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As the start of a new year approaches, long-standing trends are raising the stakes for big pharmacy operators and other companies with the ambition to re-engineer a health care system plagued by chronic issues of access, quality and cost. With economic and labor challenges continuing to mount, new paradigms for delivering patient care and remunerating providers are being put to the test. How well the new models perform will go a long way toward determining the future direction of those organizations and, perhaps, the health care system as a whole.
Already far and away the highest in the world, health care costs in the U.S. continue to surge. A report on employer-sponsored health benefits released in October by KFF found that the average annual premium for family coverage reached $23,968 in 2023, up from $19,626 five years ago. The growing drain on resources is a problem for both companies and workers.
In a separate statement last month, KFF pointed out that the burden is particularly acute at employers with less than 200 workers. Among that group of companies, which employs almost 50 million Americans, the average health insurance premium for a family was $23,621, with workers expected to cover $8,334 of that total. As a result, many families are priced out of the employer-based insurance market. “There are two health care cost crises in America: national health spending and its impact on the country, and this one, affordability and its impact on the American people,” says KFF president and chief executive officer Drew Altman.
Rising costs are also a problem for big companies. In a recent report on notable trends for 2024, the Business Group on Health, whose membership includes Walmart, Kroger and Unilever, indicates that large businesses are more vigilant than ever about increasing health care expenditures. “We live in a complex and interconnected world, and diverse factors impact employers as they seek to evolve benefit offerings for their workforces,” says Ellen Kelsay, president and CEO of the organization. “It will be increasingly important for their vendor partners to deliver in light of heightened expectations and accountability. Staying ahead of these trends will be paramount.”
The financial problems are exacerbated by challenges in the health care workforce. A study conducted by the Association of Medical Colleges in 2021 projected a shortage of 17,800 to 48,000 primary care doctors in the U.S. by 2034. Many patients already encounter significant wait times when they need to see a physician, resulting in unnecessary discomfort and, in many instances, deteriorating health. In addition, discontent among health care workers, who were pressed to the limit during the COVID pandemic, is on the rise, with some deciding to leave their profession due to burnout.
The confluence of those developments, along with other factors, make the health care system, as it is presently constituted, more and more untenable. The situation calls for bold action. Major pharmacy chains are among the entities striving to come up with innovative solutions for improving the health and well-being of Americans, while, at the same time, bending the cost curve. CVS Health and Walgreens Boots Alliance are involved in the delivery of primary care. Walmart has announced plans to add to its roster of health centers — which, in addition to primary care, offer X-ray and lab tests, dentistry, and behavioral health services. Kroger is advocating the concept of food as medicine, highlighting the link between proper nutrition and maintaining an individual’s health and well-being.
The potential for converting retail pharmacies, which are located within five miles of more than 90% of the population, into true neighborhood health care centers is clear. In order for that to happen, the industry must first succeed in shoring up the financial underpinnings of its existing business, even as they branch out into primary care and related fields.
The first order of business is to secure meaningful reform of the pharmacy benefits management sector, which for decades has exerted relentless downward pressure on reimbursements and taken advantage of provisions for DIR (direct and indirect remuneration) fees under Medicare. Aggressive advocacy by pharmacy proponents has been noticed by legislators. New laws regulating PBMs have been enacted in 27 states this year, and similar legislation appears to be gaining traction in Congress; in addition, the Federal Trade Commission is conducting an investigation of PBMs’ business practices. Victory on the PBM front is essential if pharmacies are to succeed in leveraging their traditional strengths — ease of access, trust, efficiency — in primary care and other aspects of health care.
Pharmacists in jurisdictions with liberal scope of practice rules have already demonstrated their ability to take on duties — including immunizations, routine diagnostic testing and prescribing — once restricted to the doctor’s office. Allowing members of the profession to practice at the top of their license across the country would represent an important step toward making health care more accessible and affordable.
That shift, together with the move by pharmacy operators beyond prescription drugs into other services, would go a long way toward easing troubling health disparities that are all too apparent and reining in spiraling costs. Delivering treatment at the lowest-cost point of care — without compromising on quality — represents one sure means of maximizing returns on the health care dollar by leveraging existing resources.
