Reinventing community pharmacy
A vast army of some 70,000 Walgreens pharmacists, technicians, nurses and nurse practitioners, and other clinicians is poised to plug some of the gaps in the nation’s overstretched healthcare system with expanded services, greater access for patients and new solutions for providers and payers in desperate need of quality, cost-effective solutions.
“For us, the product is no longer the pill. The product is the health outcome associated with that pill,” said Kermit Crawford, president of pharmacy, health and wellness. “We are deliberately transforming the way we practice pharmacy, going from what was a transaction-based environment to one that is more about patient relationships. So, for example, we’re moving our pharmacists from behind the counter out to where … they’re able to talk with our patients. And we’re enhancing those conversations through the use of technology.”
That transformation in pharmacy extends across Walgreens’ traditional retail prescription business, as well as its Take Care retail clinics and Employer Solutions Group, and its specialty pharmacy and home infusion businesses — all of which report into Crawford.
Crawford says Walgreens is on a quest to enable its clinicians to “practice at the top of their license.” And among the steps the company has taken “to transform the way our healthcare professionals operate today,” said the company’s top pharmacy and health decision-maker, are retail health services like patient adherence programs, a growing menu of health tests and collaborative disease management efforts with hospitals and physicians.
Not to be overlooked is the company’s vast immunization capability. Walgreens is the nation’s leading flu shot provider after the U.S. government. Its pharmacists and Take Care Clinic nurse practitioners and physician assistants administered 6.4 million flu vaccinations in 2011, nearly a third of them on nights, weekends and holidays. “No other provider can offer that convenient access,” Crawford asserted.
The massive vaccination program underscores Walgreens’ national reach and its claim as the nation’s most accessible and convenient provider of pharmacy, health and wellness services, with roughly 8,000 retail, clinic, hospital, employer and specialty pharmacies spread like a blanket across all 50 states. “We’re within three miles of two-thirds of the U.S. population,” Crawford said.
What’s more, he added, “About 40% of our stores are located in medically underserved areas. And giving people convenient access to quality, affordable care improves the patient experience and … helps lower overall health costs.”
On the clinic side, “We’re evolving to a chronic-care model,” said Crawford, expanding the role of the nurse practitioners that staff its 350-plus Take Care Clinics beyond episodic care. And to be sure, it will be building a lot more clinics in the years to come.
“As we continue opening more Well Experience stores, that provides more opportunity to expand our Take Care Clinics,” he added.
The need is clear. “Fifty percent of the people who visit our clinics don’t have a primary care physician. And with so many of our stores in medically underserved areas, there’s a real opportunity to grow our clinics,” Crawford noted.
Like its more than 27,000 pharmacists, the Take Care nurse practitioners are increasingly positioned as a vital adjunct to the care provided by the nation’s shrinking and overtaxed pool of primary care physicians. “In our clinics,” he noted, “we’re working collaboratively with a physician to manage a patient’s disease state. That care doesn’t have to be done in a physician’s office.”
“Walgreens can connect the dots in American health care,” Crawford added. “With health reform and rising health costs, we have a real opportunity here. The goal is to leverage our assets, our footprint of over 8,000 points of care, our presence in the community, our hospital and employer- based pharmacies and health centers and our clinics … to help manage total population health.”
Clearly, one area in which payers need help managing costs is in specialty pharmacy, where Walgreens is able to leverage and bundle its many assets and channels to deliver multiple options for patients and payers to choose the mode of care that works best for them.
One prime example of how Walgreens is able to accomplish this in specialty is through a program it calls “Well Transitioned,” which utilizes pharmacists in its more than 100 pharmacies based in hospitals and specialty clinics across the country, to provide pre- and post-discharge medication reconciliation for patients on complex specialty medications, such as organ transplant patients. “We call it the ‘front door’ of specialty pharmacy,” Crawford told DSN.
“So, before a patient is being discharged, [our pharmacist] will go visit the patient in their hospital room and educate them about the new medications their physician is putting them on. And then once they leave, we’ll call them at home to talk to them about the medications they’re taking, how to take them, what to expect in terms of side effects, what they’re used for, what they look like and then later, how do they [get] these medications,” he explained. “So, if they live outside of the trade area of that on-site pharmacy, how they connect to other Walgreens services” to keep them compliant on their therapy regimen.
