquely positioned to be part of the solution in this instance, rather than lying down to the issue - choose to be part of the solution.
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