Walgreens Doubles Down on Health

My far-flung family has a reunion ever year between Christmas and New Years. This year, I put my pictures of everyone on Flickr for all to enjoy. When a cousin from North Carolina called asking how to get prints, I went straight to the Walgreens website. I uploaded the pics she wanted and ordered them to be printed at the Wilmington, NC location nearest her home. Next day, she picked them up – easy as pie. In fact, picking up prints has been the main reason I go to Walgreens.

For several years, drug stores have been adding categories and items in an effort to address consumers’ need for convenience and find add-on sales. Processed food, photo finishing, and office supplies arguably dilute these stores’ focus on health.

As the Chicago Sun Times reported last month, Walgreens seems to be going in a different direction. Two important moves the company made in 2007 to begin the company's shift to more clearly meeting the health needs of the communities it serves accelerated in 2008: the Prescription Savings Club and Take Care Health Systems convenient care clinics.

In late 2007, the company launched its Prescription Savings Club program to attract U.S. consumers seeking cheaper medicines. The program includes smart moves like offering to print out for consumers the price comparison on their specific prescriptions for conditions like asthma, high blood pressure, or diabetes, and calculating the monthly savings in black and white.

Enrollment in the Prescription Savings Club costs $20 a year for an individual or $35 a year for families. The program appears to be a powerful tool for customer acquisition and retention. In 2008, Walgreens signed 1.5 million members to its prescription savings club program, about 30% of whom are new customers.

Walgreens’ acquisition of Take Care is another example of doubling down on health care for growth. The in-store clinics accept Medicaid and most insurance, and charge $60 to $80 in a typical visit to people with no insurance. Walgreens also is expanding its clinics that operate at company workplaces, like Disney World in Orlando and Harrah’s in Las Vegas. The company plans to add another 120 clinics by the end of August, bringing the combined total to 800.

To make room for more clinic and prescription services, like back-to-school physicals and vaccinations against shingles for seniors, the company is looking closely at its current assortment and dropping less health-related items like pliers and duct tape. As a result, we can expect Walgreens to clean up some of the scrambled merchandising that has become commonplace in drugstore aisles. And that will be a welcome relief.

Selfishly, I hope the photo processing services pencil out, too.

What Healthcare Can Learn from Multichannel Retail

In the ‘80s I was part of a team of consultants that explored retail healthcare concepts for a client. The idea was to evaluate the market for healthcare services and identify situations where consumers would be willing to visit a self-contained clinic to have their medical needs addressed. We showed back then that health care delivery was broken, and that market innovators could provide breakthroughs in the health care delivery experience profitably.

Launched in the early ‘80s, Urgent Care Centers came of age in the ‘90s. These centers are a response to the long times patients typically have to wait to get an appointment at traditional medical practices, and their emphasis on convenient,"good-enough" care makes them an alternative to hospital emergency departments. They fill a need and spawned other health care service delivery innovations.

In-store retail clinics appeared in 2000. Typically staffed by nurse practitioners, these clinics provide diagnoses and prescriptions on a walk-in basis. They repackage medical services available in traditional physicians' office. The core of the concept is a limited range of "get well" medical services, such as allergy or flu relief, which account for the bulk of these clinics' revenue, demand and profitability though they also treat patients who have uncomplicated minor conditions, such as bronchitis and ear, urinary tract, or sinus infections. According to a July '06 report prepared for the California HealthCare Foundation, retail clinics proliferated rapidly, and were forecast to total more than 1,500 by the end of 2008. The market has been largely driven by small start-up chains, such as MinuteClinic, RediClinic and Take Care Health Systems, which run the outlets under agreements with retailers and have had few formal ties to the medical establishment.

As reported in June ’08 on Nurse.com, “Even if we are not in-network with a particular insurance company, the choice is there for a $59 out-of-pocket expense compared to a co-pay of $75 to $100 for an Emergency Doctor visit, where you may have to wait for hours to be seen for an ear infection,” says Anne Pohnert, RN, MSN, FNP, manager of operations for MinuteClinic in Northern Virginia and Washington, D.C. The affordability and convenience of these clinics encourage patients to receive care early, which promotes early treatment and better outcomes.

According to the Convenience Care Association’s 2007 research, in-store and other types of convenience clinics have a 98% patient satisfaction rate. In contrast, patients do not rate hospital care as highly. Business Week reported late last month on research by the Harvard School of Public Health that found only 67% of patients said they would recommend the hospital where they were treated. According to the researchers, “part of the onus is on patients to improve care: Patients need to be proactive -- ask questions. The more engaged patients are, the better the care they will receive and the better the care all of us will receive, because they will drive the change for better systems of health care."

Patients are indeed becoming more assertive about their own care as health costs shift to consumers. It’s clear that different needs are best addressed in different settings – in our family alone, we’ve been to the ER when our daughter broke her leg skiing and when she hyperextended her elbow playing softball. We’ve gone to an urgicenter when my son got a spider bite on his eyelid while we were on vacation. We’ve gotten flu shots at our local Long’s pharmacy.

As healthcare consumers, we all want options that work in respectful, convenient and qualified settings. Specialty retailers like Williams-Sonoma, Patagonia and Lands' End learned long ago that their best customers were multichannel buyers – that is, they shop the brand in their own stores, online, through catalogs, and through their channel partners.

Multichannel healthcare is part of the answer to today's high-cost, broken health care delivery system. Look for savvy providers and insurers to follow retailers’ lead and find ways to offer their patients a variety of experience alternatives and care in a variety of settings.