It’s an important example of how Walgreens provides new solutions for payers and patients that help trim the upstream costs of poor compliance and adherence. While much focus is given to the 12 cents on the healthcare dollar that goes to pay for prescription drug costs, not enough is focused on the other 88 cents. For instance, as many as 30% of all hospital readmissions are due to poor medication reconciliation, Crawford said.
To keep discharged patients compliant with therapy, Walgreens is able to provide a number of options for how they can get their medications. If the patient lives near the on-site hospital/clinic pharmacy, they can come back there to get their medications, or they can choose to have it shipped to their homes via a Walgreens central fill facility or shipped to their local Walgreens store through its Specialty at Retail program. “Our model is to allow patients to choose what is the best experience for them, but then we support that through all of our different assets and channels,” Crawford said. “We believe better patient experiences drive better patient outcomes, and that drives lower costs.”
The chief engine driving Walgreens’ revenues — which topped $72 billion last year — will continue to be its prescription dispensing business, which last year churned out 819 million scripts, or 1-in-5 U.S. retail prescriptions. What is changing is the way those medicines are dispensed as the company takes a broader view of the continuum of care, automates more of the dispensing process and shifts more of its pharmacists’ attention to direct patient engagement.
“We’re still filling scripts; we’re just more efficient in how we do it,” said Crawford. “We looked at all the administrative tasks associated with filling prescriptions, and some we have moved centrally.”
In addition, the company has added automation, “About 40% of our qualified prescriptions today are filled through e-prescribing, which is … taking work out of the dispensing.”
Walgreens’ massive flu shot and immunization program has been key to its effort to transform to a full-spectrum retail pharmacy, health and wellness powerhouse. Launched at the suggestion of a Walgreens pharmacist in Colorado — “the majority of our ideas come from the field,” said Crawford — the flu shot effort began to open patients’ eyes to the types of health, wellness and disease prevention services that Walgreens pharmacists could provide.
“Five years ago, we had about 300 pharmacists certified to do flu shots,” said Crawford. “This past year, virtually all 27,000 of our pharmacists were trained [as] certified immunizers beyond flu shots. Today, all our stores are certified to give any of the 20-plus CDC-approved immunizations that are approved in their state.”
Immunizations became the gateway for a shift in the company’s health mission and business strategy. “We demonstrated that pharmacists interacting with patients by giving them flu shots led to great conversations,” Crawford told DSN. “It was loud and clear that it was acceptable.”
What’s more, he said, “flu shots were the beginning of patients looking at our pharmacists differently — giving our pharmacists permission to play a greater role on the healthcare team.”
One reason: Walgreens pharmacists were talking with patients “not only about flu shots, but about the disease states that required them to get a flu shot,” said Crawford. “It really enhanced that face-to-face interaction.”
In September, Walgreens will further strengthen that relationship with the launch of its first customer loyalty program. One key aspect of its new Balance Rewards program is that it rewards card holders for healthier behavior, for instance, accruing points for participating in programs like Walk with Walgreens. Among other benefits like building store-purchase baskets and return customer visits, said Crawford, the program provides another entry point into Walgreens’ pharmacy, health and wellness offerings. “This is a way for us to reward people for adhering to their medication therapy, or participating in [preventive health] programs,” said Crawford. “We can tie it into the overall goal of helping people to live well.
“We’ve actually begun to change the way health care is delivered in this country,” Crawford asserted. “With health reform, another 30 million people will get access to care, and there’s already a shortage of primary care physicians.”
“Someone’s going to have to fill that space, and we think Walgreens and our professional clinicians are uniquely positioned to do it,” he said.
‘What I eat’ as critical to Well Experience as ‘how I look, how I feel’
Walgreens has really helped to transform why consumers shop a drug store with its position in healthier-for-you foods and fresh produce. That’s not just thinking outside of the box for traditional retail pharmacy operators; that’s throwing out the box altogether and replacing it with an in-store food pyramid.
And they brought in the right executive to realize this vision for fresh — Steve Broughton, VP and GMM of food, beverage and household consumables at Walgreens. Broughton joined the company from Walmart, where he was in charge of its food offering at a time when Walmart had traditional supermarkets on its heels. That experience gave him the opportunity to transform a retail experience. “Greg [Wasson] enabled us to be change agents,” Broughton said, speaking to why, as a food executive, he made the transition to a pure-play drug store.
Walgreens’ focus on fresh is central to its mission to transform from a retail pharmacy into a health and daily living destination because some of the urban residents shopping its stores — whether in challenged communities, where Walgreens doubles as the neighborhood grocer, or in busy downtown areas where healthier lunch selections are available for nearby office workers — aren’t there just to buy food. They are there to improve their lives, and so “what I eat” is as important to total wellness as “how I feel” or “how I look” or “what I need now.”
