Opportunity
Leverage knowledge gained from the behavioral health market on patient needs and care gaps to enhance patient outcomes by integrating mental health with behavioral health, and medication management for improved patient care delivery.
Approach
Open new pharmacies nationwide and deepen partnerships with Community Mental Health Centers (CMHCs) and other outpatient healthcare facilities to reach more patients, while simultaneously benefitting from regulatory changes incentivizing innovation to reduce healthcare costs.
Impact
Following its partnership with Advent, Genoa pharmacies served more than 250,000 patients per month, filled over 15 million prescriptions nationwide, and opened nearly 200 new pharmacies in the US.
The genesis of Genoa
The 2010s was a decade characterized by changes in healthcare regulation, notably the Affordable Care Act (ACA) implementation, and an increased understanding of the linkage between behavioral health diagnoses and overall healthcare costs. The introduction of innovative payment models has altered care models, creating opportunities for companies like Genoa to reimagine its participation in a more valuable care model. As a greater number of individuals sought assistance for mental health conditions, there was an increase in the awareness and support specifically for people suffering from these diagnoses.
Studies estimate that approximately two-thirds of Americans with a diagnosed mental health condition do not have access to treatment currently. Non-adherence to medications remains a significant barrier to effectively treating individuals facing mental health issues.
In 2013, the Advent healthcare team cultivated a ‘sourcing cell’ in the behavioral health market. The team recognized several opportunities in the space, noticing an unmet need to support people with severe mental health conditions by fostering an environment that encouraged them to stay on their medications. The Advent healthcare team had begun tracking predecessor companies Genoa and QoL due to their pioneering efforts in this field, as they aimed to bridge a gap between local responses to mental health crises and the general healthcare system by effectively integrating the two.
At the time, Genoa was one of the only large-scale pharmacy service providers for CMHCs, and differentiated itself from traditional pharmacies by its core principle – the belief that pharmacy care involves more than just dispensing medication. Genoa’s on-site pharmacies provided more than just prescription filling by opening the door to patient care and enabling pharmacists and technicians to engage with patients. They provide patients convenience and one-on-one consultations, creating a compelling value proposition for patients, clinicians, and payers. By assisting patients in regularly taking their medications, Genoa helps reduce the overall cost of care. Additionally, Genoa’s packaging stands out from that of traditional pharmacies by using unique color coding for daily prescriptions. Medications are delivered with specialist, hands-on advice.
“Working with the healthcare team at Advent has been one of the highlights of my career. Their dedication to continuous improvement helped establish Genoa Healthcare as the leading specialty pharmacy operator in the US, delivering incredible outcomes to a very underserved population.”
John Figueroa
CEO, Genoa Healthcare
Advent was attracted to this behavioral care model over the facility-based models that existed at that time. Simultaneously, the Advent team worked closely with Douglas Present, an Operating Partner and seasoned advisor in the pharmacy industry, who introduced the team to John Figueroa, the CEO of Genoa at the time. Beyond the obvious growth lever to increase sites to increase patient care, pharmaceutical distribution and dispensing is a complicated value chain. We recognized that there was an opportunity to capitalize on pharmaceutical procurement, and Figueroa’s experience in pharmacy distribution made him an ideal partner and CEO to navigate through this complexity. This propelled our conviction in Genoa and formed the value creation plan.
Together, with two seasoned healthcare experts on our side, we knew Advent could serve as the right partner to help Genoa pursue growth and further refine its care model. Importantly, we all understood that the patient’s wellbeing was at the core of our strategy. After seeing the growth Genoa was achieving, Advent acquired an interest in the company in 2015 alongside existing partner, Nautic Partners.
Genoa’s positive impact was another selling point. “We put the patient’s needs first, the business model second, and then decided whether the economics of the business were scalable. Genoa’s business model impacts the wellbeing of patients’ lives materially. People with severe mental illness who stop taking their medications may end up in crisis: jail, on the streets, or worse. Genoa’s model of locating its pharmacies within outpatient healthcare facilities helps patients stay on their medications, which greatly increases the odds they can stay engaged with treatment,” explained John Maldonado, a Managing Partner at Advent.
More than just medication
At the time of Advent’s acquisition of Genoa, the company was operating 241 pharmacies throughout the US. During Advent’s investment, Genoa opened nearly 200 pharmacies in about three years, micro-targeting specific locations to find sites that had the greatest patient need. Our research revealed that having an on-site pharmacy or a pharmacy located close to a treatment center led to an increase in medication adherence, or the ratio of patients taking the medication they were prescribed. Using this knowledge, the team made strategic decisions when opening new pharmacies.
Our research indicated that Genoa had significant potential for expansion within this existing market. At the time, less than 35% of CMHCs were being served by a pharmacy partner, and even in those CMHCs where Genoa had pharmacies, less than 35% of prescriptions were being filled on-site. Identified areas for growth included opening more pharmacies within behavioral health outpatient facilities and increasing the share of the prescription volume among patients being treated at CMHCs.
