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Walgreens uses employer-centric model to lower health care costs

Editor’s note: As lawmakers grapple with the complex issue of health care reform, employers must be aware of the health options available to them. The following article outlines a potential solution for restaurant operators. It first appeared in NRN’s sister publication Drug Store News.

The health care reform debate has reached a crescendo in Washington, D.C., as Congress and the Obama Administration wrangle over cost and coverage issues.

But whatever health care system emerges from that dispute, Walgreen Co. isn’t waiting. With a network of community pharmacies and a growing arsenal of health care operations in areas like specialty pharmacy, home infusion and workplace clinics, Walgreens is reinventing itself as an integrated, cost-effective health and wellness solution for the nation’s employer-funded health plans.

Walgreens’ approximately 8,000 points of care are becoming increasingly attractive options for big health care payers looking to lower costs and improve the health outcomes of their employees, company officials say.

Walgreens growing list of U.S. employer clients—which includes Disney, Tyson, Harrah’s and Caterpillar—numbers more than 185 companies and more than 375 worksite-based health centers.

“We’re pioneering new approaches to achieve better health care outcomes,” said Walgreens’ president and chief executive, Greg Wasson. Those new approaches “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.”

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 health care system whose costs are reaching “unsustainable” levels, Wasson said.

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

Walgreens’ big corporate customers certainly are not waiting around for health reform, said Peter Hotz, president of Walgreens’ Take Care Employers Solutions division.

While the concept of worksite-based healthcare goes back to the 1930s and 1940s, the model has come a long way in that time, Hotz said. “As business evolved, the nature of workplace health…has gone from a risk-management focus to a medical-management focus—which means taking care of people when they’re sick as well as helping them navigate the health care system. Now it’s really more of a population health management focus, where you are not just taking care of people when they are sick, but also trying to help keep them healthy.”

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

One way to cut health care costs for big companies like Disney that cover much of the health care outlays for thousands of employees, Wasson said, is for the company’s community, specialty and health center pharmacists to work with those employees to improve their compliance with their prescription drug therapy.

“We’ve got to be able to show we can improve that compliance and save the medical system costs,” Wasson said.

Central to Walgreens’ mission to reduce costs and improve outcomes for big health-care payers will be its ability to integrate its community, specialty and employer-based pharmacies and clinical-care capabilities. To that end, the company unveiled a major new initiative early this year 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 on employer campuses and worksites.

Several employers appear to be embracing the concept. Disney, for instance, hosts a massive, Walgreens-operated healthcare center and exercise facility for Disney World employees in Orlando, Fla. In Las Vegas Harrah’s offers a similar worksite center for casino and hospitality employees.

Health reform efforts notwithstanding, partnerships between employers and health and pharmacy providers like Walgreens are likely to grow as the search for ways to defray mounting health costs intensifies. Caterpillar Inc. recently contracted with Walgreens in a long-term arrangement that will bring transparent prescription drug pricing to the company. The deal is expected to lower drug costs and reduce out-of-pocket expenses for its 70,000 employees by offering many commonly prescribed generic medicines at no co-pay to Caterpillar’s health plan members.

Separately, Walgreens said it also would provide Caterpillar health plan members a “significant” discount on all Walgreens branded and nonbranded products. Both programs will be effective Jan. 1, 2010.

The partnership is drawing interest from health industry experts. “Directly aligning pharmacies and plan sponsors enables both parties to accomplish their economic goals without sacrificing the quality of pharmacy services,” said Josh Bellamy, Pharm.D., who is president and chief executive of HealthStrategy, LLC, a business services and consulting firm. “It not only saves companies money, but it also removes the ambiguity often associated with drug pricing.”

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