Walgreens is able to take “fresh” to a whole new level in its flagship stores in major cities like New York, San Francisco and Chicago, where it tests new concepts that continue to push the envelope on selling food in a drug store. For nearby office workers, Walgreens has successfully brought in fresh sushi made on-site, baristas, fresh-baked goods, smoothie bars and frozen yogurt stations, all of which reflect a little of the local flavor.
And it’s not just the products that are helping to recreate the shopping experience — there are other less tangible dimensions of the experience that these concepts brings to its stores. “Those aromas of …coffee and fresh baked bread add to the experience,” Broughton said. “And the customers are telling us with their words, their wallets and with the lines around meal times that they are very open to a drug store carrying these types of products.”
That commitment to offering both fresher foods and healthier-for-you options has also transformed how Walgreens brings products to market in its stores that go long on fresh. “The sandwiches and the wraps and the cut fruits and salads, we source those products locally,” Broughton said. “It’s a little more difficult because we have to be closer to it, but we can reflect the taste and the flavor profiles that are significantly different by market, and we have it closer to our stores, so there is less transit time,” he said.
There are two major challenges, however: logistics and technology.
Walgreens solved its logistics challenge through facilities called consolidated distribution centers in place of direct store deliveries. Couple that with the company’s technology solution — a system that helps manage first-in, first-out product rotation with expiration dates — and you have most of the ingredients for success in driving a fresh-food business that is meaningful and relevant at the local level.
Other tools Walgreens uses to help ensure the return on investment for any store featuring fresh is tight shrink control and keeping a close eye on what sells when, and what doesn’t. “We have the ability to tweak the assortment as frequently as we need,” Broughton said. “As soon as we sell through a product … the next day it can be something different.”
However, it takes about the same amount of time to set up an item for one store as it does for 8,000 stores, so Walgreens has recently instituted a team responsible for making assortment decisions at the local level. Under the direction of VP inventory strategy Mark Scharbo, who came to Walgreens by way of Duane Reade, the team will help manage localization and inventory strategy. “He’ll help us to manage those exceptions a little bit better and [be] more narrowly focused geographically so that we can offer the correct assortment.”
In addition to Scharbo, the divisional merchandise managers that really make fresh come to life in Walgreens stores, in the many forms it takes, are Jim Jensen, who manages fresh produce; Dex McCreary, who oversees candy, beer, wine and spirits; and Chris Serbin, who’s in charge of center-store food offerings. More and more, Walgreens designates a portion of its food assortments among local brands that are relevant to shoppers in those stores. To do this, you need boots on the ground to identify those brands (for more, see page 86).
The Nuts on Clark brand available at the State and Randolph store in Chicago is a perfect example of tapping into the local flavor of the market, Broughton said. Nuts on Clark (located on Clark Street) is locally famous in downtown Chicago for its popcorn and nut varieties. The only place you can buy Nuts on Clark outside of their own shop is at Walgreens. It’s just one example of how fresh is enabling Walgreens to be different.
Colby Red is another interesting story, Broughton noted, and really brings home how food — in this case, wine — can help personify Walgreens’ larger mission to provide solutions for consumers to get, stay and live well. Daryl Groom, a winemaker, created a red wine named for his son Colby, who was born with a heart defect, to help support heart research. For the first two years, the wine was only sold in retail at Walgreens. To date, Walgreens and the Groom family together have helped raise more than $200,000 to support charities that promote heart health.
Revolutionizing the mass market beauty world
With an army of 26,000-plus beauty advisers, the expansion of the LOOK Boutique concept, the expertise from its online beauty engine Beauty.com and the Walgreens-Alliance Boots transaction, Walgreens is giving the U.S. mass market beauty world a makeover like no other.
Going back even as little as a few years ago, Walgreens wasn’t exactly making waves in the beauty industry, as its beauty department was quite typical of that found within a traditional U.S. drug store. How times have changed.
Walgreens’ journey to transform the beauty experience within its stores to create a “best in class” beauty department focused on improved design, customer engagement and experience, really shifted into high gear following the 2010 acquisition of Duane Reade. The latter, under the guidance of visionary Joe Magnacca, then SVP and chief merchandising officer of Duane Reade, was turning the drug store beauty experience in Manhattan on its head by bringing a bit of European flair to the market with its upscale LOOK Boutique.
