The pharmacy customer as frequent flyer

BY Michael Johnsen

The predictability of the chain store shopping experience has long been both a strength and weakness. The quality and experience may be predictably good, but can a shopper have a warm relationship with a store that treats everyone the same? 

Walgreens gets that. So it is transforming its relationship with its customers by getting to know their needs more closely. 

Walgreens’ new Balance Rewards shopper loyalty program, which launched Sept. 16, is all about transforming the shopper relationship to the place they shop, noted Graham Atkinson, Walgreens chief customer experience officer and architect of the program. “The dynamics of the last five or 10 years have really brought [loyalty] into a whole new focus,” Atkinson said. “If you put all that together, that collectively says that retailing and health care — like most other segments of the consumer market — are being increasingly driven by one’s core ability to understand the customer better, know what they want and be able to serve up those needs, products [and] services how they want them, when they want them and in the way they want them.”

Atkinson came to Walgreens in January 2011 with plenty of loyalty experience under his belt. Prior to Walgreens, he was president of United Airlines’ Mileage Plus program. Because of that experience, Atkinson has a different take on customer loyalty, both in terms of how it is defined and how it’s engendered, versus the typical retail-
centric view. “The way we thought about [the Mileage Plus] program was in terms of being able to identify, segment and design programs around different customers depending upon their value. … It’s a long way away from a [typical supermarket] card that you swipe and you just get the lowest price,” Atkinson said. “Customers have varying levels of value to a business, and it’s absolutely essential that you understand the value of each customer to the business now. We found in the airline model that the customer who values the benefits and services that you get from being an elite member of United … is very different from the customer who’s just collecting points.” The road warrior just wants a hassle-free experience, he said. 

The pharmacy customer has many similarities to that frequent flyer, Atkinson said. “Our ability to know that customer and influence that customer and ultimately give them a better experience, a differentiated experience … is just a huge opportunity,” he said. “How we actually segment our customers into much more meaningful universes and groups so that we can actually understand what’s really important to them is going to be as much of a game changer as the actual store experience that we’re designing and developing.” 

The loyalty program is being launched with a focus on three customer-friendly tenets: It’s easy to sign up; it’s easy to accrue points; and it’s easy to redeem those points. And Walgreens’ Balance Rewards can be accessed and used through any mobile device, maintaining the seamless, multichannel shopping proposition that Walgreens is bringing to market. 

How is Walgreens’ program different? For one thing, the points accrued through Balance Rewards almost never expire and can be combined with points earned by others in the same household. For every 5,000 points collected, Balance Rewards will award $5 good for almost any purchase at Walgreens or any of the chain’s online properties. And awards accelerate as points accumulate; for instance, 40,000 points net a $50 award. 

Another way Balance Rewards differs from existing programs is that it will be used to help drive healthier behavior among program members. For instance, Balance Rewards will be tied into Walgreens’ Walk with Walgreens program, so users who log a certain number of steps are awarded points. “This program we want very much to focus as a health-and-wellness program rather than just a retail program on the front end,” Atkinson said. 

The data that will come out of the program also will help transform how Walgreens goes to market. “We will learn a lot more about our best customers and what they shop and how they shop the entire store,” Atkinson said. “And that will enable us to send them direct offers if they want to, or otherwise at least amend, update and adjust the store selection to make sure that we’re actually providing the health and daily living services that they really want.”

In fact, Atkinson suggested that the consumer insights derived from the loyalty program would affect how Walgreens goes to market across several departments. “We’re just going to be better informed about our business on every dimension,” he said, including who’s buying, what’s selling, where stores should go and optimal labor commitments. “It runs right across the whole business,” Atkinson said. And better understanding that customer equation will ultimately lead “to better product development, store assortment selection, store location and many things besides.”

The loyalty data component that will be shared with vendor partners will better define the difference between “price takers” from “value seekers,” Atkinson added. “The other thing that has really excited [the vendor community] is the knowledge that we’re going to be able to give them, from all the promotions that we can test with them and the data and the customer knowledge, [insight] around what works and what doesn’t work.”

There is a cost associated with points, Atkinson said, and to realize a return on that investment, the Balance Rewards program is designed in such a way that it changes behavior. “The program that simply issues points or discounts for every dollar you pay doesn’t influence buying choice. Balance Rewards encourages people to either cross-shop or persuades them to actually select a particular product from a range of products. That’s where this program is different, and therein is the value for vendor partners.”


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Which area of the industry do you think Amazon's entry would shake up the most?

Helping patients where they live and work

BY Jim Frederick

Patients diagnosed with serious disease have enough on their minds. So Walgreens is doing all it can to make it easier for them to obtain, administer and pay for their specialty and infused medicines, said Mike Ellis, VP specialty pharmacy and infusion.

“The concept is to go where patients are diagnosed and where they reside. We have a large sales force who call on physicians who prescribe these types of medications. But like everything else at Walgreens, it starts with the patient.”

