Leveraging global strategy to help independents navigate macro trends in health care, business
Health care is local. But the back-end service that enables the delivery of that localized healthcare experience has become increasingly global both in size and scope.
“We believe that health care is extremely local, but from a McKesson perspective, it is becoming more global. Regarding the overall healthcare ecosystem, for us to be a healthy company in the future, we have got to explore the global opportunities,” Chris Dimos, McKesson SVP corporate strategy and business development, told Drug Store News in an exclusive interview hours before taking the stage Monday afternoon for the McKesson ideaShare 2016 Opening General Session.
“Some of the moves we’re making as a company are to position ourselves to win in that global economy,” he added. “When you think about how we are reacting to the impact of generic scale, it’s around our global relationships with manufacturers and being able to demonstrate that. When you think about innovation and changing the front-end, then it’s about the learnings we can bring from across the globe through our interactions with community pharmacies in Europe and in Canada to deliver the best of all community pharmacy.”
To describe how McKesson’s global strategy is helping to drive success for the independent pharmacy operator, Dimos outlined four macro trends that are impacting the delivery of health care at every level today:
- Generic scale: “Purchasing consolidation is happening everywhere,” Dimos noted. “When there were 10 to 12 buyers acquiring pharmaceuticals, and the wave of branded patent expiries spawned a plethora of new generic introductions, that fueled a lot of growth for pharmacy,” Dimos said. “As the number of new small molecule drug introductions fell off and the generic business became more commoditized, a number of entities — beginning with Walgreens Boots Alliance — began to form generic purchasing partnerships with major wholesalers to gain greater purchasing scale. “Where we’re at today, there are a handful of companies controlling some very large market shares,” Dimos said. “We believe it’s extremely important for us to have ‘stable’ scale … where the manufacturers can count on that long-term relationship with us so we can think and plan more strategically than just year-to-year, product-to-product.”
Consolidation and integration: “Traditionally, industry consolidation has followed the old pharmacy law, ‘like dissolves like.’ Retailers bought retailers, PBMs bought PBMs, manufacturers bought manufacturers,” Dimos explained. “Now, we’re starting to see more vertical integrations — probably the best known is CVS and Caremark.”
“With accountable care, as quality of care becomes much more of an important component, we believe we are going to see entities come together, either through organic growth or by acquiring the assets they need to be successful in the future of a value-based model as opposed to a volume-based model,” he said.
- Product mix shift: “Generic profitability is starting to wane as payers become more transparent … less new innovation in small molecules, the traditional tablets and capsules dispensed in the retail environment,” Dimos said. “You’re seeing the emergence of specialty drugs — large molecule drugs that are really aimed at much smaller, targeted populations at much higher cost. By 2020, it’s expected that specialty drugs may represent half of total pharmacy revenues, but total transactions will still be in the single digits,” he said.
- Reimbursement, performance and access: “Cost will always be important, but value is where we are going to be differentiated and measured,” Dimos said. “We’re seeing different levers used to differentiate healthcare offerings, such as narrow networks or performance-based networks where you have to earn your right to participate,” he said. “Access is being influenced on a product level in terms of limited distribution for some of the larger molecules, and that access is really influencing how providers are being differentiated inside of the overall healthcare ecosystem.”
To help community pharmacy navigate these macro forces and meet the myriad challenges imposed by each, Dimos pointed to four integral strategies independent operators should employ to drive profitability and retain access to patient lives:
- Bolster core business: “This is about managing your expenses,” Dimos said, noting that labor and inventory are two of the easiest costs to manage. “It’s about becoming extremely efficient, managing and balancing not only the clinical care, but also the economic health of your business,” he said. “We’re providing, through Health Mart and the assets that we have, ways to educate and help operators become extremely efficient in running their businesses.”
