Adding Wellness Services Could Boost Your Club’s Revenues

Take a glance into the group exercise studios and fitness areas of the average fitness club and chances are most of the people you’ll see are young, fit and healthy. But outside that club, it’s a very different story.

The majority of Americans aren’t in great shape, and they’re not doing anything about it, including not joining fitness clubs. Paul Zane Pilzer, entrepreneur and author of “The New Wellness Revolution,” says that’s because most people don’t perceive an environment of acceptance. They think of clubs as a place where people who are already fit and healthy go, rather than seeing them as a means to become that way.

“The word ‘gym’ still creates an image of body builder,” says Pilzer. “We need to turn that image into something that conveys the idea of wellness and positivity to get those 250 million Americans who don’t belong to a club to feel more comfortable with the idea.”

Part of the solution, Pilzer says, is for clubs to make a more concentrated effort to approach members’ well-being as a whole, rather than focusing solely on exercise. For example, he points out that a large percentage of people quit going to clubs because they fail to meet their primary goal for joining—to lose weight. So why aren’t more clubs integrating nutrition services, since we know that healthy eating and exercise must go hand in hand to achieve that goal?

Some clubs are already doing just that—and more. From forming strategic relationships with health care providers to incorporating therapeutic and medical services into their facilities, forward-thinking clubs are finding ways to attract the people that need them the most—and they’re reaping the benefits, from better retention rates to increased revenue streams. Could your club do the same?

Accidents and Opportunities

Gainesville Health & Fitness, a chain of three facilities in Gainesville, FL, is a shining example of a club with integrated wellness services ranging from aquatic therapy for arthritis, spinal fitness systems and physical therapy to nutrition and weight-loss counseling.

As well-organized as the services are, Gainesville owner Joe Cirulli says his decision to diversify into wellness initially resulted from several random events falling into place.

“I was initially looking at physical therapy as a career before I got into the health club business,” Cirulli says. “Once I started building my own company, I focused totally on the health club and what I needed to do to make it a success. But over time, certain things happened.”

One of those things was that Cirulli broke his knee during karate practice. After surgery, he attended therapy sessions at what he was told was the best therapy center in town. Cirulli didn’t buy it.

“All the time I was doing therapy, I was thinking ‘I can do so much better than this. I can do this in a more inspiring environment, with more inspiring people and do better than just looking at the person as a problem.’

Cirulli went back to his own club and worked on rehabbing himself. And during that time the second thing happened: Cirulli met a physical therapist from Michigan who was in Florida for only a few months. The therapist wanted to work as a personal trainer to take a break from physical therapy, and Cirulli was happy to have him on board.

“I got to know him as a great trainer, and I knew he was a great physical therapist,” says Cirulli. “I said to him, ‘Someday, I’m going to have a physical therapy center, and I’ll call you.”

The third, and final, thing was that through a fitness equipment business contact, Cirulli began testing a line of medical/rehabilitation equipment being developed at the University of Florida College of Medicine.

“The results were phenomenal what was happening to people,” says Cirulli. “And I just got to the point where I thought: ‘I can make this work now.’”

Cirulli called the physical therapist as he said he would and asked him to move to Florida. Then he invested in one of the rehab machines.

The health club was already successful thanks to its fitness facilities and programming, but Cirulli initially found it challenging to compete with already established physical therapy practices for doctor recommendations.

Cirulli and the physical therapist starting holding public seminars at Gainesville about how to reduce or eliminate low back pain. The therapist explained anatomy, physiology and proper body mechanics, and Cirulli talked about the benefits of exercise, demonstrated the rehab machine and explained the research.

“We’d give them all sorts of information and a referral pad and say ‘Go see your doctor.’ And they did,” Cirulli says. “After a while, the doctors started calling me, saying, ‘What are you doing to these people? They’re all getting better.’”

Cirulli invited the doctors in to see the facility and learn more about the program he offered, and Gainesville’s reputation grew. Eventually, Cirulli’s company took over operations of a local hospital’s rehab center. The joint venture, called ReQuest, has locations in two of Cirulli’s clubs and a third standalone physical therapy center.

Riding on the success of integrating physical therapy into his fitness clubs, Gainesville has since branched into many other wellness services. He says what drives his company is simply market need—looking at what the club members and the community need and then designing a program to serve them.

Gainesville offers a wide range of well-designed programs to address specific health issues, such as rebuilding the strength of cancer patients and easing the pain of arthritis sufferers, but it still strives to attract those who just want to get or stay in shape. Its newest plan for this goal is a line of fixed-length, small group classes called Custom Fit. Each has a specific theme, such as helping brides-to-be look and feel great on their big day. Cirulli says Gainesville will soon offer them as packages to non-members.

Best of the Best

While Gainesville evolved somewhat organically, ACAC Fitness and Wellness Centers owner Phil Wendel says his clubs’ diversification was part of a targeted strategy to serve a wider population.

ACAC opened its first location in Charlottesville, VA, in 1984 as a traditional fitness club with weights, group exercise classes and cardio machines, but Wendel says he decided to expand the club’s mission after reading a 1997 article written by John McCarthy, the former executive director of the International Health, Racquet and Sportsclub Association (IHRSA).

“John talked about the future of the fitness industry being primarily made up of a large demographic—64 percent of the American population—that called themselves the ‘interested de-conditioned’” Wendel says. “[These people] accepted the benefits of exercise, were not satisfied with what they were doing and were ready to embrace a more active lifestyle. From this point on, we targeted this market.”

The company opened its flagship fitness and wellness facility the following year. The 64,000-square-foot facility has all the usual fitness amenities, such as group exercise studios and cardio and weight equipment, but also features a therapy pool and offered on-site physical therapy and cardiac rehab.

