Exclusive Q&A with Greg Wasson
The interview appears as part of a comprehensive special report that looks inside Walgreens as the retailer changes its strategy to rejuvenate sales and streamline operations amid an economic recession.
Stimulus brings HIT, privacy into sharp relief
WASHINGTON —The Obama administration’s $787 billion plan to reboot a dangerously ailing economy is now law, unleashing billions of tax dollars to ease the state Medicaid funding crisis and spur the rapid adoption of health information technology, along with programs designed to ease tax burdens and bring millions of Americans back into the workforce. Pharmacy advocates approve of many aspects of the stimulus package, but remain deeply concerned over more stringent patient privacy protections that made it into the bill.
The bill allocated $18.83 billion for healthcare projects and the acceleration of HIT, including $1.68 billion to maintain, expand and make permanent an Office of the National Coordinator for Health Information Technology. Add in the additional $300 million slotted for regional HIT coordination efforts and $20 million for other integration activities, and the tab for national HIT coordination and support comes to $2 billion, including incentive payments to physicians for rapid adoption of e-prescribing.
The stimulus bill also includes $2 billion in funding for prevention and wellness programs within the Department of Health and Human Services, which could trickle down to pharmacy.
The American Recovery and Reinvestment Act of 2009 is drawing guarded praise from pharmacy leaders, particularly for its allocation of $86.6 billion to cash-strapped state Medicaid programs and its support of HIT. “The Medicaid funds in this bill will help states ensure that low-income patients maintain access to vital health care, such as medications and pharmacy services,” noted Steve Anderson, president and CEO of the National Association of Chain Drug Stores.
The final report also contains important tax relief that will help NACDS members and other businesses, and provides $2 billion in grants and loans for the advancement of interoperable HIT.
However, Anderson and other pharmacy leaders cautioned, the final bill calls for patient-privacy provisions that go beyond current HIPAA restrictions—provisions that could tangle pharmacists and other health providers in a web of needless restrictions, and hamper both patient relationships and the needed flow of protected patient data.
The bill calls for heightened enforcement and increased penalties to health providers who fail to comply with HIPAA regulations, as well as new security standards among businesses that deal in protected health information. It also requires “the notification of patients of any unauthorized access, acquisition or disclosure of their ‘Unsecured PHI’ that compromises…the patient’s privacy and security,” noted the legal firm of Waller Lansden Dortch & Davis.
With the uncertainty surrounding health reform, HIT and patient privacy, several groups including NACDS, the National Community Pharmacists Association, the American Pharmacists Association and others on Feb. 12 laid out a set of “Pharmacy Principles for Health Care Reform.”
Among those principles, said coalition leaders, is “assuring patient access to needed medications and pharmacy services,” and “promoting pharmacy and HIT interoperability so that all health providers, including pharmacies, are linked via electronic data and decision-making platforms to improve patient care.”
Said Anderson, “We need to make sure that financial resources will not be wasted if we have systems that don’t talk to each other or provide the right kind of information.”
Among the principles urged by the pharmacy coalition:
Pharmacists should have electronic access to such patient health information as diagnosis and laboratory values.
Federal and state grants to healthcare providers should support the growth of interoperable healthcare systems.
Guidelines should be established to protect patient information while assuring that these protections also allow information flow among healthcare providers to enhance treatment decisions.
Elephant Pharm shutters its three doors
BERKELEY, Calif. —A down economy and a tightening credit market may have been the final nails in the coffin for Elephant Pharm, a three-store hybrid pharmacy chain that closed its doors for good last month. But the concept may have been doomed from the start.
Starting a 12,000-plus sq. ft. pharmacy from the ground up—in other words without any pre-existing prescription files—is just not that easy to do without the economies of scale afforded larger national competitors—in any economy.
“The company has been burdened with obligations that were quite difficult for a company of our size to carry,” Elephant Pharm CEO Kathi Lentzsch stated. “The current management team and board of directors worked diligently to grow the company to a size that could bear these obligations, but due to the current economic conditions and the tightening of the credit market, it has not been possible to raise the capital required to continue the business.”
So it was more Elephant’s lack of heft—the company fielded the buying leverage of four locations before closing its Los Altos, Calif., store in September 2008—that sealed its fate rather than its business vision as a pharmacy that dispensed both traditional allopathic medicines alongside Ayurvedic herbs.
Originally designed by entrepreneur Stuart Skorman, the Elephant Pharm concept was meant to be the pharmacy for baby boomers, much like the 23-store Colorado chain Pharmaca, a 5,000-sq.-ft. hybrid chain that converts independents with pre-existing prescription files into a healthier-for-you pharmacy, which Skorman visited prior to embarking on his vision for Elephant.
However, as outlined in Skorman’s book, “Confessions of a Serial Entrepreneur,” Elephant Pharm faced many challenges from the outset. “We discovered the hard way that one reason no one else ever opened a big-box, upscale pharmacy is that these stores, which are driven by prescription sales, ramp…slowly because people are slow to switch pharmacies,” Skorman wrote. “That accounted for half of the outrageous losses we incurred when we first launched our operation, which was more expensive to operate than the traditional pharmacy.”
And that lack of buying power placed Elephant at a greater disadvantage—the chain’s national competitors paid some 10% less for products, Skorman estimated, which placed Elephant at a significant competitive disadvantage if it was to appeal to its customers’ pocketbooks.