Richard Ashworth stepped down as president of Walgreens this year to become president and CEO of Tivity Health Inc., a provider of fitness and social engagement for seniors. In this interview with Jeffrey Woldt, editor-in-chief of Chain Drug Review, Ashworth discusses the motivation for leaving Walgreens after 28 years. He details Tivity’s operations, including its agreement to divest its Nutrition business, which includes Nutrisystem and South Beach Diet, for $575 million. He also discusses plans to make SilverSneakers a lifestyle brand.
WOLDT: What factors convinced you that leaving Walgreens after so many years and going to Tivity was the right decision?
ASHWORTH: It was a hard decision, as you can imagine, because I had been at Walgreens my whole career, and still have so many family members and friends there. But Tivity Health was a unique opportunity. I wanted to do what CEOs do and be the strategic head of a company that is focused on its mission and purpose. That’s important to me.
Tivity Health helps older Americans live their best lives through fitness, social engagement and nutrition. I personally have two passions in that regard. I like to work out, run and stay active, and I’m very serious about how I approach nutrition. I love health care and the difference it makes in people’s lives. Tivity makes a difference, as did Walgreens. Another thing that drew me to Tivity was its history, when it was a population health company called Healthways. Historically I had watched Healthways from a distance when we were doing diabetes management and population health work at Walgreens. So, I always admired the company from afar. And, lastly, it just felt like the right time.
WOLDT: Not to get off on a tangent, but how did Walgreens’ diabetes program compare to what Healthways was doing?
ASHWORTH: It was more of an internal disease management/population health manifestation that we did in partnership with a payer. It involved taking a cohort of people with certain comorbid conditions and treating them as a population. That’s what Healthways used to do — disease management and population health, and they had this SilverSneakers brand underneath it all. It’s an interesting parallel in the sense that this business that is now Tivity Health has moved further upstream toward non-clinical health and wellness.
WOLDT: Did Tivity back away from the population health piece?
ASHWORTH: Yes, the company divested that business in 2016 to focus on SilverSneakers, which provides fitness and social engagement opportunities to eligible Medicare Advantage Members and Prime Fitness, which is a fitness network for those 18 to 64 provided through employers like Walmart as well as member organizations like Blue Cross/Blue Shield Association.
With our WholeHealth Living product, we also do a little bit of utilization management. But that business is primarily non-clinical access to chiro, physical therapy, occupational therapy, acupuncture and massage. Finally, we have a senior nutrition solution called Wisely Well to support seniors who may be experiencing food insecurity, or who have recently been discharged from the hospital.
These products together create a unique value proposition for Medicare Advantage plans, employers and members.
WOLDT: OK. Before we go more deeply into Tivity, maybe you can talk a bit about how your experience at Walgreens prepared you for what you’re doing now.
ASHWORTH: I started as a cashier, stock boy to be more specific. So, I always felt that being at the ground level for a period of time within a division paid me a ton of dividends as I got further along in my career, because I can always go back to what it’s like for the customer, what it’s like for the colleague at the register or stocking the shelves. There’s a lot of value in that, and I work really hard to always remember that. I was always in stores. I was always out visiting customers and spending time with them and talking to them and to colleagues. I had various roles — commercial roles, operational roles, strategy roles, international roles, and geographically diverse roles. All were building blocks in terms of understanding how information flows and how companies get work done.
I worked for a world-class organization, and that teaches you world-class processes and performance management, rigor around decision making, discipline in employee matters — things like that.
Lastly, the combination of retail and health care is great preparation for being the CEO of Tivity Health. I still have a ton to learn here. I just was on a call with one of our network leaders, and I learned something every minute she was speaking. I love that.
WOLDT: Talk a little bit about the health care division. What services do SilverSneakers and Prime provide, and how do you work with payers?
ASHWORTH: The primary model for the health care division is SilverSneakers, which accounts for about 75% of the business. SilverSneakers is a fantastic and leading senior brand and has been around for almost 30 years. It has a net promoter score of 81%. It’s got a strong following within Medicare-eligible populations, and they really understand what SilverSneakers does, and that it provides access to a fitness network around the country. We’re in all 50 states, and we have more than 17,000 fitness locations in our network. We allow for reciprocity of gyms, so you can go to Anytime Fitness one day, go to Lifetime Fitness the next, go the YMCA the third time if you wanted to.
We also provide a ton of digital content and education around open enrollment for Medicare in partnership with our health plans. And we’re constantly creating and delivering digital fitness content. We average 2,500 live, instructor-led virtual classes per week and more than 200 SilverSneakers OnDemand classes in our online library. So that’s SilverSneakers.
Prime Fitness also offers a nationwide network of fitness locations, but we target large employers and sponsoring organizations who provide services to member companies. We have some large employers like Walmart and others. And then we have the Blue Cross Blue Shield Association, which is a national association of 36 Blue Cross Blue Shield companies. Prime is really a fitness vertical, if you think about it, and accounts for about 20% or so of the health care division.
Then there’s about 5% in WholeHealth Living, which handles our acupuncture, massage, chiro, PT, and OT networks. So, we’ve constructed a national network of complementary and alternative medicine providers for our employers to access.
