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Retail Healthcare: What Providers Can Learn

Healthcare Marketing And Physician Strategies Summit

April 14, 2015

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Our Speakers Today

• Mark Coughlin is a Partner with Capital HealthcarePlanning.

• He has over 25 years of experience assisting healthcareclients on a variety of issues and is an expert in developingcreative, yet practical solutions that balance strategic,operational, financial and facility issues. He draws on hisextensive consulting and provider experience to focussolutions that will result in sustainable change.

• Mr. Coughlin has an MBA from Angelo State University and aBS, International Affairs from Trinity University. Mr. Coughlinis a long-standing member of SHSMD and is a Fellow withthe American College of Healthcare Exectutives and is oftenasked to contribute to industry publications.

Mark Coughlin, FACHEPartner

Capital Healthcare Planningmcoughlin@caphcp.com

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Our Speakers Today

• Katie Lestan serves as Divisional Vice President for theHealth Systems segment of Walgreens Health and Wellness.

• She leads an organization that partners with health systems,physician groups and community health centers todemonstrate the value of Walgreens’ health and wellnesssolutions to improve patients and employees healthcarewhile improving outcomes and reducing costs.

• Previously, Ms. Lestan served as Regional VP of Sales forthe Midwest and Southeast. She began her career with ApriaHealthcare and Abbott Laboratories. Ms. Lestan earned herBS in Psychology from Central Michigan University.Katie Lestan

Divisional Vice PresidentWalgreens Co.

katie.lestan@walgreens.com

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Our Speakers Today

• Dr. Patrick Carroll is the Chief Medical Officer, HealthcareClinics where he oversees matters pertaining to provision ofcare, clinical outcomes, patient safety, healthcare informationsystems and strategic initiatives that enhance the care model.Dr. Carroll is instrumental in implementing caremanagement programs, managing relationships with healthsystems and collaborating with the Clinical Office in thedevelopment of clinical programs.

• Previously, Dr. Carroll served as CMO of Integrated CarePartners at Hartford HealthCare and Medical Director forHartford HealthCare’s Medicare Shared Savings Program.

• Dr. Carroll received degrees from the College of the Holy Crossand Dartmouth Medical School and completed residency atMiddlesex Hospital/University. He is board certified in FamilyPractice and Adolescent Medicine and was a practicing primarycare physician for 26 years.

Patrick H. Carroll, M.D.Chief Medical Officer,

Healthcare ClinicsWalgreens Co.

patrick.carroll@walgreens.com

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Agenda

• Industry Overview• Provider Approach to Ambulatory Development• Retail Approach to Patient Engagement• Changing Patient Behaviors• Lessons Learned and Wrap-up• Questions and Discussion

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Industry Overview

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What We Know About Reform

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Changing Care Patterns

Inpatient volume is largely stagnant and increasingly medical.Outpatient care is the fastest growing component of the U.S. healthcare system.

Outmigration of care is both a threat and the greatest opportunity to grow profitable services.

For providers, growth likely to come through diversification away from acute care

Inpatient volume is largely stagnant and increasingly medical.Outpatient care is the fastest growing component of the U.S. healthcare system.

Outmigration of care is both a threat and the greatest opportunity to grow profitable services.

For providers, growth likely to come through diversification away from acute care

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Future Drivers for Success

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Evolving Definition of Ambulatory

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Provider Approach to Ambulatory Development

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Key Questions Driving Ambulatory Development

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Creating Balanced Capacity

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Planning Success Factors

• Defining the Market• Market Prioritization• The Competitive Imperative• Integration with Physicians• Prioritization Framework• Competitor Analysis• Development of Standards and Prototypes

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Define the Market

• Defining the market for ambulatory issignificantly different than for a traditionalhospital service area

• Ambulatory should provide a distributedmodel of care that creates convenient accesspoints for patients that are close to home andwork

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Prioritize the Opportunities

• The historical lack of emphasison ambulatory meansmultiple opportunities forhospitals to pursue in themarket. For payers, the lack ofpresence on the providerside also presents multipleopportunities to improve enrollee service.

• These opportunities allow for:– Extension of geographies currently

served (broader access)– “Rounding out” the services in existing

markets (diversification along thecontinuum)

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The Competitive Imperative

• Populationmanagementcapabilities requirea significantinvestment– Moving before

the market is readywill impact returns

– Moving late canimpact success

• Time your investment correctly byassessing the likely speed ofdevelopment in your market area

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Integrate with Physicians

• For an ambulatory strategy to meet itsfull potential, it must be integrated with aphysician strategy so that the ancillariesoffered are balanced with the specialties

• Without this integration, there will eitherbe volume “leakage” or underutilization

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Prioritization Framework - Regional

