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Walgreens cuts ties with two ACOs

Though the nation's largest pharmacy chain has also launched a new partnership on the West Coast to help manage ACO patients.

Photo of Walgreens from <a href="">Wikipedia</a>.Photo of Walgreens from Wikipedia.

Walgreens said it is cutting ties with two accountable care organizations, though the nation’s largest pharmacy chain has also launched a new partnership on the West Coast to help manage ACO patients.

Just two years after Walgreens launched three partnerships as part of the Medicare Shared Savings Program — offering providers medication management, data and a retail experience for their patients — the chain is ending its partnership with two of them: The Advocare Well Network and the Scott & White Walgreens Well Network.

The Advocare Well Network, a partnership with the New Jersey-based multi-specialty group Advocare, saw costs rise 4 percent. The ACO’s 13,400 beneficiary population was benchmarked at $143 million, but ended up with expenditures of $149 million, according to federal data.

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“We mutually agreed to discontinue our relationship,” said Walgreen spokesperson Jim Cohn. The Advocare ACO wasn’t liable to share in the losses with Medicare, though it did successfully report quality measures and faired about average or better.

[See also: Accountable Care Organizations explained.]

About 18 percent of the the ACO’s at-risk diabetic population was under the composite target — control of blood sugar, blood pressure and cholesterol, as well as using aspirin therapy and not using tobacco — while 76 percent of diabetics had blood sugar under control and 77 percent of hypertensive patients had blood pressure under control.

Compare that to the rest of the 220 shared savings ACOs. The average saw 22 percent of at-risk diabetics under composite target, 78 percent of diabetics with their blood sugar under control and 68 percent of high blood pressure patients were under control.

The 34,000-beneficiary Scott & White fared a bit better financially and clinically, though in some cases it was below average.

The ACO had 26 percent of diabetes patients meeting the target and 85 percent of diabetics with controlled blood sugar, though only 60 percent of hypertensive patients under the control. Its costs were pretty much just at the benchmark of $299.8 million, coming in at $299.6 million.

Walgreen and Scott & White, the largest nonprofit health system in Texas, have dropped the ACO venture, but are working on a number of other initiatives, including a clinical affiliation with Baylor Scott & White in Dallas-Fort Worth that involves Walgreens clinics.

“This affiliation has played an integral role in our Healthcare Clinic entry and subsequent expansion into the Dallas-Fort Worth market,” Cohn said.

Other initiatives

In Florida, Walgreens is continuing the Diagnostic Clinic Walgreens Well Network, with a Tampa Bay-area multi-speciality practice.

The 7,500-patient ACO saved 2 percent of total medical costs (about $1.5 million) in its first year, benefitting from ”having a Walgreens Health System Pharmacy located within Diagnostic Clinic, which also neighbors Largo Medical Center,” Cohn said. “With Diagnostic Clinic, Walgreens pharmacists work closely with case management and provider teams to support patients as they transition out of the hospital into the community setting.”

[See also: $445M in bonuses given to ACOs that saved money for Medicare.]

Walgreens is also starting a new venture on the West Coast, helping the Heritage Provider Networks affiliate Arizona Priority Care manage Medicare ACO patients and Medicare Advantage beneficiaries.

Meanwhile, Walgreens is partnering with one of the hottest entrants to healthcare in Palo Alto-based diagnostics company Theranos. Walgreens Wellness Centers in the Bay Area and Phoenix are offering Theranos’ needle-free blood tests for dozens of conditions, at half of the price of Medicare.

Founded by Elizabeth Holmes as an undergrad at Stanford after working on SARS detection in Asia, Theranos is poised to give the $50 billion-plus laboratory services market a run for its money, selling cholesterol tests for $2.99 and hemoglobin A1c tests for $6.67 — without the need for hospital or clinic labs or the large chains like Quest and LabCorp.

Heralded as the coming disrupter of an opaque and overpriced market, Theranos is now valued at $9 billion, with Holmes controlling 50 percent of it.

If Theranos improves access and price of blood diagnostics, it could be a boon for the Medicare trust fund and save taxpayers billions. It could also win huge business for Walgreens, at the expense of legacy providers.

However, Theranos is also recruiting physicians to use the company for lab tests, and Walgreens is also looking for more ventures in and outside the ACO program.