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 / Spring 2010 / Issue 58(originally published by Booz & Company)


The Pharmacy Solution

As these barriers recede, the pharmacy could occupy several positions within the evolving health-care system to become a more valuable and integral player.

Strategies for Pharmacies

As pharmacy companies plan for the future, they will need to first choose between two approaches for serving different patient segments consistently. The first is to build retail health centers that focus on healthy and at-risk individuals and that deliver a range of health and wellness services, such as health risk assessments, counseling, smoking cessation programs, and ongoing tracking of risk factors. This health maintenance function could be executed in partnership with employers and government payors that seek to manage the health of large populations. This approach could also expand into the adjacent domains of nutrition and weight management, well-being, and beauty products and services. Consumer products companies could partner with pharmacies to deliver compelling value propositions in this sphere.

A large retail footprint, trusted patient–pharmacist relationships, and in-house trained clinicians are the key assets in this approach. Our analysis shows that pharmacies equipped with retail clinics could handle health issues that would otherwise be responsible for up to 10 percent of physician and emergency room visits.

The second approach is to concentrate on compliance and comprehensive disease management for the chronically ill. This population continues to grow, and more people are being forced to deal with multiple chronic conditions. Disease management (DM) companies are tackling the issue head on, but their efforts have not been fully satisfactory for the public or commercial payors. (Medicare, for example, has canceled its DM demonstration programs, and more commercial payors are bringing the DM function in-house.) Once again, the pharmacy is well positioned to tackle this issue, offering face-to-face interaction with a trusted clinician instead of the phone-based intervention used by disease management companies. Starting with compliance programs and expanding into medication therapy management and disease management, pharmacies could help payors keep their chronically ill populations from becoming sicker.

The magnitude of this issue is difficult to overestimate. Diabetes — a debilitating chronic illness with an annual cost to the economy of $174 billion — has a medication compliance rate of less than 50 percent. Addressing it would benefit everyone: patients, payors, pharmacies, and pharmaceutical manufacturers. Patients would receive better and more consistent care and greater support for staying on prescribed treatments. Offering more services would allow the pharmacy to address the seasonality issue that makes retail clinics unprofitable today. Finally, targeting patients with counseling, disease management, and compliance programs could drive greater market share and customer retention.

Once each pharmacy company has determined the patient segment on which it wants to focus, it will need to determine the extent to which it will integrate into the health-care system. We see the emergence of two potential models.

The first model is to create a shadow, or parallel, network, in which some pharmacy companies would string together a cohesive set of retail- and employer-based sites in which they offer a range of products and services, providing shorter wait times for individuals and lower costs of care for employers. This network would be independent of the traditional care-delivery system, relying on the conventional system for prescriptions but seeking to replace it for a subset of patients with limited health needs. Walgreens, for example, is attempting to create its own health-care network, delivering care in Walgreens stores, at the employer site, at home, or even inside a hospital.

The second model is for pharmacy companies to move toward more integration with the existing system, rather than operating in parallel with it. Given adequate physician support, a hybrid network could emerge, with pharmacies serving as accessible retail outposts for large health-care systems. In this role, pharmacies would perform a triage function, offering basic care to some and referring the rest to their primary care physician or specialists. Making use of the EMR network, the process would be seamless for the patient. As the pharmacy generates traffic for physicians via referrals, health systems would generate traffic for the pharmacy by directing their low-acuity emergency room patients there for quick, high-quality, cost-effective service. Walmart, always a company to watch, appears to be moving in this direction, having defined its niche and contracted with local hospital networks. Its commitment to integrated care can also be seen in its recent move to provide electronic medical record software to physician practices.

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