Retail Rx has earned a seat at health reform table
“I’m not willing to say it was a great move at this point.”—BusinessWeek Feb. 12, 2009.
That’s what Morningstar analyst Mitchell Corwin had to say about the 2007 merger that created the $76 billion healthcare goliath now known as CVS Caremark. He’s entitled to his opinion, but you have to believe there was probably a whole lot of people waiting to greet Columbus upon his return to remind him that despite his killer suntan, the world most definitely was still flat. And no amount of corn or cocoa would make them think otherwise.
But Drug Store News believes that much as “Flat-Earthism” fell out of fashion several centuries ago, the number of people who don’t get the vertically integrated pharmacy model—how the retail stores, PBM, mail order, specialty pharmacy and retail clinic components come together to improve health-care costs and outcomes—are disappearing rapidly.
The prevailing spirit in America right now is to fix what is wrong with health care, to reduce cost and to get more for what we pay for, and there is a strong sense that rather than just fruitless debate around health care, we will get meaningful reform. And, it will become more and more clear that retail pharmacy offers more answers than questions about how to get from here to there.
This occurred to me last month as I read the BusinessWeek article about CVS Caremark chief Tom Ryan’s vision for how 7,000 drug stores, 500-plus retail clinics and a massive PBM can take a massive bite out of the hundreds of billions of dollars that America OVER-spends on health care.
“I don’t believe our health-care system is broken,” he told BusinessWeek. “We are just spending too much, and it’s unproductive.” By identifying which patients are not taking their medicine, the technology that ties together and drives the total CVS Caremark universe is capable of fixing a lot of the inefficiency Ryan and many others see bogging down U.S. health care.
And it’s not just CVS Caremark. Over at Walgreens, the commitment to leveraging technology to bring greater efficiency to health care through things like improved compliance goes back three generations of leaders to the current management team under president and CEO Greg Wasson. While Walgreens may not have the benefit of a big PBM, its clinic offering, part of its Health and Wellness division, includes an extremely robust employer solutions component, with some 350 worksite clinics operating in companies across the country.
“Employers across the country are looking for ways to lower healthcare costs and deliver employee benefits,” Wasson told the New York Times in a January interview. “This is a way for an employer to do both.”
Walmart, while it doesn’t own a PBM or a clinic division, also is talking the “saving employers/payers’ health-care costs” message. Through a program with Caterpillar, Walmart will waive pharmacy copays for all 70,000 CAT beneficiaries. Walmart’s leaders promise they can reduce costs and are pushing for a seat at the healthcare reform table.
The calls from retail pharmacy for meaningful reform are everywhere—like the full-page ad that ran in an early February edition of The Washington Post from Walgreens, urging politicians and policy makers to take a common sense approach to healthcare reform.
“America cannot wait another day for healthcare reform,” the ad read. “The nation’s largest employers, the family of four, the uninsured single mother, all tell us that the U.S. healthcare system is collapsing around them.”
Admittedly, I already had begun thinking about how retail clinics could play a larger role in the delivery of health care in America, long before our new President and the 111th U.S. Congress began down this road of reform. The question was and is, what would that role be and how might it work? Because it isn’t just a simple matter of breaking down the barriers that prevent retail clinics from operating in certain parts of the country.
This isn’t about expansion of retail clinics as a new healthcare delivery model; at this point, that has to be a no-brainer. There just aren’t enough doctors in this country. By next year it is expected that the physician shortage will stand at about -50,000 and counting.
This is about an expanded role in health care for retail clinics. Because that is where the savings really begin to add up.
In the recent ad, Walgreens noted the company’s experience on the employer-based solutions side of its business. “On average, these centers deliver $2 to $4 in savings for every dollar invested by the corporation,” the ad stated. “And these savings don’t include the value of disease prevention and management programs integrated into care delivery at these on-site centers.”
I already had been thinking about this when I came across a chart from the February 2009 edition of U.S. News & World Report, which listed the 12 most effective prevention measures that could be implemented with the biggest overall impact in terms of lives and dollars saved. Eight-of-12 are either services that retail clinics correctly offer, or could be offering, including daily aspirin use consultation, childhood immunizations, smoking cessation counseling, alcohol abuse screening, colorectal cancer screening, hypertension screening, influenza screening, vision screening, cervical cancer screening, cholesterol screening, pneumococcal immunization and breast cancer screening.
For Drug Store News’ money, the writing is right there on the wall: if there is going to be meaningful reform in American health care, retail pharmacy and clinics are going to be at the center of that improvement.
United Drugs and Associated Pharmacies merger to combine strengths
Behind the decision by United Drugs and Associated Pharmacies to merge is one overriding theme: a national, integrated cooperative of more than 2,000 pharmacies all rowing in roughly the same direction is a force to be reckoned with.
In today’s economic maelstrom, it may also mean the difference between success and failure for many of the independent pharmacy operators operating under the combined United-Associated umbrella.
This economy — which is chewing up many smaller businesses, drying up demand for all manner of goods and services, and throwing hundreds of thousands of workers a week off corporate payrolls — leaves little room for error. And the financial meltdown makes operating an independent drug store — not an easy proposition in the best of times — a daunting prospect. Any combination of buying and marketing co-ops that can boost efficiencies and/or beef up the menu of services or purchasing clout of their members has to be a topic of serious consideration.
What’s more, merging the memberships of United and API creates one of the nation’s largest independent pharmacy networks, on a par with McKesson Corp.’s Health Mart franchise operation, Cardinal Health’s Leader umbrella program for independents and its Medicine Shoppe franchise pharmacy brand, or AmerisourceBergen’s Good Neighbor Pharmacy store-service and branding program. Only a handful of drug, supermarket or mass merchandise chains field as big a store network.
But many questions remain, even assuming the merger is approved. Among them: how will the combined programs squeeze new operating efficiencies and a stronger service program for their members out of their marriage? What additional steps need to be taken in this kind of unforgiving market to unite the 2,000 pharmacies under a stronger marketing, advertising and branding umbrella? Will there be a unified national advertising and pricing strategy? And, finally, will the members of both groups embrace the combination as a long-term benefit to their business?
Carmel Pharma designates April National Safe Handling Awareness Month
COLUMBUS, Ohio Carmel Pharma has designated April as National Safe Handling Awareness Month, and April 20 as National Safe Handling Awareness Day.
The company said the purpose of the month was to educate healthcare workers about safe handling of drugs and protect them from hazardous drug exposure. According to an alert published by the National Institute for Occupational Safety and Health, exposure to hazardous drugs can lead to skin rashes, infertility, miscarriages, birth defects and possibly cancer.
Carmel Pharma will sponsor a free webcast April 20 from 1 p.m. to 2 p.m. EST, followed by a live “ask the experts” session. The webcast will be part of a month of regional and national continuing education activities.