“Initially, in 1998, cardiac rehab and physical therapy were tenants,” Wendel says. “Flash forward to today, we own our own physical therapy clinic, we have a nutritionist, 20 to 30 fitness specialists, personal trainers, all with certifications and degrees in the field. We also have nurses in all of our clubs.”

Many of ACAC’s auxiliary services are open to the public, including physical therapy, nutrition and counseling, a weight-loss club and wellness coaching, which helps participants with issues such as achieving a healthy work/ life balance, quitting smoking and managing stress.

Non-members can also gain access through ACAC’s Physician Referred Exercise Program (PREP). The program, which won Club Industry’s Best of the Best award for non-member program in 2010, was created with the help of a medical advisory board and allows non-members to attend the club for 60 days for $60 with a referral from their doctor. In addition to regular club access during those 60 days, PREP enrollees have two 30-minute sessions per week to work with a medical fitness specialist, one consultation with a nutritionist and a session with a personal trainer.

PREP has around 180 enrollees per month—all non-members. It’s an impressive figure, but Wendel points out that it’s not achieved passively.

“Each club has a full-time outreach staff member, whose job is to call on physicians’ offices,” he says. “The PREP program grows each year, and physicians gain confidence in our ability to properly handle their referrals.”

As a certified Medical Fitness Association (MFA) facility, ACAC takes seriously its commitment to providing high-quality wellness and medical fitness services, and Wendel urges other club owners to remember that trying to expand a club’s mission this way is not an endeavor to be taken lightly.

“If you don’t have a good ground game and quality programming that you can offer physician-referred clients, don’t get into that business,” he says.

Low-impact, Big Rewards

Fitness clubs needn’t offer all the barbells and whistles of an MFA-certified facility to show their dedication to creating a healthier community. Forming a relationship with a health care provider, such as a local hospital, can bring benefits without the need to renovate, buy new equipment or hire additional staff.

Cardinal Fitness, a Chicago-based chain with 54 locations in Illinois, Indiana and Ohio, became the exclusive health club partner for Silver Cross Hospital, Joliet, IL, in 2007. According to Emilie McClughen, Cardinal’s director of marketing, the relationship has been advantageous for both parties.

“Silver Cross Hospital was interested in teaming up with a large health club entity in order to provide benefits and support for their employees, physicians, volunteers and patients,” McClughen says. “It made sense for us to partner, as we are able to work together to meet the need for healthy communities by providing health and fitness education, outreach and resources.”

Through the terms of the partnership, selected Cardinal clubs offer discounted memberships to the hospital’s employees, physical rehab patients and bariatric surgery patients. This raises the club chain’s revenues from memberships while serving as an incentive for Silver Cross staff and patients.

The Silver Cross patient-members are under the supervision of their health care providers, so Cardinal didn’t have to change its programming or hire specialists to accommodate them. McClughen says the chain is confident it provides a high-level of personalized programming for all its members—whether already fit or in recovery—through its trainers.

“Our trainers are all certified and taught a science-backed program that can be tailored to each individual based on their needs,” says McClughen.

Along with member referrals, McClughen says the aim of the partnership is to increase Cardinal’s visibility in the community and ability to provide information and education to club members and potential club members.

One of the ways the partnership achieves this goal is through public health and fitness events. For instance, in an effort to raise awareness about childhood obesity, Cardinal has hosted several events at Silver Cross Field, home of Joliet’s minor-league baseball team. On certain game days, the club’s trainers invited children to run the bases and take part in exercises, and they distributed an information packet about staying active.

Although events like this no doubt help raise Cardinal’s profile in the community, McClughen says the most important benefit the chain has received from the partnership is that it allows the participating fitness centers to provide targeted education for its members.

“With Silver Cross bringing a medical component to the relationship, Cardinal Fitness is able to provide members with more information to help them fully accomplish their health goals,” McClughen says. “With the help of Silver Cross Hospital, we are able to provide diet and health information at our annual health fairs, such as advice on healthy eating.

In addition, we were able to provide low-cost health screenings to test for cholesterol, blood glucose, blood pressure, and body fat analysis.”

The Bottom Line

The costs and benefits of expanding a club’s scope vary greatly, depending on the level of services offered and how they are managed.

A partnership like this one has a relatively low financial expense. Aside from marketing costs shared by the partners, the greatest commitment is in time. The additional membership revenue resulting from hospital referrals is easy to measure, but the financial impact of the public relations boost that the club receives from its community events is incalculable.

Adding services incurs more of an outlay. Medical rehab machines, such as those used at Gainesville, can run $50,000 to $60,000. Hiring qualified therapists is another expense. However, when managed well, these services can eventually become very profitable. When Cirulli first took over the hospital rehab facility that is now part of ReQuest, it grossed twice what Gainesville’s rehab services did but still made less money. Cirulli says Gainesville’s rehab services now yield 20 percent profit.

It can take years to realize the profits from incorporating a new program or service, especially if the revenue comes indirectly. PREP, which ACAC started in 2004, has enrolled 2,000 participants in the Charlottesville facility to date. Wendel says that the approximately $120,000 in gross revenue from the program sales covers just the amount it takes the club to run the program. The true value to the club comes from the new members PREP brings in.

“Based on our historical data, we know that at least 40 percent of PREP participants become club members,” Wendel says. “Their average tenure is 30 months, and their average dues and peripheral sales are $135 a month. Therefore, our long-term projection for the 1,979 participants in Charlottesville in 2010 is $3.2 million.”

With such significant revenues possible, encouraging those who need these wellness services to step through the doors of fitness clubs could not only benefit the millions of Americans suffering from what Pilzer calls “voluntary poor health,” it could make the club industry’s bottom line a little healthier, too.

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