Insurers, once reluctant, are now embracing the convenient-care strategy. During a May 1 first-quarter earnings call, Larry Merlo, CVS Caremark's CEO, noted how “in the early days,” only about 20% of MinuteClinic visits were covered by insurance. That number is now approaching 90%. The embrace comes in part because the drug chain has forged partnerships with 26 local health systems. Revenue for the first quarter was 50% greater than the first quarter of 2012, “bolstered by the very strong flu season,” he told analysts.
Walgreen is aggressively moving to offer more services in its Take Care clinics. It recently began offering assessment, treatment and management of asthma, diabetes, hypertension and other chronic conditions. While Take Care is still involved with only six health systems, it has also joined three accountable care organizations, what many see as the healthcare delivery system of the future. “I think the big shift that I see in the landscape is from one that has historically been a pay-for-use model to one that is really starting to center around outcomes in healthcare,” Wade Miquelon, Walgreen's chief financial officer, said last week during an investor conference in New York.
With ACOs and payment for outcomes, Walgreen will benefit from gain sharing when it helps keep people healthy and lowers healthcare costs. “That's a huge shift, and what (paying health systems for outcomes) gives rise to is for players like Walgreens to participate with them, help them bend the cost curve so they can make more money and we can play more broadly,” Miquelon said. “These things are very disruptive because we can provide, in many areas, the same or better care more conveniently and cheaper than the current alternative. And, what's really changing is that—in the past—nobody cared about that as much because everyone was being paid per use.”
Clearly that's worked in vaccinations, once a mainstay business of primary-care physicians. Walgreen now has 26,000 pharmacists credentialed to administer shots. “It doesn't mean we're going to be doing brain surgery—we're not, but there's lot of things in primary care and preventive medicine that we, I think, have the right to win,” Miquelon said.
He predicted pharmacists would begin writing prescriptions for certain categories of drugs. “I like to say what we're trying to do is transform the role of the community pharmacies, not necessarily just the role of the pharmacists.”
Its most significant move yet is its pioneering efforts in moving retail clinics into the ACO space. Walgreen has partnered with Largo, Fla.-based Diagnostic Clinic; Marlton, N.J.-based Advocare; and Temple, Texas-based Scott & White Healthcare to form ACOs.
Scott & White's Dr. W. Roy Smythe, who is their medical innovation director, said forming an ACO was Kang's idea. “I knew what they were doing, but I had no idea that their plan was so audacious,” the thoracic surgeon said. The Scott & White Healthcare Walgreens Well Network was one of 106 ACOs chosen to participate in the Medicare ACO shared-savings program this past January.
Health systems that are forging partnerships with retail chains such as Walgreen and CVS Caremark see another advantage in the linkups: access to capital. “All these changes we're talking about, none of them are free,” Smythe said. “They have the resources to make investments in technology and systems that are hard for health systems to make. They bring resources to the table that, frankly, we need.” Walgreen's 8,100 stores racked up sales of $18.7 billion in the second quarter.
Physician critics of storefront medicine worry that it's really financial pressure, not a desire to deliver better care, that is driving retailers' push into their field. Dr. Jaan Sidorov, a primary-care physician and independent healthcare consultant, wrote a post in the “Disease Management Care Blog” that said the publicly traded companies are looking to aid their bottom lines by having salaried nurse practitioners pushing more prescriptions to offset its narrowing margins as more drugs go generic. “Ultimately, I think Walgreens is all about selling drugs,” Sidorov said in an interview with Modern Healthcare. “Walgreens, CVS and the other retail drugstores are perilously close to the bad karma that big pharma has.”
Walgreen is actively moving to dispel those suspicions. In addition to developing ACOs, the firm has developed “centers of excellence” that have improved patient compliance with medication regimens. That should improve patient outcomes, reduce hospital admissions, readmissions and emergency department visits, and—yes—sell more prescriptions in the process. “It's a win-win-win scenario,” Kang said. “Patient outcomes are better, we're getting more prescriptions and, from a payer perspective, their total cost of care is lower.”