As digital disrupters make inroads, pharmacy giants shifting to health services, J.D. Power executive says

Under pressure from digital disrupters, brick-and-mortar pharmacies are pivoting more toward health and wellness services. (CVS Health)

As new digital disrupters like Amazon’s PillPack redesign the pharmacy experience, brick-and-mortar pharmacy giants will need to innovate and pivot to health and wellness to stay ahead, according to industry experts.

While overall utilization of digital pharmacy services is still relatively low, existing PillPack customers score higher than all other brick-and-mortar and mail-order pharmacies in terms of overall customer satisfaction, according to findings from a U.S. pharmacy study from J.D. Power.

Traditional brick-and-mortar pharmacies are losing some ground when it comes to customer satisfaction, James Beem, managing director of global healthcare intelligence at J.D. Power, told FierceHealthcare.

Here's a look at what the survey found.

Customer satisfaction

As pharmacy services become more of a commodity, consumers are more open to adopting alternative pharmacy strategies and other disruptive technologies, Beem said.

The real sweet spot for e-commerce will be if they can replicate the personalized experience consumers get at local retail pharmacies with a higher level of customer service and attention from pharmacists.

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"If these digital pharmacy services can do that, they are going to put some pressure on the large pharmacy chains that, frankly, are not delivering the same level of customer service," Beem said.

Customers give PillPack particularly high ratings in regards to their feeling of trust with the pharmacy, Beem said, and this an important baseline as the service expands.

Brick-and-mortar pharmacies also are lagging when it comes to innovation, as consumers view mail-order pharmacies as more innovative than retail store pharmacies, Beem noted. J.D. Power's pharmacy study from 2018 found the average customer satisfaction score for mail-order pharmacies to be 859 on a 1,000-point scale, compared to a score of 847 for brick-and-mortar pharmacies.

Recent efforts by industry leaders to block prescription transfers to Amazon subsidiary PillPack may slow the company down but will not stop the bigger changes that are coming to the pharmacy industry, industry experts say.

Walgreens is shuttering 200 of its approximately 9,560 stores in the U.S. as it looks to cut costs, according to Forbes, citing a company filing with the U.S. Securities and Exchange Commission. The news comes on the heels of an announced shutdown of 200 stores in the U.K.

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But don't count the large industry players and brick-and-mortar pharmacies out just yet. As technology companies promise to change the way Americans address their pharmacy needs, changing such entrenched behavior will be an uphill battle, said Greg Truex, managing director of health intelligence at J.D. Power.

Health and Wellness

Face-to-face interactions with pharmacists continue to be important to consumers, J.D. Power's survey found, and customer satisfaction tends to be higher when consumers have more in-depth discussions with the pharmacy staff.

Traditional retail pharmacies such as CVS and Walgreens have a significant opportunity to offer health and wellness services that provide consumers a clinical experience, and that's difficult to achieve with a digital or online platform, Beem said.

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Consumers living with chronic conditions or taking multiple medications are more likely to want coaching from a pharmacist and will need more care coordination to manage their medications. "There is an opportunity for brick-and-mortar to reinvent itself and be more innovative," he said.

According to J.D. Power's survey, about two-fifths (42%) of customers who are aware of their pharmacy’s health and wellness services have used one of the services in the past year. Those who have taken advantage of health and wellness services spent 12.5% more on their most recent prescription order.

CVS, now merged with Aetna, is moving in this direction with its HealthHUB model, which it piloted in Houston stores earlier this year. The HealthHUBs serve as health and wellness destinations, with more than 20% of the store dedicated to health services for diabetes care, digital health tools, and on-demand health kiosks. The company plans to expand the model to 1,500 retail locations in the next two years. 

Walgreens also opened a series of primary care doctors' offices in some of its Texas retail locations, part of a shift toward a changing healthcare delivery model the pharmacy retail giant has previously announced.

"The integration of pharmacy, medical and care coordination to help consumers with their health care needs, that’s where the hockey puck is going," Beam noted.

RELATED: CVS plans to turn 1,500 stores into HealthHUBs

As the consumer healthcare experience continues to change, patients are open to receiving care in a retail pharmacy setting, according to a J.D. Power consumer survey after the CVS-Aetna merger. Close to half (45%) of consumers said they would consider receiving primary care services at a CVS-based clinic rather than going to their primary care doctor.

"Consumers are giving the retail chains permission to serve as a proxy for their primary care needs," Beem said.

While digital and online pharmacy services focus on lower cost, convenience and customer service, the large incumbent players should focus on evolving to be bigger players in the overall healthcare market, he said.

"There is a significant amount of disruption that has already occurred and that will be even more significant in the next five to 10 years," Beem said. "Brick-and-mortar pharmacies need to be thinking about how they can become an extension of a larger health care system. They need to think about how they can help coordinate the care of patients post-discharge and how to help them manage their conditions to prevent them from becoming high risk and being readmitted to a hospital. That is where we're going to see the evolution."