“Our strategy in this space is getting the drug where it’s the least costly and the most clinically appropriate site of service that the patient desires,” Ellis explained. “That may be in the home, the physician’s office, the outpatient setting or even the hospital in some cases.”

Ellis, a pharmacist, forged a 30-year career in specialty and infusion medication therapy with Olsten Health Services, Quantum Health Resources, Advance PCS and most recently, CVS Caremark, where he served as SVP specialty trade relations and contracting and pharmaceutical services, before joining Walgreens in September 2011.

The specialty pharmacy business, the industry veteran said, “has transformed Walgreens from just the corner drug store and acute care pharmacy to one with experts in some of the most complicated disease states out there, with the most expensive medicines and the most clinically challenging patients. Walgreens, with its collection of assets, has to be strongly considered as a third healthcare destination beyond the physician’s office and the hospital.”

It may surprise some that Walgreens has become the nation’s third-largest provider of specialty medications and “the largest non-PBM-owned specialty pharmacy,” according to Ellis. The company also is the nation’s largest provider of home infusion services, giving it a powerful voice with manufacturers and the public and private payers who pay for these types of drugs. 

“We have four large central specialty pharmacies that can distribute across the country, and almost 100 infusion pharmacies strategically located in local marketplaces, because you need to be in the local marketplace to deliver care,” he said. “We’re also unique in that we employ our own nurses. So in over 92% of the cases we handle, our nurses administer those drugs, as opposed to using contract nurses.”

“We believe, and our data proves, that our quality of care and outcomes are much higher because our nurses have relationships with the patients and are familiar with the drugs,” Ellis asserted.

All those assets give Walgreens distinct competitive advantages in specialty and home infusion, he continued, as well as additional touchpoints with patients across the United States that extend well beyond its 8,000 retail and hospital-based pharmacies and clinics. What’s more, the company’s ability to serve patients with chronic and serious conditions in any setting they choose — be it the home, retail pharmacy, outpatient hospital, physician office, mail or Take Care Clinic through one of its four central specialty pharmacies, its specialty Center of Excellence pharmacies or its traditional community pharmacies — helps build its name recognition, loyalty and new business with patients, prescribing physicians, payers and manufacturers, Ellis said.

“Ninety percent of our infusion patients have never used Walgreens, which is kind of astounding, but many of them have been healthy until they acquired the condition they’re now dealing with. We think that by providing this service, we will create a loyal bond with that patient for many years to come,” he added.

Walgreens’ multichannel approach to specialty and home infusion also can lead to lower health costs for patients and payers, Ellis said. “Because of the skill sets of our clinicians, we don’t necessarily have to put patients in an outpatient setting to achieve the same clinical results. And the cost differences are dramatic.”

“Much depends on getting the patient to the most appropriate clinical site of care,” he added. “Our ability to deliver medications in the home, the pharmacy or in one of our ambulatory treatment centers, versus an outpatient or hospital setting, can mean as much as a 30% to 40% difference in the cost of the drug and the procedure.”

One of Walgreens’ key assets for staking a major claim to the specialty market is the hundreds of pharmacies around the United States that the company has converted to “Centers of Excellence” for a particular disease state. The centers are a key resource for attracting and treating patients with specific serious conditions, such as HIV. 

“Can Walgreens have 8,000 stores with more than 27,000 pharmacists trained in all of these disease states? While certainly a goal, that may not be realistic given the low incidences of these types of diseases. So we’ve developed a hub-and-spoke model across the country,” Ellis explained. “For example, we have about 600 Centers of Excellence around HIV, in areas where there’s a high incidence of the disease.”

In a Center of Excellence pharmacy, Ellis said, Walgreens employs “very specific staff trained in that disease state. And that’s very important if you’re afflicted with one of these complex conditions.”

In its pharmacies that specialize in HIV and hepatitis, for instance, “there are social issues that go along with that disease. So the staff undergoes intense clinical and sensitivity training,” he said. Pharmacists and technicians in those stores also get special training to help their patients line up the resources to allay the costs of expensive HIV/AIDS medications, including financial aid and co-pay assistance programs from manufacturers and 
charitable organizations.

For patients dealing with serious diseases like HIV, the Centers of Excellence provide a convenient, locally accessible option for obtaining specialty medicines and learning about their use and administration, added Jeff Berkowitz, SVP pharmaceutical development and market access. “At retail Center of Excellence, pharmacists can work with patients in ways you can’t with a central-fill specialty pharmacy,” he said. “When that patient comes into our stores and seeks help” with issues like self-injecting drugs or learning about their side effects, “they’ve got that patient-pharmacist relationship.”

Health stakeholders, including the federal government, are beginning to recognize the potential for improved patient outcomes and cost-effective care that the Centers of Excellence provide, Ellis said. The Centers for Disease Control and Prevention has launched a new pilot program with select Walgreens and Take Care Clinic locations where the pharmacist or nurse practitioner are trained to deliver confidential HIV testing and counseling. In another newly announced program, the Department of Health and Human Services is looking to the company to demonstrate the effectiveness of medication therapy management for the HIV population. Ellis said, “To be recognized by the federal government as a leading expert in HIV is pretty special.”


