MinuteClinic passes 10 million visits
CVS Caremark’s MinuteClinic continues to evolve and play a greater role in the U.S. healthcare system as evidenced by its expanding footprint, broadening scope of service and growing roster of strategic affiliations.
Since opening its doors in 2000, MinuteClinic has surpassed 10 million patient visits and remains on course to add about 100 clinics annually over the next five years — putting the clinic operator in an ideal position to play an important role in the U.S. healthcare system.
“Healthcare reform is a positive development for retail clinics because there are about 30 million people who are currently uninsured who will have healthcare coverage,” said Andrew Sussman, president of MinuteClinic and SVP and associate chief medical officer of CVS Caremark. “Add to that the aging of the population and the shortage of primary care practitioners, and the opportunity for services such as those provided by MinuteClinic has the potential for growth.”
In fact, MinuteClinic, which currently operates more than 600 locations, already has taken steps to broaden its suite of services. For example, in 2010, it launched a health condition monitoring service for patients with diabetes, high cholesterol, high blood pressure and asthma. In 2011, it began offering vitamin B12 injections and the human papillomavirus vaccination Gardasil.
To help with patient education, it launched earlier this year the Ask Me 3 program, which is designed to enhance communication between healthcare providers and patients in order to improve health outcomes.
“Research shows that patients who understand health instructions get well sooner, tend to take their medication regularly and make fewer mistakes with their care. In particular, clear communication helps individuals do a better job of managing chronic health conditions,” stated MinuteClinic chief nurse practitioner Paulette Thabault, who joined MinuteClinic in July 2010.
Over the past few years, MinuteClinic has formed affiliations with a number of health systems and, since the end of the first quarter 2011, it has added five strategic affiliations to its roster. The company announced No. 11 in August, when it announced its partnership with Indiana University Health, the state’s largest health system.
In addition to patient education and disease state management programs, these partnerships also share the common goal of integrating electronic medical records to streamline communication around a patient’s care for providers on either side of the partnership.
PBM postioned to ‘effectively compete’
At press time, the industry was weighing the potential merger of pharmacy benefit manager rivals Express Scripts and Medco Health Solutions, but executives at CVS Caremark remain more confident than ever that its PBM business is ideally positioned to “effectively compete,” regardless of what federal trade regulators decide for ESI-Medco. And there’s good reason why.
“With the evolution of U.S. health care to more consumer-directed care, our multiple consumer touchpoints make us best-positioned to promote cost-effective and healthy behaviors. And the success that we’re having in both the 2011 and 2012 selling seasons clearly demonstrates that our model is resonating with payers,” Larry Merlo, president and CEO of CVS Caremark, told analysts in August.
Not only did the PBM business experience double-digit revenue gains during the second quarter ended June 30 — due in large part to the addition of the Aetna contract and the acquisition of the Medicare prescription drug business of Universal American — but the company continues to make progress on its five-point PBM growth plan, which includes:
Achieving continued momentum in new business wins and strong client retention;
Continuing to develop and up-sell its unique clinical offerings;
Driving growth in 90-day mail choice and generic dispensing rate;
Focusing on high-growth areas, especially Medicare Part D, specialty pharmacy and Aetna; and
Executing successfully on the PBM streamlining initiative, with a goal to deliver more than $1 billion in related cost savings from 2011 through 2015.
“In addition to the anticipated benefits from this five-point plan for PBM growth, 2012 also begins the generic wave, which will carry through the next several years with about $100 billion of branded products coming off patent between now and 2016,” Merlo told analysts. “So I remain very confident that 2012 will be the year that our PBM breaks trend and demonstrates healthy operating profit growth.”
Broadly available for implementation beginning Jan. 1, 2012, will be a new medical benefit drug management service for the company’s PBM and specialty pharmacy clients. “This offering will enable CVS Caremark to identify the unrecognized specialty pharmacy spend currently billed through the medical benefit for oncology patients,” explained Per Lofberg, president of CVS Caremark’s PBM business. “We can provide our clients with an opportunity to better manage these expensive drugs while also improving the quality of care for their members.”
