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CACDS sizes up challenges of changing business model
November 19th, 2012
by Alasdair McKichan
TORONTO – Adding new services to an established business model, as community pharmacy is now in the process of accomplishing, is challenging but it can be done profitably, said Steve Wilton, vice president of pharmacy affairs at the Canadian Association of Chain Drug Stores, at CACDS’ annual conference.
Wilton used as examples of manufacturing companies that had successfully added substantial service functions such well-known names as General Electric, Caterpillar, Otis and, in the technology sector, IBM, Dell and Intel.
Success in the process was impacted by such issues as: the economic potential of the services; the scope of the organization’s current competencies, and the need to define and deploy a successful service strategy.
In the implementation process the role of employees was an especially critical link. It was usually necessary to revamp recruiting and training; refine and clearly define roles for all staff involved in the service delivery; link compensation to performance for employees at all levels; deploy technology that supports frontline workers; and recognize that management leadership is essential and capabilities are different.
Pharmacy is moving from a business model that has been mainly transaction based to one that is primarily relationship based. That shift requires significant changes, such as the following:
• Structures and processes that ensure efficiency, quality, delivery time.
• Staff capabilities that extend well beyond clinical competency.
• Incentives that are consistent with health care professional status.
• Metrics and targets that enable management to evaluate success or failure in achieving goals.
In the early 2000s Walgreens faced a number of significant changes in its competitive environment. Mass merchandisers made dramatic cuts to generic prices. Employers began to mandate mail order. CVS merged with Caremark to provide a more comprehensive offering to insurers and employers. Walgreens’ response, Wilton suggested, provided some precedents for Canadian pharmacies in 2012.
Walgreens’ expanded service strategy included the following:
• Leveraged services for insurers via in-depth, multisession counselling for chronic disease patients.
• Blood pressure, cholesterol and A1c testing at over 1,600 pharmacies.
• Walk-in Take Care Health Services clinics in over 350 store locations to deal with customers’ minor ailments.
• “Well Cared For” initiative introduced to strengthen employee engagement.
A recent analysis by Cubic Health of Canadian of diabetes patients within their private plan database revealed that there was a serious disconnect between patient behavior and the regimens they should be following. For instance, nearly one-third were taking neither kidney protective BOP-lowering medication nor cholesterol-lowering medication.
Community pharmacy should develop service-based partnerships with brand pharma and private payers to support optimal health outcomes while ensuring economic sustainability.