Everyone wants a piece of the pie

Everyone wants a piece of the pie

This morning CVS Health announced they have acquired Target’s pharmacy business for $1.9 billion. Last week Walgreens announced plans to expand their telehealth efforts. According to story posted on the Drug Store News web site:

“As we continue to advance our telehealth strategy and expand our digital footprint, we’re pleased to help offer unparalleled access to medical professionals for more of our customers,” said Adam Pellegrini, Walgreens divisional VP digital health. “Our society truly values anytime, anywhere convenience. And with a growing need for access to affordable health care services, we believe telehealth solutions can play an important role in helping to improve patient outcomes and continues our mission to provide a seamless, omni-channel digital health experience.”

The story goes onto state:

Rite Aid is piloting a new service with HealthSpot in three Ohio markets, the first of which is expected to open over the next few months. The foundation of the HealthSpot telehealth platform, which was announced in May, is built on expanding access to care by driving patient adoption of remote healthcare delivery models.

“We want to build a national healthcare access network across the country in retail pharmacies in conjunction with leading local health system partnerships. To truly evolve healthcare, we must focus on data integration in our system to deliver a high standard of care,” Steve Cashman, HealthSpot CEO, said at the time.

“With HealthSpot we have the potential to reach over 30,000 retail pharmacies which unlocks patient access to affordable and convenient care,” Tamara StClaire, chief innovation officer of Commercial Healthcare for Xerox, said at the time. “Now patients, providers and payers have easy access to the often unwieldy processes that underpin the healthcare system — like appointment scheduling, claims eligibility and submissions, and even integration with EHRs – all through one secure platform.”

These moves and others being made are just further confirmation of two trends going on in the wacky world of diabetes – the growing role of interconnected diabetes management (IDM) and the belief that it’s just a matter of time before reimbursement is tied to outcomes, that it is no longer a question of whether if this will happen but when this will happen.

These moves also make it clear as these changes are taking place scale matters, that the more patients in a system the better.

There are also serious implications for diabetes device companies in particular glucose monitoring companies.  As we have been stating for some time the old guard – Abbott (NYSE:ABT), Roche and Johnson and Johnson (NYSE:JNJ) are ill-equipped to deal with the coming of IDM. Yes they have scale but they lack the systems that retailers like CVS- Walgreens and Rite Aid need. Frankly newcomers like TelCare, Livongo and iHealth are better positioned to help these retailers than the old guard. Although one could make the argument that this move towards IDM helps a company like Glooko and their system which transfers data from most of today’s meters to the cloud.

The battle ground Diabetic Investor sees developing isn’t just which systems the retailers favor but just who controls/manages the patient with diabetes. Or put another way when outcomes based reimbursement becomes a reality who will collect the money when they get a patient under control. On top of this one has to wonder how physicians, primary care providers especially, feel about these retailers moving into their territory. Keep in mind that 80% of patients with diabetes are treated by a primary care provider.

The simple fact is a well-trained pharmacist is perfectly capable of managing the majority of customers they interact with who have diabetes. The Asheville Protocol proves this.

These retailers also have another advantage most physicians don’t they have, the right systems in place. Besides web sites and apps they also have reward programs in place, programs that are already incentivizing patients with diabetes for monitoring their glucose levels or refilling prescriptions. Given the growth of in-store clinics it’s not a stretch to imagine patients being incentivized for an HbA1c test or improvements in HbA1c. Nor it is a stretch to imagine a retailer incentivizing a diabetes consult with a CDE or pharmacist.

The reality is another Diabetic Investor prediction is coming true, namely when it comes to diabetes management it’s no longer about devices or drugs but which diabetes management system a patient uses.  In the new world order just as in the old world scale is critical just for different reasons. In the new world order scale is critical because outcomes will matter and the more patients in a system the higher the revenue.

Frankly Diabetic Investor is encouraged by the changes that are taking place. For when outcomes truly matter, when companies have a vested interest in patient outcomes ultimately it’s the patient who benefits most.

It’s also true that the companies currently in this wacky world, the old guard so to speak, better start adapting to the changes that are taking place for if they fail to adapt they are risking their very survival. Besides pharmacy retailers wanting a piece of the diabetes pie high tech companies like Apple and Google also want a seat at the table.

Change is coming and as Momma Kliff used to say either adapt to change or get the hell out of the way as there is nothing anyone can do to stop change from happening. Smart woman Momma Kliff.