One year ago, Jonathan Roberts, EVP Rx purchasing, pricing and network relations, also was named COO of the PBM business, assuming leadership of PBM operations, mail-service pharmacy and specialty pharmacy.
Urban stores, ExtraCare bolster front end
CVS Caremark may be highly focused on driving medication adherence, curbing rising healthcare costs and improving the health outcomes of its patients, but there’s no doubt that its retail segment remains a critical part of its business, as evidenced by the innovative initiatives playing out at the front end.
CVS/pharmacy always has prided itself on convenience, but the retailer clearly is raising the bar with its Urban Cluster store concept, which is in its second year of rolling out and is helping to fuel both top and bottom lines. According to CVS, it plans to complete more than 200 stores this year, on top of the roughly 200 it completed last year.
“Our urban stores continue to post very strong results, and our test earlier this year in California yielded especially exciting results. We expect California to be a key expansion market for our urban layout later this year,” Larry Merlo, president and CEO, told analysts during the second-quarter conference call in August.
The Urban Cluster store concept can include slight variations to appeal to the local area. For instance, at the CVS Urban Cluster store in New York’s Union Square area, a more extensive wine selection appeals to tourists and guests staying at the W Hotel a few blocks away.
The key element of the Urban Cluster concept is a significant focus on consumables, which in the reset was expanded and moved closer to the door — a prominent location that makes the section impossible to overlook and easy to access. There’s also an expansive Grab & Go prepared foods section; a greater offering of grocery items, such as cereal and pasta; household items; and baby products. The Urban Cluster format is how CVS will play in food desert markets.
As for its pharmacy dominant cluster, the retailer is focused on re-merchandising stores that are primarily shopped for pharmacy and related products. “We’ve seen exciting results from our first wave of test stores that we completed late last year, demonstrating that it is possible to significantly reduce SKU comp inventory while growing sales and margin,” Merlo said during the first-quarter conference in May. “We are being very careful and deliberate to find the right balance. We’re conducting lots of customer research, so we’ll test this format longer than others. We’re going to be expanding the tests to an additional group of stores in the second half of this year, and we hope to scale the model beginning in 2012.”
Meanwhile, the company’s highly successful ExtraCare Rewards loyalty program, which is in its 10th year and has more than 67 million active cardholders, continues to be a major focus to help drive profitable sales, as opposed to what the company refers to as “empty sales,” or sales without a profit flow-through.
The company recently has bolstered the program by launching a new digital coupon option for ExtraCare and the ExtraCare Beauty Club for its beauty shoppers. With the new “Send to Card” digital savings option unveiled in August, cardholders can send select ExtraCare coupons received by email directly to their ExtraCare card for automatic, digital in-store redemption. This eliminates the need to print those coupons at home and submit paper copies at the register.
In January, CVS launched its ExtraCare Beauty Club, which provides ExtraCare cardholders who register their cards with additional rewards on beauty purchases and other beauty-specific benefits. CVS/pharmacy Beauty Club members receive a 10%-off-beauty shopping pass upon enrollment, $5 in ExtraBucks rewards with every $50 beauty purchase and $3 in ExtraBucks rewards on the member’s birthday, as well as special beauty offers throughout the year. Members also receive monthly email newsletters with exclusive coupons, tips from experts and new product information.
To further enhance member benefits, CVS introduced in late June its “Beauty Board,” a panel of beauty and style experts who provide interactive content and advice for the CVS Beauty Club Facebook page. As of late June, there were more than 8 million ExtraCare Beauty Club members.
Speaking of beauty, CVS continues to add to its exclusive product offerings and now has partnered with actress Salma Hayek to offer the exclusive beauty collection Nuance Salma Hayek. The collection is comprised of more than 100 products within four categories — skin care, cosmetics, hair care and body — and marks the first complete beauty line developed by an actress in partnership with a national retailer.
Then, of course, there’s the Beauty360 concept, which, aside from its high-end beauty offerings, makes a major statement with its upscale decor and layout, which includes a separate entrance. As of press time, there were 25 Beauty360 stores in operation, primarily located in California. The first location was unveiled in November 2008 at a Capitol district CVS store in the center of Dupont Circle in Washington, D.C.