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Which area of the industry do you think Amazon's entry would shake up the most?

Health crisis will expand clinic sites, service

BY Antoinette Alexander

When National Association of Chain Drug Stores president and CEO Steve Anderson earlier this year at NACDS Annual urged pharmacy leaders to be “disruptive innovators,” and new NACDS chairman and Walgreens president and CEO Greg Wasson called on the industry to embrace a holistic view of the total store in improving patient lives, they easily could have submitted Walgreens and its Take Care Health Systems subsidiary as an ideal case study.

“When we think about our role in health care we, for years, have been talking about disruptive transformation — positive, disruptive transformation, which is what the healthcare industry has really needed,” Peter Hotz, group VP of Walgreens/Take Care Health Systems, told DSN. “While the worksite and retail businesses are different, they both play that disruptive role. The worksite business is disrupting the way, in a positive fashion, and transforming the way that employers provide access to health care to their employees. … With the retail clinics, the focus there has been transforming access to care.”

Today, Take Care Health Systems is the largest and most comprehensive manager of worksite health-and-wellness centers and retail-based health clinics, with more than 700 locations throughout the country. And there’s no doubt that both its retail-based Take Care Clinics — whose future growth will be influenced, in part, by additional openings of the Walgreens Well Experience concept — and worksite locations are not only revolutionizing the face of health care but also are revolutionizing the entire Walgreens enterprise.

With the convergence of three major trends — a physician shortage, the nation’s deteriorating health status and rise of chronic diseases, and the upcoming increase in healthcare coverage due to healthcare reform — not only will the strain on the nation’s healthcare system intensify, but so will the need for those convenient, affordable and high-quality services provided through Take Care Health. This will further position Walgreens along the front lines of health care.

To counteract the strain on the U.S. healthcare system, Hotz said the company is embarking on several “creative solutions” that will include additional sites, services and hours. Some of these solutions are well under way. For example, Take Care Clinics is offering, in a pilot with the Centers for Medicare and Medicaid Services, the health risk assessment that must be completed as part of Medicare’s new annual wellness visit. It also recently expanded its menu of services to include new diagnostic tests and administrative physicals. The services, which include a blood test used to monitor Type 1 and Type 2 diabetes, and a lab test to help identify hidden blood in the stool, further advance the Well at Walgreens strategy as Walgreens enhances its services as a community healthcare provider and transforms to a health and daily living destination.

Going forward, technology also will play a greater role to help Take Care fill gaps in care. In fact, Hotz said the company currently is testing the application of telemedicine. 

For example, Take Care Health Systems collaborated with Cisco in late 2011 to operate the LifeConnections Health Center on Cisco’s campus in San Jose, Calif., offering employees and dependents integrated health-and-wellness services, including primary care, physical therapy, chiropractic care, acupuncture, vision, health coaching and an on-site Walgreens pharmacy. The worksite facility also is connected to Cisco’s campus in North Carolina, where employees can interact with a physician at the San Jose campus via high-definition video. 

Hotz also believes there’s an opportunity to offer video health within the retail-based clinics to provide patients access to specialists. 

Meanwhile, the clinic operator is piloting a program that offers patients mobile and online appointment scheduling services through consumer healthcare app iTriage, and is offering real-time appointment scheduling via the Web.

“The general, underlying theme is a more integrated part of the healthcare delivery system, and that’s true of Walgreens overall, and not just the retail clinics. Where the clinics started as acute treatment and a lot of independent services, they are now involved a lot more in working with the community as an extension of a health system and working in coordinated models of care,” Hotz said.

Taking a look specifically at worksite clinics, this is a market-driven, fast-growing area of the business for Take Care Health Systems that, generally speaking, is enabling employers to curb rising healthcare costs by saving roughly $2 to $4 for every $1 they invest over a five-year period. In stark contrast to the national average, many of Take Care’s employer clients are showing flat health spending trends over the past five years, Hotz explained — and some are reversing the trend altogether, he told DSN.

“We are being asked to look at the worksite health center as a platform from which we can manage not only the care that is delivered at the worksite, but also in the community. The other big trend there is the continued movement toward more of a population health management role,” Hotz said. “So, not just managing the acute issues, but really looking at that population that that employer is responsible for, and trying to work with that employer on both a macro basis and an employee-by-employee basis to try and figure out how to drive down those costs and improve the health status of that population. We are getting a lot more involved in awareness programs, wellness campaigns, long-term condition management, behavior change … and trying to get at the underlying root causes of the healthcare cost.”

As a strong indication of its belief in the worksite model, Walgreens is one of Take Care’s own corporate clients. Walgreens’ Deerfield, Ill., office campus hosts a Healthy Living Center that offers headquarters team members a full array of acute and preventive services and an impressive fitness facility.


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Which area of the industry do you think Amazon's entry would shake up the most?