America's Largest Supermarket Chain Is Betting It Can Keep You Healthy By Tracking Your Groceries And Prescriptions

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(CINCINNATI – February 8, 2019) - Colleen Lindholz has a counterintuitive idea.

Lindholz is the president of Kroger Health, meaning she oversees 2,200 pharmacies and more than 200 health clinics for the largest grocery-store chain in America. The pharmacy business, just like the grocery business, is a numbers game: The more groceries Kroger sells, or the more prescriptions it dispenses, the more money it makes.

But instead, Lindholz has set a goal to fill fewer prescriptions for each person who shows up at a Kroger pharmacy.

Lindholz described it as "kind of crazy," adding, "We want to decrease the need for healthcare."

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Competition is increasing for groceries and prescriptions

Kroger, a $22 billion company that operates 2,800 grocery stores around the US, has had to get creative to compete with the likes of Walmart and Amazon, which now owns Whole Foods.

While online sales of groceries still make up only about 3% of the retail market, they're steadily increasing. Kroger's pharmacies also face digital competition, with Amazon acquiring an online pharmacy that can send pills straight to your door, and venture-backed startups building online pharmacies that deliver prescriptions too.

To stay competitive, companies like Kroger are bulking up on the health services they provide in their stores. For instance, CVS Health, the massive drugstore chain that recently merged with the health insurer Aetna, is setting up in-store health hubs. Walgreens is adding services like lab tests, hearing screenings, and eye exams.

Kroger is making other strategic moves, such as partnering with Walgreens on a pilot to put some of Kroger's groceries in Walgreens' pharmacies in Kentucky. The partnership, Lindholz said, is helping Kroger grow its footprint beyond the stores it already operates.

Ultimately, Lindholz is betting the grocery store will be the place where people go for their health.

"For one thing, it's very local, and for two, it's very personal," Lindholz said. In her experience, changing people's habits or intervening when they're about to get sicker happens more in person than over the phone.

How Kroger can get to fewer prescriptions

Filling fewer prescriptions, however, will require some changes to how the pharmacies within Kroger stores operate.

For one, Lindholz is working to integrate the healthcare side of the business with the food side. Healthier eating habits could reduce the need for some medications to treat chronic conditions like diabetes or heart disease, or prevent them from progressing to the point where a person needs additional medications or care.

"We really believe — because we're inside a grocery store, because we can tie the healthcare side to the food side — that that's the way we're going to change the way healthcare's delivered in the country," Lindholz said.

To accomplish this, Kroger's pharmacists will have to go beyond the traditional way we think of that role, as the person who fills a prescription. Instead, they'll need to work more like doctors or nurses.

To help, Kroger is building software with the health-IT company Assure Care designed to link its loyalty card to its pharmacy data and to electronic medical records from health systems around the country; Lindholz said the system would be rolled out in Kroger stores by the fall. Kroger has also hired dietitians to work alongside the staff at its Little Clinics and pharmacies.

Kroger's loyalty card already tracks what a customer buys and uses that person or family's eating habits to come up with a food score, which they can see on Kroger's OptUp app.

When a person goes to pick up their prescription, they could be asked whether they'd like to share their food score with the pharmacy. While the food score sums up how healthy the food the person buying is, the pharmacist wouldn't see the exact ice cream and chips they've purchased.

If the person says yes, they would have to consent to share the information with the pharmacist before it would show up next to their prescriptions.

The hope is that by putting that food score next to the pharmacy data and the person's medical data — assuming customers also opt to share their medical information with their pharmacist — pharmacists will be equipped to intervene in ways other than simply filling the prescription.

For example, if a person with Type 2 diabetes, a common condition in which the body stops properly regulating blood sugar, comes in, the pharmacist might be able to see the person's blood-sugar levels as last reported to their doctor, as well as their food score.

If the person's eating habits and blood-sugar levels are not where they should be, the pharmacist could do something about it, like refer them to a dietitian.

"We're training our pharmacists to do more than just open the bottle and say 'Is that the right pill?' and close it, because they really didn't go to school for that," Lindholz said.

technician dispensing pills A technician stocking the shelves of the pharmacy at a White House Clinic in Berea, Kentucky.  Reuters

Doing more than dispensing pills

Lindholz isn't alone in this idea. Independent pharmacists, feeling the pressure from declining reimbursements for the prescriptions they dispense, are seeking to get paid more like doctors or nurses and less like sales clerks.

Here's the thinking: You might see your doctor a few times a year, but you probably pop into your local pharmacy once a month, if not more. So why not check in on your health there instead of setting up a separate appointment with your doctor? The visit won't be as comprehensive as a full yearly physical, but it could help fill in the gaps between visits.

Already, when pharmacists dispense medications, their job is not just to put the pills in the tube, but check whether the prescription will mix poorly with any other drugs the patient might be taking, counsel them on how to take the medication, and answer any questions they may have thought of on their way from the doctor's office.

Kroger is working on signing contracts with employers and insurers to get paid based on how well its pharmacists and dietitians manage the health of a group of patients instead of how many prescriptions they dispense, known as pay-for-performance contracts.

In December, Kroger launched a randomized 250-person trial with researchers at the University of Cincinnati to see how effective this approach of working with dietitians could be at helping people develop better eating habits.

"It's worth billions to the healthcare system if we can figure out how to delay some of those chronic diseases or prevent them," Lindholz said.

And that could be key as the future of retail stores continues to change.

"We're trying to put together where Kroger is evolving from the industry traditional grocer to being more than that," Lindholz said. "Retail will be here, but it just won't be the same. Our stores are transforming into being a destination for people to come to where they can understand the role of food as medicine."

About The Kroger Co.:
At The Kroger Co. (NYSE: KR), we are dedicated to our Purpose: to Feed the Human Spirit™. We are nearly half a million associates who serve nine million customers daily through a seamless digital shopping experience and 2,800 retail food stores under a variety of banner names, serving America through food inspiration and uplift, and creating #ZeroHungerZeroWaste communities by 2025. To learn more about us, visit our newsroom and investor relations site.