Before joining forces with Advent, Genoa was expanding by opening 25 to 35 new pharmacies annually. Upon partnering with Advent, Genoa significantly increased its pace, opening an average of one new pharmacy each week. The company established a dedicated team to systematically launch and integrate new pharmacies into the organization. With the help of a new general counsel, Genoa overcame legislative challenges and gained approval to operate behavioral health pharmacies in the large healthcare markets of California and New York.
Genoa benefited from strong end-market growth as regulators and payers continued to recognize the importance of appropriate mental healthcare and the value proposition provided by Genoa for high-risk patients.
Genoa had already begun investing in technological advancements, including collating a patient’s prescription history, to be used in emergencies to understand patients’ unique needs. To support these high-risk individuals, Genoa launched a program providing medical management solutions for health plan members with at least four chronic conditions.
“If a patient has forgotten to take their medication and is caught up in an emergency situation, having the patient’s medical history at hand is crucial for determining a course of action. This integrated method saves time, and money, and – most importantly – ensures the patient is treated appropriately,” shared Carmine Petrone, a Managing Director at Advent.
The core operation
Through seven strategic acquisitions facilitated by Advent, Genoa strengthened its core pharmacy operations and ventured into related businesses such as telepsychiatry and medication therapy management.
During our ownership, Genoa took a significant step forward to provide additional services beyond its core prescription-filling business by acquiring telepsychiatry provider 1DocWay, and subsequently rebranding the service as Genoa Telepsychiatry. This strategic move allowed Genoa to enhance its ability to serve the needs of both its patients and CMHC partners.
The addition of telepsychiatry enabled Genoa to offer increased treatment staffing at key times and locations based on identified demand through our market research, thereby providing more comprehensive support for mental health services and allowing these facilities to grow and cater to more patients. The therapy service was a crucial component to delivering on Genoa’s mission to meet consumers where they are and provide hands-on care. This telepsychiatry offering was also complementary to the drug dispensing arm of the business and provided cross-selling opportunities through the pharmacy base. This service allowed therapists to help ensure patients continued to take their medications and importantly, it was convenient for patients.
To broaden its footprint and to better serve the needs of patients, Genoa continued to pursue additional acquisitions. The company announced the acquisition of a 13-chain pharmacy in Michigan called Advanced Care in 2016. The following year, Genoa acquired a Medication Therapy Management (MTM) provider to enhance value for payer partners. The acquired company was renamed “Genoa Medication Management Solutions” and provides a content management system to provide advanced MTM services to Medicare beneficiaries. MTM services assist in improving patient treatment plans by providing recommendations related to pharmaceutical care for patients with multiple health conditions.
Advent further assisted Genoa in integrating the IT systems of these acquired companies into a unified platform for sustainable future growth with a focus on pharmacy-level efficiency. As Genoa expanded, it capitalized on its size to lower drug purchasing costs and enhance its payer relations department, leading to improved core drug economics and an increase in average gross profit per prescription.
“We all had a shared goal of improving patient’s wellbeing, and this shared belief was crucial in scaling Genoa.”
Carmine Petrone
Managing Director, Advent
The pill for success
Genoa benefited from sustained strong performance heading into 2018, catching the attention of many potential suitors. At the time, Genoa was the fifth-largest pharmacy chain in the US with 435 locations across 46 states. Figueroa’s extensive knowledge and experience within the sector significantly contributed to Genoa’s strong position, giving the team a dominant negotiating advantage.
Genoa’s clinical outcomes played a crucial role in attracting potential buyers, as they were meticulously researched, peer-reviewed, and showcased the effectiveness of Genoa’s model. This data was particularly appealing to UnitedHealth Group, an integrated health insurance, healthcare delivery and pharmacy services provider, which ultimately acquired Genoa in late 2018. UnitedHealth recognized the attractiveness of Genoa’s pharmacy platform, as well as the value of its clinical outcomes, and saw an opportunity to deploy this care model against a higher proportion of the patients it insured.
The sale to UnitedHealth made strategic sense for various reasons: it acknowledged the positive impact of Genoa’s care model on patients, while also delivering multiple sources of cost synergies. Additionally, with its existing pharmacy operations footprint and position as one of the nation’s largest Medicaid and Medicare insurers, UnitedHealth saw potential in expanding Genoa’s services.
In addition, the telepsychiatry division of Genoa, which was serving 125,000 people annually across 35 states, was viewed as an attractive capability that United could leverage in different ways. Ultimately, UnitedHealth carved out this segment and expanded it across its patient population.
At the time of sale, Genoa’s services had resulted in medication adherence rates of more than 90%, decreasing emergency room visits by 18%, and a reduction in hospitalizations by 40%. Today, it continues to deliver on its original promise of providing a higher level of pharmacy services at an outstanding value to patients in extreme need.
