credit: New York Times
Yesterday, CVS took the bold move of dropping tobacco products from their retail stores by October 1st of this year, walking away from $2 billion in revenue from their coffers. Wall Street lauded the marketing move, but the money pundits went against the decision.
However, the Sermo Physician community looked at it as savvy marketing, coupled with industry pressure and the opportunity to dominate the burgeoning medical clinic industry. Over the course of the day, hundreds of doctors stopped by the discussion and chimed in. While applause for the health benefits of the move was the top point of consensus, it was tempered by their understanding of the ACA and its potential impact when the private sector starts to understand the new business models its mandates will encourage.
Behind the Decision: A Shifting Landscape and the ACA
In the past few years municipalities have been banning retail stores with embedded pharmacies from selling tobacco products. These laws have been widely supported by a number of medical associations including the American Medical Association and the American Lung Association.
The $2 Billion dollar loss should be more than replaced with the rapidly expanding CVS’ MinuteClinics – medical clinics staffed by nurse practitioners, physician’s assistants, and pharmacists who can dispense flu shots, medication, and assist people with basic care for chronic diseases such as diabetes. The company’s stated goal is to expand its 750 clinics today to 1,500 clinics by 2017, having opened 150 in 2013.
Uniquely Positioned to Work with Obamacare
Due to their Caremark merger, CVS already works closely with hospitals, doctor’s networks and the newer Accountable Care Organizations, new types of medical organizations encouraged by the Affordable Care Act (Obamacare) because doctors are paid based on the health of their patients, not on the number of tests or procedures ordered.
According to their own 2012 Annual Report, MinuteClinics run 40% to 60% below the costs of similar care centers, something very appealing both to private insurers and the ACA. Since they already have strong ties with private insurance carriers, this is an easy step to broaden their market with the approximately 15 million new Medicaid patients coming into the system. This truly is a savvy market play and likely worth more than the $2 Billion loss from tobacco.
Are doctors left out of this equation?
Beyond a Chief Medical Officer, Troyen Brennan, M.D., there is literally no mention of physicians on the CVS Caremark staff. MinuteClinics are designed to handle minor ailments and routine care of chronic diseases but this could open up patients to missed symptoms, delayed treatment or even worse.
Our own Senior Vice President, Jon Michaeli spoke with WGBH-TV yesterday to voice our physicians opinions. [if you're having trouble seeing the video, please click here]
[youtube http://www.youtube.com/watch?v=cJl6ZQnygVY&w=560&h=315]
The doctors strongly supported the removal of tobacco products and commended CVS for the action but they were also concerned about patient care and their own livelihood.
One physician said, “they will make up for the lost revenue with MinuteClinics and with the unnecessary antibiotics and prescription cough medicines they prescribe … this will take business/revenue away from primary care physicians. They are not our friends.”
While there’s no doubt this move is, on its surface, a good thing. Its implications, however, for CVS and the futurescape of US healthcare are significant and triggers many more questions. Is the removal of tobacco products by CVS savvy marketing or a genuine move to improve the health of their customers? Do you think MinuteClinics should be staffed with supervising M.D.s as well as N.P.s and P.A.s working alongside pharmacists?
If you’re an M.D. or D.O. come join the discussion inside Sermo.
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