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Deliotte report trumpets possible convergence

Retail pharmacies, DM

Deliotte report trumpets possible convergence

A relatively new healthcare player may have a future in disease management (DM), according to a recent Deliotte Center for Health Solutions report.

Retail pharmacies (also called retail clinics) have grown from a handful of locations to more than 1,000 in a mere three years. Supporters praise the clinics’ convenience of care and lower overhead costs compared to physician offices, and Deliotte suggested the clinics’ future may see them going beyond basic acute care.

In its report Disease Management and Retail Pharmacies: A Convergence Opportunity, Deliotte predicted that retail pharmacies may expand their offerings to DM. The authors noted that the convergence makes sense because retail pharmacies are conveniently located, offer extended hours, sell pharmaceuticals and health products, and enjoy brand-name recognition.

Paul Keckley, PhD, executive director at Washington, DC–based Deliotte, says the movement toward retail pharmacies is a switch from the old ways of offering health services. “If you think of organized medicine as Marcus Welby, that’s probably not the reality going forward,” Keckley says.

Patient self-care is a critical component of DM. For those with chronic illness, retail pharmacies will provide greater flexibility to see a healthcare provider at a retail clinic, the authors suggested.

Nearly 40% of the U.S. adult population has one or more chronic diseases. Yet less than half of those Americans are enrolled in a DM program that tackles chronic illnesses such as asthma, diabetes, congestive heart failure, chronic obstructive pulmonary disease, and coronary artery disease.

Retail pharmacies could also see DM as an opportunity to cross-sell and expand their reach as trusted health information advisors. “Conceivably, it has the potential to create a comprehensive local primary care health system alternative to traditional physician-owned entities. Health plans, employers, and consumers likely will be receptive; the challenge will be the development of appropriate relationships with hospitals and specialists and the fierce public relations battle traditional defenders of primary care are likely to wage,” the researchers wrote.

In its report, Deliotte said two forces will drive the DM/retail pharmacy convergence:

  • Consumers will use DM services at clinics because they are convenient and can provide the services without making major capital investments
  • Health plans and Medicare will pay pharmacies for DM services that result in improved patient care and lower costs

Major national pharmacy chains, such as Walgreens, Longs, and CVS, have enough capital to invest in DM, the most notable investment being information technology (IT) platforms that will help clinics implement electronic medical records, according to the authors.

Future of DM?

More than 160 independent providers offer DM services, and the U.S. DM market is expected to reach $30 billion by 2013, given the nation’s aging population, bulging healthcare costs, and increased rates of chronic illness.

Deliotte wrote that DM’s current business model faces challenges in scalability. Patients are disinterested in voluntarily enrolling in the programs, some coaches have trouble engaging patients, and physicians are not involved in the programs.

The following trends will make DM services more popular, according to Deliotte:

  • Greater use of care management technologies that connect patients with providers
  • Increased awareness of medication management
  • Desire to reduce costs
  • Primary care physician shortages, coupled with more retail pharmacies
  • Hospitals moving to care management organizations
  • Health plans offering more DM programs
  • Increased consumer demand
  • Greater government support for effective DM services

Payers see clinics as a less costly care setting. Keckley says 40% of primary care visits are not for physical care, but for services such as prescription refills. There are more effective ways to refill prescriptions and utilize physicians’ time—and retail pharmacies are one option.

Tine Hansen-Turton, executive director of the Convenient Care Association in Philadelphia, says retail pharmacies already partner with providers and health plans, adding that managed care companies appreciate retail clinics because they see their value and lower costs. In fact, a recent Health Partners study reported that the average retail clinic visit costs $75, whereas a trip to the physician’s office costs $127, and an emergency room visit costs $345.

Since the first clinics entered the scene a mere three years ago, the retail pharmacy market has exploded, despite some concerns raised by primary care physicians and some government officials. That resistance has not stopped the momentum. Convenient Care Association, which represents organizations that operate more than 950 clinics in 28 states, has seen the market swell from about 150 retail pharmacies to more than 1,000 in two years, says Hansen-Turton. “From my perspective, it’s about convenience, and it’s easy, accessible, and affordable care,” she says.

