Walgreens’ Healthcare Model

The healthcare reform debate has reached a crescendo in Washington as Congress and the Obama administration wrangle over cost and coverage issues. But Walgreen Co. isn’t waiting. Neither are the growing numbers of U.S. employers that are turning to the drug store and health services giant for help in dealing with their mounting employee healthcare costs.

For more and more of those major corporations—count The Walt Disney Co., Harrah’s and Caterpillar Inc. among them—Walgreens has come to mean a lot more than the drug store at the corner of Main Street. Armed with a national network of community pharmacies and a growing arsenal of healthcare operations in such areas as specialty pharmacy, home infusion and workplace clinics, Walgreens is reinventing itself as a fully integrated, cost-effective health and wellness solution for the nation’s employer-funded health plans. Taken together, these approximately 8,000 points of care are becoming increasingly attractive options for big healthcare payers looking to lower costs and improve the health outcomes of their employees.

Presently, Walgreens’ growing list of employer clients numbers more than 185 U.S. companies and more than 375 worksite-based health centers that take on a variety of forms.

“We’re pioneering new approaches to achieve better healthcare outcomes,” Greg Wasson, president and CEO, Walgreens, explained in a recent interview. Those new approaches, he said, “will integrate capabilities across all of our platforms, including pharmacies, retail clinics, call centers and mail service, to enable patients to better control their conditions.” And increasingly, Wasson noted, the company is “taking our expertise directly to employers’ campuses.”

Its message to the healthcare marketplace and managed-care community is that Walgreens—with its nearly 7,000 drug stores with pharmacies in all 50 states, roughly 400 Take Care in-store health clinics, the nation’s largest home-infusion and fourth-largest specialty pharmacy businesses, more than 100 hospital-based and health-center pharmacies, and hundreds of worksite health centers—can be a convenient, market-based solution for a fractured healthcare system whose costs are reaching, as Wasson put it, “unsustainable” levels.

“The sands are shifting in our industry because of health-care reform and changes taking place,” Wasson explained. “And the good thing is, when the sands do shift, it certainly causes uncertainty, but it also creates openings.”

Those openings create a huge opportunity for community pharmacists to step up and be recognized as a non-physician healthcare provider, according to Wasson.

With the health system in dire need of cost-saving reforms and family-practice physicians increasingly overwhelmed by patient loads, Walgreens is ideally suited to provide solutions, he asserted.

“There’s a shortage of primary-care physicians,” Wasson said. “Our community pharmacists and the other clinicians we employ, both in stores and on employers’ campuses, can play a big role in filling the gap in primary care, as well as lowering costs.”

One big way to cut healthcare costs for big companies such as Disney, which cover much of the healthcare outlays for thousands of employees, is for Walgreen’s community, specialty and health-center pharmacists to work with those employees to improve their compliance with their prescription drug therapy.

“Nearly 50% of patients on chronic medications are non-compliant in some form or fashion within four months of starting a new medication,” Wasson said. “We’ve got to be able to show we can indeed improve that compliance and save the medical system costs.”

Central to Walgreens’ mission to reduce costs and improve outcomes for companies that employ many workers will be its ability to integrate its community, specialty and employer-based pharmacies and clinical-care capabilities. To that end, the company has unveiled a major new initiative to bring together all its pharmacy and patient-care capabilities under a single service and marketing umbrella on behalf of employer-based health plan sponsors.

That program, called Complete Care and Well-Being, is an “employer-centric” pharmacy, health and wellness program that puts Walgreens pharmacies and Take Care health clinics directly on employer campuses and worksites. It is designed to reduce healthcare and prescription costs for employers across the country.

The program, according to Wasson, allows a ground-based approach with clinicians in the center, touching employees daily, and a clinician, nurse or pharmacist sitting across from them, connecting to whatever benefit design or structure they have in their current program, to make it much more effective.

“Our goal is to make this a one-patient, one-employer, one-employee view of Walgreens,” Wasson said. “We want the employer to understand that Walgreens can bring all these solutions to bear.”

Employers appear to be embracing that message. Disney, for instance, hosts a massive, Walgreens-operated healthcare center and exercise facility for Disney World employees in Orlando, Fla.

While on-site facilities can scale up or down depending on the scope of services provided, the number of employees covered and the general age of the employees, generally speaking, for every $1 a company invests in worksite-based health care the savings is anywhere from $2 to $4.

Partnerships between big employers and health and pharmacy providers such as Walgreens are likely to grow as the search for ways to defray mounting health costs intensifies. Most recently, Caterpillar contracted with Walgreens in a long-term arrangement that will offer the employer transparent prescription drug pricing. The deal is expected to lower drug costs for the world’s largest manufacturer of construction and mining equipment—and reduce out-of-pocket expenses for its 70,000 employees, as well, by offering many commonly prescribed generic medicines at no copay to the company’s health plan members.

The two companies also agreed to explore, through Walgreens’ Complete Care and Well-Being program, additional ways to extend integrated healthcare and pharmacy services to Caterpillar employees. Separately, Walgreens said it will also provide Caterpillar health plan members a “significant” discount on all Walgreens branded and non-branded products.