Walmart/Humana: 21st century retailing grounded in 18th century economics
WHAT IT MEANS AND WHY IT'S IMPORTANT — "It is not from the benevolence of the patient, the pharmacist or the payer that we expect our better health, but from their regard to their own self interest." While the somewhat-modified quote is ascribable to Adam Smith, an 18th-century economist credited with the invisible hand theory, the principle holds true: Solutions developed as a part of commerce are both more efficient and more sustainable because they benefit all involved. The patient gets cheaper goods and an incentive to shop healthy; Walmart gets a loyal base of patients/shoppers with the opportunity to sell more goods to them; and Humana gets a healthier group of covered patients that, if this deal delivers a tangible lowered healthcare cost, could cement a place for retail pharmacy as a core pillar in any healthcare offering.
(THE NEWS: Walmart forges new pathway to wellness, challenges others to follow. For the full story, click here.)
This may be a groundbreaking deal between a national retailer and a national healthcare company in both its scope and reach, but retail pharmacy market solutions driving patients toward better healthcare solutions already are out there. And you don't have to look too hard to find them. Immunizations and the evolution of the retail clinic model are ready examples. And loyalty cards across the three largest retail pharmacies could be another prime example.
In fact, if the Walmart/Humana deal looks promising, it's those loyalty card programs across CVS, Rite Aid and Walgreens that will be drawing plenty of looks from other insurers, if they haven't already. With CVS and Rite Aid you have established programs that collectively engage 95 million active cardholders. You have 15 years of consumer data with CVS' ExtraCare card and two years of data with Rite Aid's Wellness Plus. And while Walgreens is relatively new to the loyalty card scene, its Balance Rewards loyalty program launched just last week, the company has been piloting loyalty programs over the past several years.
And while these retail pharmacies aren't in the supermarket business — technically speaking, Walgreens is certainly making the case for fresh food and better food offerings across its Well Experience and food oasis stores — they are in the healthcare business and may be better able to drive those tangible outcomes through improved compliance/adherence to drug regimens and established disease-state management programs. Walgreens and Rite Aid are already fielding healthcare advocates in the aisles to help patients access the healthcare information they need on the spot, either through their tablets or by pulling the pharmacist into the conversation. For that matter, so is regional operator Pharmaca, which also fields a loyalty card program, by the way.
You might even call it "The Retailization of Health Care." We did, in fact, call it just that. It's the cover story for DSN's Aug. 27 issue, penned by Jim Frederick, and it's a good read with pull-outs on how healthcare retailer MaxWellness is actively partnering with hospitals or how Sam's Club is driving patient value through its optical care business. Frederick outlines several not-so-invisible market forces that are driving healthcare insurers in search of those more efficient, more sustainable solutions.
It's the future of pharmacy retailing as we see it. Do you agree?