How socialized medicine “should” work and why the U.S. desperately needs it. 

We’ve all heard about the Affordable Care Act (ACA), or as most people in America know it, “Obamacare”; and we as a nation, are mostly divided about the program. In truth, the ideal that President Obama and his administration tried to achieve is admirable, but their execution is largely flawed. The critical missing ingredient, the regulation of the third party payers.

Our Broken System

Our healthcare system is built upon a divided set of smaller industries. We have hospitals and doctor offices, medical devices, pharmaceuticals, biotechnology, pharmacies, and largest of all, insurance companies. All of these business entities are operated, as well as governed, independently. While independence of each other may work well in regulation, it does not work well when we are speaking of the benefit to the end user. Multiple industries all having a part in the overall healthcare of the patient means multiple times the cost is driven up in order for each industry along the way to make a profit. That also means multiple opportunities for companies to focus on the business over patient care.

Do the industries even care? 

The further separated from direct patient care you go, the more likely you will see a larger focus on profits, than on patient well being. This is not to say that the bigger players don’t care about the patient, they do, but their greater focus is not the individual patient, but on the patient population as a whole. For instance, point of care facilities like doctors and pharmacies focus on each individual patient and how they can help improve their quality of life. Higher up the ladder, the train of thought changes. Pharmaceutical companies may think of how shifting trends in patients’ health can help them to shift their focus on specific treatments and therapies to increase their drug pipelines. Even higher, you have insurers that will look at shifting trends in medications and therapies and how they can minimize their expenditures while still providing a patient with a baseline standard for care. I don’t believe that what these industries are doing is inherently wrong, after all they are a business and their primary focus is on their shareholders, not the patients. That being said, I do believe we need to change the system and find a way that benefits both the patients, as well as the shareholders.

Crisis

The United States is at the center of a healthcare crisis. We are one of the most obese and unhealthy nations in the entire world, and our healthcare system is also one of the most flawed. A large majority of those living in the US do not have access to quality health care, and worse, the systems in place to provide healthcare for the poor are not being utilized correctly, which in turn fuels the negative cycle. All across the nation we see patients on Medicaid treating emergency rooms like a doctors office because it’s simply easier than making an appointment at a doctors office.

Resolution

The solution is a difficult one, and may ultimately prove impossible. While a regulating body for insurance companies based on evidence based medicine may be the easy way out, it’s not likely going to happen in our society. Perhaps a better solution is one we are already seeing in the industry. Pharmaceutical companies are changing the way they develop and market drugs to incorporate market access in their decision planning, making even the newest drugs more accessible than before. We also see retail pharmacies creating new patient focused services such as medication therapy management, which provides medication reviews and consultations to patients. The focus is on reducing the need for costly treatments and procedures, while proving to third-party payers that we did our best to maintain the health of an individual, so now the therapy we are proposing is the most logical and reasonable conclusion. Yes, the ACA is flawed, but with proper adaptation by the various industries, there may be a light at the end of the tunnel.

How socialized medicine “should” work and why the U.S. desperately needs it. 

CVS buys out Target pharmacies. Prepares to move in on Target patients. What’s the long term outlook?

http://money.cnn.com/video/news/2015/06/15/target-selling-pharmacies-to-cvs.cnnmoney/
In a $1.9 Billion move, CVS buys out Target pharmacies in an effort to expand their reach. For those of you that don’t know, they also run the second largest pharmacy benefits manager (PBM) service, Caremark, and with their latest purchase of 1,600 Target pharmacies along with their 80 clinics, they will also be operating over 1,000 clinics under their Minute Clinic trademark. Sounds like just another acquisition by a Fortune 500 to get a little bigger market share? Maybe, maybe not.

It may seem natural for a retail pharmacy chain to acquire competitors, but this is the first move by a major retailer chain to buy out pharmacies belonging to a major corporation who’s major revenue comes from front store sales and not pharmacy. Previously, retail chains such as CVS and Walgreens would buy out large pharmacy chains or independents (think CVS’ acquisition of Long’s Drugs in CA and Walgreens purchase of Happy Harry’s in DE). This new purchase marks a first, and interesting prospect of partnership with other big name retailers.

This new partnership is mutually beneficial, with CVS gaining more prescriptions and patients from Target, and Target gaining a new customer base coming in from CVS. The question then is if CVS is aiming to push Walgreens out of retail pharmacy?

My opinion is that CVS understands their front store market is fading and trying to move into the healthcare side of their business model. Much like Walgreens’ new patient-centric focus, CVS may push their Minute Clinic and mail-to-retail model as their long-term outlook. The scary part is that it looks like they are moving towards a vertical integration business model. What’s vertical integration you might ask? In economics, vertical integration is where a supply chain of a company is solely owned and controlled by that company. Translated, this means CVS will be in full control of the patient interaction from a provider visit in their in-store Minute Clinic, to prescription fills within their pharmacy, to maintenance fills from their mail order pharmacy.

Great! That means I can see a doctor AND get my prescription all in one place, right?

Well yes, technically that would be true, BUT in the long run, it may potentially mean patients get locked into CVS exclusively. With greater control of the supply chain, CVS is in a position to negotiate a better contract with third-party-payers, or insurance companies. Ultimately, they may be able to create a new contract system that’s fully in-house, meaning that the only in-network or preferred providers are ALSO the only in-network or preferred pharmacies. This would be damaging not just to patients, but to the entire healthcare industry, as they are now able to undercut other pharmacies as well as provider offices. Suddenly patients may notice the primary doctor they’ve had for years is no longer a preferred provider, or is now out-of-network, meaning higher co-pays. Considering 75% of the entire U.S. population lives within a 3 mile radius of a CVS compared to a 5 mile radius for Walgreens, many insurance companies may prefer CVS as a provider and servicer for both medical AND prescription.

While there are still many regulatory and legal hurdles in place to prevent such an occurrence, if CVS is indeed planning such a strategy, we may be heading towards interesting times for the entire healthcare industry.

CVS buys out Target pharmacies. Prepares to move in on Target patients. What’s the long term outlook?