“The past three years have been the most exciting professional journey for me and our beauty team,” said Shannon Curtin, Walgreens divisional VP and GMM for beauty, personal care and seasonal. “As our beauty team embarked on a reinvention journey, we understood the importance of understanding our past successes and spent countless hours studying the present competitive landscape.”
In recent years, the innovation within beauty at Walgreens has shown no signs of slowing. In fact, it is gaining steam as Walgreens now works to expand the LOOK Boutique experience at select locations across the nation. While the number of LOOK Boutiques within both Duane Reade stores in New York City and Walgreens stores nationwide continues to grow, a shining example of the retailer’s true beauty prowess can be found at the Duane Reade flagship store at 40 Wall St. in downtown Manhattan.
Within this flagship location, beauty mavens will find an expanded LOOK Boutique with exclusive, higher-end beauty products; an automatic fragrance sampler so shoppers can try before they buy; a nail salon offering manicures, gels and the latest nail color shades from OPI and Essie; a hair salon by Phyto Universe offering such services as hair/scalp analysis, blowouts and styling; a Ramy-branded brow bar for in-store brow-shaping services; and a virtual makeover tool for “trying on” makeup.
Various components of the LOOK Boutique, such as the Ramy-branded brow bar and nail salon, are being rolled out to additional store locations where it makes the most sense. “You’ll see the brow bar in most LOOK Boutiques that we open now, for both Walgreens and Duane Reade stores,” said Paul Tiberio, Walgreens divisional VP procurement and inventory strategy. “The nail salon is a perfect example of expanding beauty services. It was born in the Wall Street store, and based on its success, other locations have followed including the State and Randolph store in Chicago. You can also find one in Puerto Rico at a flagship store that recently opened.”
“Our ‘masstige’ product lineup is starting to rival department stores when it comes to prestige beauty, as well as skin care. We can perform skin analysis on consumers to help them find the right skin products for their complexion, an area that has become popular based on the repeat purchases we are seeing,” Tiberio added.
Echoing that sentiment, Magnacca said that, based on the successes the retailer is seeing on the test concepts within its flagship stores, the learnings from its LOOK Boutiques now are being applied back into Walgreens’ Well Experience stores. One new concept Walgreens is testing in beauty that Magnacca gets excited about creates a multi-channel play inside the store, tying into some of the e-commerce assets the company acquired in 2011 in the Drugstore.com deal, he explained.
“State and Randolph is a good example of that, where you can actually kiosk the Beauty.com business. We think that has tremendous horsepower in terms of differentiating ourselves, and leading the traditional drug store space,” said Magnacca. “A lot of the elements of that have already made it into the Well Experience stores,” said Magnacca, who now serves as president of daily living products and solutions at Walgreens. “For example, taking nail from a traditional in-line category and putting it on a unique fixture in the front of the store is now a standard in our Well Experience stores moving forward.”
“If they’re out filling prescriptions or shopping for everyday essentials, customers at these locations have the convenience of shopping for themselves without making additional trips to department stores or specialty stores for prestige products,” said Marcia Gaynor, Walgreens GMM for LOOK Boutique. “When you add our trusted beauty advisers to the mix who field questions and suggest products, that customer walks away with an exceptional and memorable experience.”
If its acquisition of Drugstore.com and Beauty.com helped it step up its game in beauty, Walgreens’ latest acquisition has the capability to be a complete game-changer for the company. Serving as a powerful accelerant to its existing beauty strategy is the recent merger with Alliance Boots. “We’re very serious about beauty and so are they. So, I think we link up in a very big way,” said Magnacca, who stressed Walgreens’ commitment to its 26,000-plus beauty advisers and also noted that Walgreens will be launching its Beauty Awards program in the fall.
“We are heavily focused on prestige skin care at this point — we’re trying to advance the skin care segment. We also want to move more into the color cosmetics side of our business, and we just believe [Alliance Boots] will be an accelerant for us in terms of their learnings through their existing relationships and through their successes.”
There’s no doubt that Alliance Boots’ successes within beauty will benefit Walgreens. For example, while Walgreens currently has no significant private-brand presence in color cosmetics, Alliance Boots has seen great success with its No7 brand — a top-selling brand in the United Kingdom for face, lip and eye makeup.
To date, the changes within beauty at Walgreens have been significant, but there’s no denying that the best is yet to come as this transformer further taps into its deepened well of resources and opportunities, and forever changes the way the U.S. drug store industry approaches beauty.