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Will you define health reform?

BY Rob Eder

“I can’t hear you; I have a banana in my ear!”

-Ernie the Muppet


There is so much noise out there about the Patient Protection and Affordable Care Act and what it means for America that at times I wish I could just stick a banana in my ear — actually, make that two bananas, one for each ear.


I don’t want to waste any space here lamenting over what has become of a profession I gave my life to, but the sad fact is we live in a world where pundits blab and spin, and reality and truth — the facts — take a back seat to whatever a bunch of jerks tell you it is.


But you really can’t blame the media even — this thing has been going on for as long as people preferred to be sheep whose opinions are hand-fed to them like kibble at a petting zoo. Plato wrote about it more than 2,400 years ago in his “Allegory of the Cave,” a recap of a discussion between Socrates and Plato’s brother. Basically, Socrates believed that people choose to watch shadows projected on the wall in front of them, and attach meaning to them rather than turning around to see things for what they really are. I think if the ancient Greeks had TV, Socrates would have referred to CNN and Fox.


I do my best to screen out all the noise — like the July 5 Gallup Poll that came out in the wake of the Supreme Court’s decision to let the ACA stand. Forty-six percent believe that the law will hurt the economy versus 37% who believe it will help the economy. That’s like asking someone in Plato’s allegorical cave, “What color are the shadows?”


If you ask some people, they’ll tell you the ACA will bankrupt America. If you ask others, they’ll tell you that you can’t only look at rising costs — you have to consider the savings that investment will deliver. Will states really go broke expanding Medicaid? What will they save by not having to pay for the cost of uncompensated care when poor people end up in the emergency room and can’t afford to pay they bill? How will prices adjust when hospitals and doctors no longer charge the insured more to make up for the cost to treat the uninsured? Economists at the Urban Institute estimated that 21 to 45 states would save money by expanding Medicaid.


A lot of this is politics. Many worry that America will become a welfare state, when the reality is we have long been a country that doesn’t refuse care to those who can’t afford it — we just pay too much the way we do it now and get little in return.


As a result of the Supreme Court’s ruling, “incentives for collaboration are quickening the convergence of hospitals, insurers, drug makers, physicians and technology companies,” wrote PricewaterhouseCoopers Health Research Institute in its June 2012 white paper, “Implications of the U.S. Supreme Court ruling on health care.” “Creation of new state and private insurance exchanges, greater pricing transparency, mobile technology and nontraditional competitors are turning the health business into a retail operation. … The crucial question now is: Will health reform define your organization, or will your organization define the post-reform landscape?”


To be sure, the report is aimed more at large- and small-business owners that may have been putting off addressing the new requirements of the ACA. According to a poll of more than 4,000 employers conducted in late June/early July by the human resource consulting firm Mercer, more than half said they were waiting for the Supreme Court’s decision. In all, 16% will wait to see how the November elections pan out.


But if you’re a provider on any level, particularly in community pharmacy or retail clinics, PwC asks a valid question: Will health reform define your organization, or will your organization define the post-reform landscape? Is your company ready? That’s the key sound bite in all of this. Everything else is just noise. 



Rob Eder is the editor in chief of The Drug Store News Group, publishers of Drug Store News, DSN Collaborative Care, and Specialty Pharmacy magazines. You can contact him at [email protected].

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Alliance Boots deal changes the game for WAG

BY Michael Johnsen

Walgreens and Alliance Boots — it’s a trans-Atlantic retail pharmacy game-changer. 


As the largest single purchaser of prescription drugs in the world, with 11,000 retail pharmacies in 12 countries that currently dispense more than 260 million prescriptions a year, and a global pharmaceutical wholesale operation to match, serving more than 180,000 healthcare outlets worldwide, the new company will have a whole lot more leverage on that side of the business. 


And the area in which Walgreens will benefit immediately is private brands. While Walgreens has beefed up its private-brand development in recent years with brands like Delish and Nice!, it will benefit greatly from the 400-plus associates Boots currently has dedicated to private-brand innovation. Boots has long been acknowledged for private brands, most notably the venerable No7 beauty brand, but also Soltan (sun care), Botanics (natural skin care) and Boots Labs (anti-age partnership with Procter & Gamble).


And given the market for multisource generic pharmaceuticals and future projections, having an in-house generic pharmaceutical manufacturing capability — Alliance Boots’ Almus division currently makes generic pharmaceuticals in five European countries — could be a decided advantage for a drug store operator.


Two more areas where Walgreens might be able to learn from Boots: optical — Boots operates some 625 optical stores in the U.K.; and loyalty cards — approximately two-thirds of U.K. women are members of Boots’ program, and Walgreens is expected to roll out its own card in September. 


How transformational is this deal? Consider Walgreens’ revenue mix today and how it expects that to change over the next five years. Currently, about two-thirds of Walgreens’ $73 billion in sales is in pharmacy. In 2016, sales of the combined companies are projected to top $130 billion, with only about one-third coming from the U.S. pharmacy business. 


As an encore, Walgreens celebrated Independence Day by buying USA Drug’s 144 stores for $438 million.

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Macy’s creates skin care man cave

BY Antoinette Alexander

PHILADELPHIA — The men’s grooming market is poised for further growth as more than 9-out-of-10 men are using some sort of grooming product today, according to a recent report by the NPD Group. Looking to further tap into the growing segment, Macy’s in downtown Philadelphia has opened a “men’s grooming zone” on its beauty selling floor. The space — which carries high-end grooming brands for men, such as Lab Series Skincare for Men, Shiseido Men and Jack Black — is an ideal “man cave” complete with a flat-screen TV, free wireless Internet and a Keurig coffee maker.


It is “almost a men’s skin care man cave,” Muriel Gonzalez, EVP cosmetics, fragrances and shoes, told the Wall Street Journal. A similar space opened in the Macy’s in San Francisco in June. According to NPD, the men’s facial skin care market has grown 11% in dollar sales in 2011 compared with 2010.

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