The Role of Retail in Revolutionizing Health Care, Part VI

In this last of a six-part series, Dave Nazaruk, senior vice president, retail business development for StayWell/MediMedia USA, continues his exploration of the role of retail in revolutionizing health care and the economy.

Previous articles in this series on the retail industry’s impact on the health care system examined consumer Touch Points that position food and drug retailers as unique in the health care delivery system to transform how we think about health and wellness, and explored the opportunities to leverage retail’s influence to engage consumers to adopt healthier lifestyles, particularly in the critical areas of nutrition/obesity and medication adherence. This final article will focus on funding options for creating a broad-based population health management solution through the retail sector and also issue a call to action to the industry to provide more vigorous leadership in the current health care reform debate.

Funding the Solution
Potential channels for funding the development and deployment of any retail industry-led consumer health management solution include:
• Manufacturers: New and redirected marketing spend — including monies currently going to eHealth site advertising — from supplier-partners eager to reach more highly targeted consumer health-seeker populations.
• The American Recovery and Reinvestment Act: A portion of the stimulus package is dedicated to health information technology (HIT), much of which can be standardized and widely promoted by the retail sector.
• Retailers themselves: This component could be achieved not necessarily through new cost outlays but instead by intelligent redirection of current investment in:
    — Health benefits, specifically cost reductions resulting from employee and beneficiary utilization of the solution.
    — Marketing spend, with redeployment of a portion of traditional mass-marketing tactics to the more highly targeted vehicles that an electronic, data-driven solution provides.
• Consumers: The model pioneered in the ’80s by Price Club — now Costco — could potentially be adapted by retailers to offer their most health-conscious shoppers enhanced savings and benefits on health-related products and services in exchange for a small upfront membership fee. Consumers have widely embraced the warehouse club concept, understanding the quid pro quo of larger savings they’ll achieve for their initial $40 to $50 annual club membership investment; and millions of them also routinely pay significant monthly or annual fees for membership in health clubs and online and offline health and weight management centers (Weight Watchers, Jenny Craig, etc.).

Could a significant percentage of health-seeking consumers be similarly motivated to pay a nominal enrollment fee (say, $20/year) for the promise of bonus rewards points or additional savings on health-related products? Or even be willing to pay more (perhaps $5/month) for a Platinum Health Rewards offering that also delivers increased savings on prescription medications as well as advanced online personal weight and health management instruction, meal planning, trackers, and other tools similar to those provided by companies such as Weight Watchers and various eHealth sites?

The stimulus package recently passed by Congress commits $20.8 billion for improved health information technology. A well-designed retail-based consumer health initiative could be eligible for funding consideration, delivering as it can the following:
• Consumer Education and Awareness Programs: Personalized for and targeted to the individual consumer, and provided with the frequency and in the electronic format of the consumer’s own choosing (online, e-mail, text to mobile device, voice, etc.).
• Personal Health Records (PHRs): Retail is uniquely positioned to drive availability and utilization of PHRs by a wide segment of the population and to incorporate data-driven capabilities that enable, among other benefits, superior prescription drug management and weight management tools for patients and their providers.
• E-prescribing: Promotion and standardization of e-prescribing capabilities will result in the vast cost efficiencies and reduced medication errors envisioned by more widespread adoption, and retail pharmacy is the commercial hub through which this initiative can be most effectively driven.
• Electronic Medical Records: Retail — through pharmacy and the growing retail clinic segment (including increasing partnerships with health systems a la the Wal-Mart model) — has the greatest throughput and commercial incentive to drive connectivity across the health care continuum.

Retail — or at least retail pharmacy — has already begun staking a claim for involvement in the development and potential funding of HIT components it touches upon. In a statement about the stimulus package, the Healthcare Distribution Management Association said:

“Needed and appropriate investments in prevention and wellness programs, health IT, electronic health records, e-prescribing and interoperability will improve quality of care, reduce costs, decrease or eliminate medical errors, and enhance information about the use of pharmaceuticals.”