- Pharmacist-delivered services: “The pharmacist has to practice at the top of his license,” Dimos said. Pharmacists need to be prepared for the day that provider status is enacted for the profession. “Having that status, it’s not the end of the game, it’s just the beginning,” he said. “Pharmacists need to educate themselves about the new services they will be able to deliver as providers before someone pays us for it. It’s about moving from product provision to knowledge provision, and then being able to monetize that.”
- Partnering within the greater healthcare ecosystem: “Healthcare is local, especially for our independent community business,” Dimos explained. “The partnerships they form with the local healthcare providers to provide services, whether it’s in transition of care or helping to prevent readmissions, those types of collaborations are partnerships they can form based on locality and the relationships they have in the local healthcare ecosystem.” But pharmacy operators need to take a proactive role in driving these relationships. “They won’t come to you; you’re going to have to seek them out.” This is another area where McKesson is helping to provide turnkey solutions for its customers. The company rolled out the Collaborative Practice Agreement (CPA) program in a few states last fall. The program has since been expanded to 37 states, covering nearly every state that requires a CPA to prescribe and administer eligible immunizations to patients in their community.
- Identify new revenue streams: “You have to diversify away from dispensing revenue and earnings only,” Dimos said. “Health Mart can help identify those opportunities and provide turnkey solutions to assist in getting those programs off the ground, such as immunizations or medication synchronization,” Dimos noted.
But it’s more than that. “Are you innovating? Are you innovating on the front-end? Are you thinking about new ways to capture and engage your patients?” he asked. “We see a growing interest around healthy food or beauty in the marketplace,” he said. Whether it’s disease-state specific like diabetes, or general like nutrition, pharmacists need to make sure they are diversifying their revenue streams, he said.
AccessHealth demos new suite of tools to help optimize managed care performance
McKesson’s AccessHealth, a market leader in managed care solutions, is showcasing a number of enhancements at McKesson ideaShare 2016 designed to help enable independent pharmacies to gain access to — and compete in — the right preferred networks.
AccessHealth hosted a special sunrise educational session Tuesday morning, at McKesson ideaShare, where two executives from CVS Health talked about the types of activities and outcomes payers are looking for from independent pharmacies in order to maximize performance reimbursements opportunities. In addition, AccessHealth team members were on hand in the McKesson ideaShare exhibit hall to walk attendees through the new enhancements.
But to get a first-hand understanding of how AccessHealth’s contracting and performance programs help independent pharmacy operators understand and navigate the managed care landscape, deliver best-in-class medication-related performance outcomes and optimize reimbursement, Drug Store News caught up with AccessHealth VP and general manager Eyad Farah and director, pharmacy performance Amie Bland in an exclusive pre-ideaShare interview.
“The narrow networks are not going to go away,” Farah told DSN. “They’ve proven successful in doing exactly what they’re supposed to do, reducing overall costs for payers and the PBMs.” This has been an interesting year, Farah explained, “because we’re starting to see more and more of these limited networks within the commercial and the Medicaid space,” which represents about two-thirds of the prescription volume for pharmacies participating in AccessHealth, he said.
Among the recent enhancements to the AccessHealth platform is the Pharmacy Performance Guidebook. Introduced earlier this year, the Pharmacy Performance Guidebook helps McKesson customers understand the overall performance focus of each PBM or plan, and offers detailed instructions for developing action plans to improve patient behavior and boost outcomes through such tools as medication therapy management, refill reminders, medication synchronization and behavioral coaching.
“As all of health care continues to move to a value-based payment model,” Farah said, “it’s becoming increasingly more important for community pharmacies to incorporate performance measures into their practices. Very similar to how performance models have grown in the last couple years, we’re going to see that move toward [limited] performance networks,” Farah said.
“This is the year our pharmacists have more opportunities to obtain performance dollars than any other year we’ve seen,” added Bland. “In 2016, we’re seeing medication therapy management completion activity fees, bonus payments and now variable direct and indirect remuneration fees, so the actual reimbursements can be improved by elevating top performance.”
