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CVS Caremark outlines growth framework at annual Analyst Day meeting

BY Antoinette Alexander

WOONSOCKET, R.I. — CVS Caremark executives expressed optimism going into 2013 and outlined its strategic growth framework, which leverages the company’s unique integrated model, during its annual Analyst Day held on Thursday in New York City.

“CVS Caremark is very well-positioned for continued growth. The rapidly changing environment creates significant challenges across the healthcare universe, but this also creates significant opportunities,” Larry Merlo, president and CEO of CVS Caremark, told analysts. “We are uniquely positioned to address these opportunities through pharmacy innovation. Our strategic growth framework provides the lense through which we’ll make strategic investments and prioritize initiatives. And we are capitalizing on our suite of assets to drive results and enhance value for our clients, customers and shareholders.”

Merlo kicked off the meeting with a brief look at 2012’s core areas of focus — continued leadership in core businesses, pharmacy innovation to solve key healthcare issues and capitalizing on the power of its integration “sweet spots” — and a review of some major accomplishments within the past year. However, the real question is where does the healthcare powerhouse go from here? In fact, that question served as the backdrop to Thursday’s meeting.

During the meeting, executives identified the highest priority initiatives that define the company’s strategic growth framework, including advancing new breakthrough interventions to improve medication adherence; transforming primary care through the accelerated growth of MinuteClinic and expansion of its breadth of services; expanding specialty pharmacy services; identifying opportunities to deliver solutions addressing provider needs to support patient outcomes; partnering more closely with health plans; and expanding digital capabilities across the enterprise with the goal of addressing patient information and product needs in a seamless fashion.

PBM Growth Strategy

On hand to provide a business update and to discuss core growth opportunities within the PBM business was Jon Roberts, EVP and president of CVS Caremark Pharmacy Services.

With the progress of the 2013 selling-season likely on the minds of many industry observers, Roberts told analysts that the company garnered $4.4 billion in total gross new business and a 96% retention rate. Roberts noted that the PBM has seen success across all segments: Employer, Med D/Medicaid and Blues/commercial health plans.

Furthermore, CVS Caremark is seeing growing interest in its proprietary programs Pharmacy Advisor and Maintenance Choice.

Pharmacy Advisor, which is the company’s clinical program designed to address adherence and gaps in care, will further expand come 2013 with the deployment of five additional chronic conditions — asthma, COPD, depression, osteoporosis and breast cancer.

“Adoption remains strong, and we expect to have approximately 16 million lives enrolled in our programs in 2013,” Roberts said. “And in 2013, we will further expand Pharmacy Advisor to Medicare members. This expansion into Medicare will help our health plan clients achieve their star ratings in the clinical metrics.”

Meanwhile, the Maintenance Choice program continues to prove successful. Maintenance Choice is the company’s integrated product that was broadly introduced in 2010. It extends the mail order benefit for Caremark members that participate in qualifying plans, enabling them to pick up their maintenance medications at any CVS retail pharmacy with no increase in co-pay or payor pricing.

The company will launch in 2013 across its book of business the next generation of the program dubbed Maintenance Choice 2.0, which includes a less restrictive or voluntary plan design option.

“In 2013, we will have 14.5 million lives adopting Maintenance Choice, up from the nearly 11 million lives in 2012. We are seeing more new clients adopting Maintenance Choice right out of the gate,” Roberts said. “We see a significant runway for future adoption of Maintenance Choice, and we believe the potential adoption among our current clients represents up to 34 million members in total. We expect adoption of the program to accelerate in coming years.”

Roberts also said the company is well-positioned to capitalize on fast growing market segments: Medicare Part D, managed Medicaid and specialty pharmacy.

“In summary, we believe that the PBM is uniquely positioned to drive growth and our priorities remain focused on continuing to achieve profitable net-new business; leveraging our unique model to create truly distinctive client and member value; continuing to progress in driving clinical outcomes; continuing to build on our leadership positions in specialty, Medicare and Medicaid; and finally, we continue to build a culture of continuous improvement, building upon our streamline efforts. I believe these are critical to our success in this changing market,” Roberts told analysts.

Driving Growth in Retail Pharmacy

“Our retail business is really firing on all cylinders,” Mark Cosby, EVP and president of CVS/Pharmacy, told analysts. “We are continuing to grow market share, and we are significantly outpacing our competition in both the front store and in the pharmacy. And while we have clearly seen an uptick from our ESI customers, our underlying core business continues to perform well.”

Touching upon its core growth opportunities, Cosby discussed the company’s plan to drive pharmacy growth, differentiating the front store and growing its store base.

As part of its pharmacy growth, Cosby discussed the company’s new WeCARE initiative, which aims to improve service and outcomes and grow scripts.

“We modified our powerful RxConnect system to address the landscape changes. WeCARE integrates all prescriptions into one workflow to efficiently manage whether they are faxed, e-prescribed or dropped off. WeCARE also integrates our patient care intervention programs directly into our pharmacy workflow. It also clearly defines the role of each member of our pharmacy team," Cosby said.

Most of the stores will have this new workflow in place by the end of this year, with a few remaining stores moving to WeCARE in 2013.

Meanwhile, the retailer is working to expand its myCVS store clustering initiative, which focuses on store designs that match the needs of customers within each type of trade area.