• Short-term investmentsmay focus on maximizingreturns in a fee-for-serviceenvironment and alsoconsider the long-termneed to:– Balance capacity across

the continuum with theeventual demand of adefined population

– Provide geographic dispersionfor convenient and cost-effectiveaccess to the target populations

Example: Primary CareRegion 3 investment in PCPs should bevery different than Region 8

Example: Primary CareRegion 3 investment in PCPs should bevery different than Region 8

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Assess the Competition

• The competitive environment inambulatory is much more diverse andfluid, with competitors entering andexiting much more frequently

• New approaches, which include adegree of uncertainty, are necessary inorder to effectively monitor thecompetition

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Develop Standards & Prototypes

• The key ingredients of ambulatorysuccess include lower costs andmarket flexibility

• Developing model of care standardsand facility prototypes ensuresconsistent, efficient operations, reducesdevelopment time, enhances speed-to-market and promotes brand identity

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Implementation Considerations

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Implementation Considerations

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Executing the Ambulatory Strategy

• AmbulatoryNetwork Plan

• ServiceDeploymentStrategy

• OperationallyDriven Prototypes

• Optimal PatientCare Environment

• Flexible FacilityModels

• Operational &StrategicBenchmarks

• Business Planning• Lowest Cost of

Occupancy Analysis• Physician

Alignment Planning

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Framework for Ambulatory Care Prototype Development

Scalable, standard, well-thought out practice models thataccommodate most needs & provide for speed-to-market

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Provider Ambulatory Strategy & Design

Develop a comprehensive ambulatory network that:1. Supports growth of specialty services both for inpatients and outpatients2. Provides flexible, high-quality, and lower-cost platform to compete in fee-for-value environment3. Offers sufficient geographic coverage to participate in selective contracting with health plans

Develop a comprehensive ambulatory network that:1. Supports growth of specialty services both for inpatients and outpatients2. Provides flexible, high-quality, and lower-cost platform to compete in fee-for-value environment3. Offers sufficient geographic coverage to participate in selective contracting with health plans

Design & RationaleDesign & Rationale

Ambulatory StrategyAmbulatory Strategy

Hospital

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Constellation Service Deployment

Hub & Spoke Model Constellation Model

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Key Takeaways

An ambulatory network requires a “Retail Mindset” for success.• Locating and sizing sites is about focusing on the customer, matching the size and scope to the demand and

creating visibility.• The competitive environment is much more fluid and requires quickness with speed to market, a lower cost

structure, standardization and the agility to change course quickly.• Service offerings should be geared to capturing as much of the consumer event as possible.• The ambulatory network can lay the foundation to support an evolving healthcare marketplace with low-cost

delivery sites, patient access points and diversification along the continuum.• It must be accretive in today’s environment with a broad portfolio of financial sound services.

Success in the ambulatory environment requires speed to market, operating efficiency and a set of toolsand benchmarks to help guide planning, investment and implementation.

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Retail Approach to Patient Engagement

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There is a Way

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A History of Innovation

Stand-alonestores withdrive-thru

pharmacies1992

MultiplelanguageRx labels

2002

1950Self-service

stores

1968First with

child-resistantcontainers

Pharmacieslinked bysatellite

1981

1999Prescription

history online

2005Online

digital photo

1960 1980 1990 20101950 1970 2000

1991Point-of-sale

scanning

OpenedFirst

Retail Clinic2006

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The Best Corners of America

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Site Analysis: 3 Questions When Analyzing a Site

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The Reality of Retail Modeling

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Basic Strategic Model

This model can be used to develop a market-baseddecision framework for store decisions

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What Has Changed?

• It is no longer “build it and they will come”• Reimbursement pressures• Population health – Disease Prevalence/need• Healthcare reform• Need partners: physicians and health systems• Need to look at total cost of care and the impact of pharmacy

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Healthcare Clinics: Affiliates in Extending Primary Care Access

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Key Consideration for Potential Partnership

LOWER TOTAL HEALTHCARECOSTS

INCREASE ACCESS & DRIVEINCREMENTAL MARKET SHARE

IMPROVE OUTCOMES &QUALITY

SHAREDINVESTMENTS

WIN-WINALIGNED

INCENTIVES

CLINICALCOLLABORATION

• Co-marketing• IT Connectivity & data

exchange• Change Management/training

• Shared performance targets• Value-based payment (e.g.,

PMPY, shared-savings fromreducing spend or cost)

• Good Business for BothPartners

• Collaborate on Clinicalprotocols to reinforce corestrengths of each partner

Partnership Principles Key Mechanisms

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Orlando Health

Problem / Goal: • Need to expand footprint in order to have a Gateway to support emerging modelof care

Decision Process /Criteria:

• Urgent care limited and not sustainable• Speed-to-market

Success Factors: • Collaboration on both sides• Common pathway and view of population health• Record sharing is key physician satisfier• Physician leadership and oversight• Build trust• Physician oversight should build relationship efforts into

administrative time to build trust• ER MD works well, not a threat and does not have a practice