Direct and indirect remuneration (DIR) is a fee system, originally created by the Centers for Medicare and Medicaid Services and subsequently adopted by private payers, designed to lower costs and improve outcomes for patients. DIR fees are collected at varying times throughout the year, so anticipating and planning for them is critically important for pharmacy operators.
Pharmacies that meet the top PBM performance requirements may be charged a smaller DIR amount than those who underperform, Farah explained. “In 2016, about 40% of AccessHealth Medicare Part D claims had that variable DIR opportunity,” he said. In 2015, there were relatively none.
To help independent pharmacy operators maximize the variable DIR opportunity, AccessHealth also recently added the DIR Estimator Tool to its suite of tools. The DIR Estimator Tool helps estimate accrual and incentive amounts that could impact DIR payments.
After McKesson ideaShare, AccessHealth will be introducing a performance estimator tool that “will help stores identify all the performance opportunities they have available to them — for instance, if there are MTM activity fees available or PBMs that are offering the variable DIR rates,” Bland said. “There’s even a partnership within McKesson that’s offering rebates. So, the new estimator tool will highlight all the various performance reimbursement opportunities in one place for our pharmacies.”
Earlier this year, AccessHealth augmented its McKesson Reimbursement Advantage program with the launch of MRA+, which integrates PrescribeWellness Patient Engagement Center and Medication Synchronization Solution, StarWellness in the MRA program. MRA+ helps pharmacies tap into their performance opportunities and provides a dedicated coach to assist pharmacies on their performance journey, Bland explained. “Our MRA and MRA+ stores have higher performance scores than those that are not enrolled in these programs,” Bland said. “They have constant reinforcement of the importance of pharmacy performance.”
Currently, more than 5,700 small and medium chain pharmacies are members of AccessHealth.
Walgreens makes digital couponing even easier
DEERFIELD, Ill. – Walgreens customers now have the ability to redeem paperless coupons from Walgreens and manufacturers for online purchases, as well as in-store purchases.
Additionally, offers can now be “clipped” on product detail pages and in search results on Walgreens.com, and through the Walgreens mobile app.
Both new features are the drugstore chain’s latest enhancements to its paperless coupon offering, making it faster and easier for customers to find and redeem the latest promotions and deals.
“In the last few years, we’ve seen a growing demand from our customers to provide value and a seamless shopping experience whether they visit us in-store, online or through the Walgreens mobile app,” said Linda Filler, Walgreens president of retail products and chief merchandising officer. “Paperless coupons give Walgreens and our vendor partners an opportunity to deliver even greater value to our customers no matter which of our channels they choose to shop.”
Walgreens paperless coupons are the electronic coupons available to the more than 85 million active Balance Rewards members through Walgreens.com/coupons or the Walgreens mobile app. Customers can search and “clip” hundreds of offers in a variety of categories from Walgreens and other manufacturers. Clipped offers are automatically saved to a customer’s Balance Rewards card and can be seamlessly applied in-store at checkout when a customer uses their Balance Rewards card. Now, customers also have the ability to use their clipped offers while shopping online at Walgreens.com or through the Walgreens mobile app.
“We were one of the first retailers to take an innovative and simplified approach in developing the customer experience for digital coupons,” said Abhi Dhar, Walgreens senior vice president and chief information officer. “These latest enhancements, in addition to integrating our loyalty program with Apple Pay and Android Pay, have made it even easier for the millions of people who use our online and mobile channels every day to save even more at Walgreens.”
Since Walgreens first launched paperless coupons in 2014, the drugstore chain has seen a continual increase in monthly redemptions, with more than 135 million total coupons clipped through the program. The company has continued to enhance and simplify paperless coupons by also offering manufacturer coupons through a partnership with Quotient (previously Coupons.com Incorporated). Walgreens also plans to offer digital redemption and clipping from product pages for its Weekly Ad and Monthly Savings Book later this summer to give customers more savings opportunities.