“We have defined eight unique clusters to match our customer base, and we are organizing to capitalize on this cluster opportunity,” Cosby said. He said that the company is designing a new store prototype that will be fully oriented toward each of the eight clusters.

The effort kicked off in 2011 with its Urban cluster, and now the company has set its sights on a Suburban-focused pilot in 2013. This will feature an enhanced pharmacy and an elevated health and beauty assortment.

The Suburban cluster will be rolled out through remodels and as part of its new store program. The company will also test new clusters that will be rolled out starting in 2014.

“The myCVS clustering effort will be a powerful growth driver for us both in the front store and in the pharmacy,” Cosby said.

MinuteClinic momentum gains steam

MinuteClinic continues to prove that it is a critical component of the CVS Caremark enterprise. Revenue growth continues to be robust, expansion of services and telemedicine spell greater opportunities and the number of clinical affiliations continue to grow.

Andy Sussman, SVP and associate chief medical officer/president of MinuteClinic told analysts that 2012 standalone MinuteClinic revenue will be in the high end of its guidance range of $185 million and $190 million. Next year, the company expects revenue from MinuteClinic operations to be at least $225 million, up more than 20% from 2012.

By year-end, the company will operate 640 clinics in 25 states, of which 98% are open year-round.

The company announced it would accelerate MinuteClinic’s growth plan, and now plans to operate at least 1,500 clinics by 2017 and will continue to enter new markets, including Hawaii and Louisiana next year.

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Survey: Americans want greater control over their own health care

BY Jason Owen

PHILADELPHIA — According to a new Wolters Kluwer Health survey, 80% of consumers believe the greater "consumerization" of health care — or the trend of individuals taking a greater and more active role in their own health care — is positive for Americans. Survey data suggests many Americans feel that a greater role in their care is not only good, but necessary, with 86% of consumers reporting that they feel they have to take a more proactive role in managing their own health care in order to ensure better quality of care.

Most consumers also say they feel prepared to take on a greater role in managing their own health care, with 76% reporting that they have the information and tools to take a more proactive role in healthcare decisions ranging from choosing healthcare providers to researching treatment options. Despite feeling prepared, only 19% report that they have their own electronic Personal Health Record (PHR).

These findings correlate to recent reports from DSN highlighting consumers turning more towards social media and mobile apps to help in their healthcare needs.

"With greater responsibility placed on patients to take a role in their own care, it’s essential that consumers have access to evidence-based tools and resources to make informed decisions about their care in partnership with their healthcare providers," said Dr. Linda Peitzman, chief medical officer for Wolters Kluwer Health. "Access to research-based medical information not only can positively impact quality of care, but it also can lead to improved doctor-patient communication and relationships."

Survey findings showed that the notion of the "patient experience" is also gaining significance for many Americans. Three-in-10 adults (i.e., 30%) want their patient experience to be the same as any other customer experience they have — such as shopping, hotel and travel experiences — complete with choices and control.

The Wolters Kluwer Health survey was conducted by IPSOS among 1,000 U.S. consumers ages 18 years and older. Survey questions focused on exploring whether consumers want more control over their own health care and whether they feel prepared to take on more responsibility.

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ATA partners with minority caucuses to advance telemedicine legislation at the state level

BY Jason Owen

WASHINGTON — The American Telemedicine Association, the leading nonprofit membership organization for remote medical services, is working with three minority legislative caucuses to educate lawmakers and introduce model legislation for telehealth in statehouses around the country. ATA has formed partnerships with the National Organization of Black Elected Legislative Women (NOBEL), the National Black Caucus of State Legislators (NBCSL) and the National Hispanic Caucus of State Legislators (NHCSL) with the goal of maximizing state-government support of telemedicine. All three organizations have recently passed resolutions calling for the removal of artificial policy barriers and greater adoption of telehealth services.

“This collaboration builds on the great work already being done to advance telemedicine in forward-thinking state legislatures,” said Jonathan Linkous, CEO of the American Telemedicine Association. “States are often the true innovators in developing policies, regulations and payment mechanisms in support of telemedicine. We’re using the outcomes, evidence and lessons learned from these cases to show all state governments how telemedicine can improve the quality of health care, increase access and reduce costs."

NOBEL, NBCSL and NHCSL are natural allies for ATA, both for their focus on state policy and as representatives for minority populations. Telemedicine is proven to have a significant positive impact on historically underserved groups. “Remote healthcare services can alleviate chronic healthcare shortages that exist in both urban centers and rural areas,” Linkous said.

ATA and its members have been instrumental in steering state policies to better deploy telemedicine. To date, 16 states’ legislatures have mandated payer reimbursement of telemedicine services. Almost every state now includes some telehealth in their Medicaid programs and many states are expanding their services to cut Medicare service costs. ATA has also worked to eliminate burdensome regulatory issues that exist, or have been proposed, in many states.

In October 2012, ATA received a grant from the Human Resources and Services Administration, a part of the U.S. Department of Health and Human Services, to research state telehealth policies and promote state-level best practices.

The American Telemedicine Association is the leading international resource and advocate promoting the use of advanced remote medical technologies. ATA and its diverse membership work to fully integrate telemedicine into healthcare systems to improve quality, equity and affordability of health care throughout the world. Established in 1993, ATA is headquartered in Washington, D.C. For more information, visit the organization’s website.

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