Take Care

Take Care Health Systems has been running retail clinics since November 2005 and was purchased by Walgreens Pharmacies in 2007. It has grown from 50 branches, when Walgreens purchased the company, to about 250 clinics within Walgreens stores. Take Care has treated more than 675,000 patients during its three years of operation.

The Conshohocken, PA–based company has already begun the move toward DM services. Sandra Festa Ryan, RN, MSN, CPNP, chief nurse practitioner officer at Take Care, says retail pharmacies offer more than just acute services.

Take Care now provides preventive risk assessments and services, which seek to find people at risk for obesity, diabetes, and heart disease. Take Care nurse practitioners refer at-risk patients to local physicians.

Festa Ryan says these preventive services are an initial step to offering chronic disease programs. “It really is the direction that we need to go to provide more disease management and evaluation and treatment of illnesses,” she says, adding that retail clinics enjoy “high frequency of touch points” and nurse practitioners are able to offer more disease prevention and health promotion than physicians who are stretched for time.

“We’re open evenings and weekends. Because we have longer hours [than physicians’ offices] and we’re a walk-in, we have access points that didn’t exist. The convenience part is what really is driving the patient,” says Festa Ryan.

Deliotte wrote that retail pharmacies will need to offer new technological care coordination innovations, because the current DM operating model is labor-intensive and nonscalable. Keckley says the emergence of retail pharmacies, coupled with electronic medical records and personal health records, allows for lower costs and quicker solutions to DM.

Retail pharmacies will have to build some of that infrastructure, including health coaches, call centers, and algorithms that predict readiness to change. “There’s an IT infrastructure that can make population-based care management more effective than some of the current models because they’re not dependent on claims data,” says Keckley.

Festa Ryan says Take Care already has an electronic platform that includes an electronic medical record tracking mechanism to ensure that patients are receiving the proper care. Having an advanced computer platform will allow retail pharmacies to track how their large patient populations are progressing.

“From an IT perspective, to go into chronic disease management, it’s going to take some innovative thinking as to how to track and trend things. But what it’s going to give you is a lot of information for outcomes studies, so you’ll be able to show significantly if you get into disease management how you have really changed and improved health,” says Festa Ryan.

DM for the uninsured

Festa Ryan says about 30% of Take Care’s customers don’t have health insurance, and another 30% don’t have primary care physicians. Studies have found that these factors make a major difference in a person’s health. Festa Ryan says retail pharmacies have an opportunity to help uninsured Americans, particularly those with chronic disease.

“There’s a whole population out there that are not receiving any guidance as to what to do and how to improve their lifestyles. It’s an absolute opportunity,” Festa Ryan says.

Although there is momentum, there is also the issue of reimbursement. Similar to how primary care physicians expect a care coordination fee for overseeing a patient’s care via the medical home model, reimbursement models would need to incorporate payment for the time retail clinics spend offering DM services.

A RAND study published in the September/October Health Affairs noted that the payment models have already changed for retail clinics. Whereas most patients originally paid out of pocket at clinics, health insurers, including Medicare and Medicaid, are now paying for visits to retail pharmacies. In fact, 67% of retail clinic visits are paid by insurance, compared to 90% of primary care physician visits. For example, Take Care receives payment from private insurance plans Blue Cross Blue Shield, Aetna, CIGNA, Coventry, Great West, Humana, MultiPlan, UnitedHealthcare, and WellPoint.

“Reimbursement for disease management services likely will be accepted by commercial plans and tested by Medicare via pilot programs,” wrote the report’s authors.

Festa Ryan says Walgreens, between its pharmacies, retail clinics, and worksite facilities, has 7,000 points of entry into healthcare. The company hopes to increase that number to 10,000 points of entry by 2012 and make Walgreens “a healthcare destination.”

“It’s really going to be a real phenomenal shift when you see that all evolve,” Festa Ryan says.