Likewise, in the “Principles of Healthcare Reform,” issued by a pharmacy-related coalition including FMI, NACDS, NCPA and AphA, is the assertion that reform efforts should:

“… provide pharmacists electronic access to critical patient health care information, including diagnosis and laboratory values. This information must be provided through an interoperable electronic health record system, including electronic prescribing, that supports multidirectional communications among various health care providers and settings.”

Finally, the National Council for Prescription Drug Programs (NCPDP) stated the case for its members thus:

“Pharmacists and pharmacies will play a greater role in improving continuity of patient care and, therefore, medication adherence and outcomes . . . NCPDP is expanding its activities to support these goals by engaging its members and other stakeholders in removing barriers, enhancing system interoperability and developing the standards needed to support the patient-centered pharmacy care model of the 21st century.”

Only a fraction of the full $20.8 billion — especially when coupled with the vendor and retailer support mentioned above — would fund an industrywide initiative, enabling retail to become the vital change agent alluded to throughout this series.

Call to Action
The case has been made throughout this series of articles that the solution to revitalizing health care, consumer health and wellness, the economy as a whole, and retailing in particular can be found in the retail sector itself. However, it will require a solid majority of the players in that sector, if not the entire sector, to come together in an unprecedentedly cohesive fashion to develop and deploy a unified vision and strategy that temporarily sets aside short-term competitive issues for the longer-term collective good.

Independent and chain drug, supermarket and mass/club retailers, working in concert through the various trade associations (FMI, NACDS, NCPA, GMDC, etc.), supplier partners, wholesalers, and other buying groups [m] the sum of the parts of the retail industry truly being greater than the whole [m] would produce even faster and more stunning results, assuming competitive issues can be resolved to accomplish this greater good.

In spite of the fact that food and drug retailers are far and away the most accessible and frequented health care venue for Americans, somehow the perception of retail as a critical component of the overall delivery system is below practically every other part of the system in the minds of consumers, lawmakers and even the health care industry itself — even though few other hubs approach the economic clout of the overall food/pharmacy industry ($893 billion for just the 75 largest retailers), nor do they have anywhere near the active role, with quantifiable health outcomes, in consumers’ lives that retail can boast.

The retail industry clearly recognizes its potential and economic prominence, and has signaled — through its various trade associations — a strong desire to insert itself into the process, as demonstrated in the following statement from NACDS’ “2008-2009 Chain Pharmacy Industry Profile”:

“In the ‘NACDS Principles of Healthcare Reform,’ the Association highlights a logical case for pharmacy’s vital role in the healthcare delivery system, and describes its view of essential components for any healthcare reform initiative. Using chronic care as an example, the white paper lays out the following case: In addition to its dramatic human costs, chronic disease is responsible for the vast majority of healthcare spending. Pharmacist-provided care can improve outcomes for patients with chronic disease, and reduce costs. Therefore, public policy strategies should incorporate the value of pharmacy, and certainly should not jeopardize the viability or accessibility of pharmacies.

Regarding the NACDS economic analysis, the total economic impact of retail stores with pharmacies reaches well beyond their $827 billion in annual sales. In fact, based on an analysis by NACDS, retail stores with pharmacies have a total annual economic impact of $2.42 trillion, based on 2007 data. That is the equivalent of approximately 17 percent of the gross domestic product. Every $1 spent in these stores creates a ripple effect of $2.93 throughout other segments of the economy. However, public policy — such as pharmacy reimbursement models for government programs that reimburse pharmacies at less than their cost for some drugs — can jeopardize the ability of pharmacies to perform their vital role in health care delivery, as well as their ability to help drive the economy.”

To read Parts I to V in this series, visit PG article 1, PG article 2, PG article 3, PG article 4 and PG article 5. To download a comprehensive White Paper on this topic from Nazaruk, visit Get Role of Retail in Revolutionizing Health Care White Paper.

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