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Retailers take part in transition to quality-based healthcare model and get paid

BY Alaric DeArment

Walmart’s Arkansas Payment Improvement Initiative aims to create a more patient-centered and cost-efficient payment system for the retailer’s home state. 

The latest move by Walmart is as sure an indication as any that health care is becoming less about fee-for-service and more about basing compensation on ratings derived from patient outcomes.

John Gorman, chairman of the Washington-based Gorman Health Group, summed up what’s been happening last month at a symposium in Philadelphia sponsored by Acro Pharmaceutical Services when he said, "We’ve got to all collaborate to deliver better value to the member, the payer and ultimately to the customer — the federal government."

With what Gorman predicted to be an explosion of accountable care organizations and a transition to healthcare delivery to something akin to public utilities, retailers are already starting to jump in to quality-based health care, as was also demonstrated this week when the Department of Health and Human Services announced 106 new ACOs in Medicare, including three operated by Walgreens.

Meanwhile, a PwC report this week found that more companies were likely to form partnerships to build their population health information technology infrastructures and to share responsibility for patient outcomes and satisfaction, data collection and analysis, member education and engagement, focusing on at-risk populations – in addition to Medicare’s ACO and patient-centered medical home initiatives. Interestingly, the report also found a rise in the number of consumers who expressed interest in buying insurance from non-traditional sources, such as retail stores, while finding overall that consumers’ rising voice on where their healthcare dollars go was prompting the healthcare industry to compete on attributes similar to retailers, showing just how deep the new focus on overall quality goes.

The United States healthcare system is undergoing its biggest change in more than a generation, developing a quality-based model that means retailers have a major interest in working as part of a team to ensure the delivery of quality care.

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New Albertsons will leapfrog Supervalu on DSN’s Top 50 Pharmacy Power Players

BY Michael Johnsen

Last week in a much anticipated move, Cerberus Capital Management acquired 877 supermarkets from Supervalu for $100 million in cash and the assumption of $3.2 billion in debt.  Also part of the deal, a Cerberus-led investor consortium will provide the remaining Supervalu business an influx with the purchase of up to 30% of Supervalu stock at a purchase price of $4 per share. 

Following the transaction, Supervalu will be a $17 billion business comprised mostly of its distribution business, which will represent 47% of revenues, Save-A-Lot (25%) and 191 regional supermarkets (28%). 

If the pharmacy mix in Supervalu’s remaining pharmacy business remains at 8%, then the chain will fall from No. 13 on DSN’s Top 50 Pharmacy Power Players to No. 34 with some $340 million in annual pharmacy revenues.

But Supervalu’s remaining supermarket business may become a 191-store chain on the rebound. "Earlier this year we launched what we call value transportation with a huge price investment to get our prices on strategy and coupled with that was a massive marking advertising and communications program both internally and in the stores and externally to our billboards and marketing efforts," current Supervalu president and CEO Wayne Sales told analysts. "When you look at banners such as Cub, we aggressively [talked] about not only our price versus key competitors but also other parts of the value proposition that we bring to our customers in addition to our price position," he said. 

And behind that initial marketing campaign Supervalu will be able to invest more per capita against the smaller store base. "The remaining banners are smaller, they are more regional and they require less investment in price," Sales said. "So we have again less to distract us from because of the divested banners going away and we can put absolute focus on the 191 retail stores that we have left."

Meanwhile, Albertsons LLC, ranked No. 29 last year on the DSN’s Top 50 Pharmacy Power Players would leapfrog Supervalu to that No. 13 spot with more than $2 billion in estimated full-year pharmacy sales through the New Albertsons. 

Overall, the transaction may be good news for competitors like Kroger, Safeway and other food retailers, wrote Credit Suisse research analyst Ed Kelly. "Cerberus closed or sold over half of the Albertson’s stores it acquired in 2006. A similar scenario here would clearly be good for overlapping competitors.

Other analysts are speculating that new owner Cerberus will jettison some of its new banners such as Jewel-Osco, possibly offering Kroger entree into the Chicagoland market. 

At the helm of the newly formed Supervalu will be two seasoned retail turnaround veterans. Former OfficeMax chief Sam Duncan has been credited with revitalizing a sluggish business supply business in 2009, bringing the company’s per share price from $4.80 to $16.80 in the span of a year. He did the same previously at Shopko — the company’s stock rose to some $22 a share, up from $13 a share. 

And Robert Miller, who will be non-executive chairman of the new Supervalu, may be qualified to write a case history on successful turnarounds. Miller, who got his first start in retailing with Albertsons some 50 years ago, took over at Rite Aid and helped engineer the drug store retailer’s first turnaround between 1999 and 2005 with lieutenants Mary Sammons and John Standley. 

 

 

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Wegmans Food Markets introduces new app

BY Michael Johnsen

ROCHESTER, N.Y. — Wegmans Food Markets on Thursday upgraded its complimentary shopper’s app. 

“Ever since we released the first version of our app a couple of years ago, we’ve been listening to customer feedback and making improvements based on what we hear,” stated Jason Wehle, director of internet marketing for Wegmans. “One of the most common requests we received was for compatibility with Android devices. We’re excited that this new version delivers on that request, and it will soon work with Kindle Fire and Barnes & Noble Nook too."

For iPhone users, Wegmans helped personalize the app by including the ability to reference past purchases. "We’ve added other features too, from more nutrition information to estimating what it will cost to buy the items on your list," Wehle said.  

And the app is expected to help expedite the grocery trip. The Wegmans app organizes shopping lists by aisle according to the store’s layout. If a shopper visits a different Wegmans, users can switch to another store location. The new app also estimates the total cost of the items on the shopping list. “Customers have asked us for this feature because it offers more control over spending and planning. It helps keep the food budget on target,” Wehle said.

Other tasks that can be completed on the app include refilling a prescription, checking store locations and hours, watching cooking videos, browsing recipes and checking nutrition information.


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