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Results

• June 2014 – March 2015• 1356 patients have used clinics for convenience and after-hours care• 983 patients referred to OH; call center enabled

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Next Steps

• Pre-diabetes and Cardiometabolic Screening Visito Clinics can help fill the gap

Outreach for 2-3 Visits per year Comprehensive monitoring of key markers

o Effectively engage patients Average Diabetes patient seen >20x per year at Walgreens

o Healthcare Clinic Screening Visit Proposal Overview of recommended screening questions, physical exam,

and laboratory testing Breakdown of patient Risk results Outline of provider action based on patient risk (2 proposed

options) Screening only Screening with diagnostics

Actions based on results and may include follow up with PCP

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Changing Patient Behaviors

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Consumers Take Charge: A New Economy Redefines Value

• Higher cost sharing and high deductible health plans• Patients penalized /rewarded for health behaviors

Consumers BearMore Risk

Active Shoppers • Comparison of cost: Castlight, Medibid, CalPERS, Theranos,getthedealoncare.org, PatientsLike Me

Comparison ofQuality/Experience

• 72% Internet users looked online for health information lastyear

• Quality metrics in public domain: Providers rated-Yelp,ZocDoc

Self-care/HealthTracking

• 100,000+ healthcare apps are available for download• 20% of smartphone owners have downloaded app to

track/manage health

Patient Will NoLonger Be Patient

• Demand Access, Quality, Reasonable Cost:1600 Retail Clinics• 70% Patients Willing to Change Provider for Suboptimal Experience

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Driving Significant Cost Savings to Patients and Employers for Non-emergent Patient Visits

1. Mehrotra, et al. The Costs of Quality of Care for Three Common Illnesses at Retail Clinics as Compared to Other Medical Settings. Ann Intern Med.Sept 1, 2009; 151 (5): 321-328..

2. Weinick RM, Burns RM, Mehrotra A. Many emergency department visits could be managed at urgent care centers and retail clinics. Health Aff(Millwood). 2010;29(9):1630-1636.

• The average cost of care at a retailclinic is one-fifth the cost of an EDvisit1

• Between 13.7% and27.1% of ED visits could take placeat retail clinics or urgent carecenters, with potential cost savingsof $4.4 billion annually2

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Theranos Partnership

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Why Theranos Partnership?

©2014 Walgreen Co. All rights reserved. Confidential and proprietary information.Some of the content contained in this presentation is confidential and proprietary to Theranos.

Affordable

Accurate FasterLess Invasive

Convenient Transparent

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Connected Walgreens Ecosystem

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Telemedicine/Digital Health : The New Paradigm

• Telemedicine: Health care via the phone or internet

• Triple Aim : Lower Cost, Improved Patient Experience, Improve Populations Health

• Growth: 2014 37% employers/carriers offer~ 60% by 2017

– 50% KPMG Visits are Virtual

– 6 billion/yr savings potential for employers

– 49 billion global mHealth market by 2020

• Telemedicine Displaces: 15% of office visits

15% of ER visits

40% Retail Health visits

• Reimbursement: Only 41%Telemedicine visits currently reimbursed

• WBA: MDLive and WebMD ( Digital Health Advisor)

• Pharmacy Chat:24/7 9000k interactions/week

• Qualcomm Healthy Circles: Chronic Disease Management through high touch/ exception management

©2014 Walgreens Co. All rights reserved. Confidential and proprietary information.

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Aligning Digital Health interventions with the continuum of care

Health and Wellbeing ComplexChronic

Care

Primary Chronic DiseaseManagement Moderate

ChronicCare

Continuum Of Care

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Healthcare Everywhere: Connecting & Rewarding Patients

©2014 Walgreen Co. All rights reserved. Confidential and proprietary information.

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Our Rewards Model Can Help Drive Wellness & Clinical Outcomes

©2014 Walgreen Co. All rights reserved. Confidential and proprietary information.

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Winning the Hearts and Minds of Consumers…

• Design business system fromconsumer-in

• Make wellness easy , personalized ,all the time

• Create a consumer economy with costtransparency

• Full social and mobile web services tohealth and wellness

• Constantly innovate around consumerneeds-informed by real-time feedbackand highly mobile marketplace

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Lessons Learned and Wrap-Up

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Lessons Learned

• Significant synergy between provider and retail based approach– Connecting with patients is critical– Visibility can be key to success– Breaking down barriers is necessary

• Market is evolving quickly – innovate or die• Critical player is the patient – how do you connect with patient and change

behaviors?

A well-thought-out strategy to connect with patients is critical to future success.This strategy must embrace technology and innovation and break down barriers

between historic silos.

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Questions and Discussion