WOLDT: This part of your business must have been impacted by the COVID-19 pandemic and the difficulties people encountered in accessing the gym and other services.
ASHWORTH: For sure. The main product, if you will, is our fitness locations. They are doing a great job of focusing on safety and making sure they use the right hygiene and social distancing protocols. But, as you can imagine, it’s very tentative for people to return. We are seeing people return to their routines and that includes going to the gym, but it has been a challenge. Our survey data tells us that people are itching to get back to a fitness routine, but they want to go when it’s safe. And governors have different versions of how they allow people to go back to the gym. So even if a state is in an “allow” phase, you may have to wear a mask the whole time, or you may not. It may mean 25% occupancy; it may mean 50%. There are many variations. But, yes, COVID has massively impacted our business. The good news is the team pivoted fast to digital. We did this in partnership with our health plans. We have had over 1 million live instructor-led virtual visits since late March, when at the beginning of the year we had zero.
I’ve connected with our top 10 payers, many of whom I knew from my time at Walgreens. The way they view this business is not simply, “Hey, it’s a gym benefit and we want people to go to the gym.” They view it much more longitudinally than that, meaning SilverSneakers is really important in their new member recruitment. Members look for SilverSneakers access in their Medicare Advantage plan selection. It has fantastic brand recognition. The plan sponsors also need it for retention. They’re in our plan already, and they really like SilverSneakers. They trust it. And, yes, it also helps beneficiaries get and stay fit, and develop social connections through their classes and the gym community.
WOLDT: You mentioned that you already knew most of the payers. How different are negotiations at Tivity from what you encountered Walgreens? Are payers pressing you to cut costs like they do in retail pharmacy?
ASHWORTH: Buyers always want the best prices and sellers always want to charge more. So, the dynamics of a network business are really no different. But the nuance here is that what we had at Walgreens was great execution, great brand reputation and great access. Tivity has the same thing — great brand reputation, fantastic consistency, and a nationwide network of fantastic gym providers. So, there are some similarities in that regard.
On the other side, the pharmacy world has trouble with supply and demand, and how many pharmacies are available. In this world, it’s a bit different. We just want seniors to be healthier and more connected. Everybody is running toward trying to find ways to keep them more socially active, more physically fit and more nutritiously fed.
WOLDT: Do payers see the services you provide as a way to keep people out of the hospital, and therefore as an investment that keeps their costs down?
ASHWORTH: Yes, but there are some additional benefits as well. We’ve got some plans that are at one end of the spectrum, meaning go in, get as many utilizers as possible — “I want people physically fit. I know long term that’s going to be better for everyone and cost me less.” Then there are others who are at the other end, saying, “I’m not sure just how impactful this really is, but I’m willing to do it because my members really want it and I want to make them happy.” They are more about the engagement, acquisition and keeping members happy side, less on the clinical. And you have some that are kind of in the middle. So, it’s a little bit of a range. All in all, what they all care about is that their members are happy, have good experiences and are healthy.
WOLDT: Do you see an opportunity to do research that demonstrates the efficacy of what you do?
ASHWORTH: We’re on our way on that one. Over the years the company has done a number of longitudinal studies that correlate physical activity with lower costs, less isolation and loneliness and improved health, but we can do more. A Day One focus for me is to gather more information directly from our consumers. I am very encouraged by the data and results we are seeing.
WOLDT: It doesn’t surprise me to hear that you’re doing that. Maybe you could talk a little bit now about the other side of your business — Nutrisystem — and how that fits into your bigger plans.
ASHWORTH: In May, the company announced a strategic alternatives process for Nutrisystem. I knew that as I was coming on board as CEO and supported that decision.
On October 19, we announced that we have entered into a definitive agreement with a leading food and consumer focused private equity firm, Kainos Capital, to acquire our Nutrition business, which includes Nutrisystem and South Beach Diet, for a purchase price of $575 million in cash.
These are two very well-known brands with programs that work. However, our board and management team believes that divesting the Nutrition business through this transaction will best enable Tivity Health to focus our team, resources and investment on our core health care business, drive long-term, sustainable growth and increase shareholder value.
We are currently a business with over $1 billion in revenue and we have about 1,000 colleagues in three main offices: Franklin, Tenn.; Chandler, Ariz.; and Fort Washington, Pa. When the transaction closes, which we expect to be later this quarter, we’ll be a smaller, but more nimble and focused organization.
WOLDT: With Nutrisystem, you launched a new product line for senior nutrition — how is that going and, with the divestiture, will it continue?
ASHWORTH: Our customers have been very receptive to Wisely Well, our senior nutrition solution, and we will continue to deliver this product in partnership with Nutrisystem after the transaction closes. Food insecurity is a significant issue among seniors, affecting more than five million seniors each year. Health plans recognize that there is value in supporting the health of certain high-risk members through nutritionally balanced home-delivered meals. At the same time, with COVID-19, many organizations that typically provide meals have reduced or temporarily suspended their services. So, we’ve partnered with national senior organizations to provide meals. The Centers for Medicare and Medicaid Services is expanding what is covered under Medicare Advantage supplemental benefits to include things like food and transportation under certain circumstances. So, there is a growing demand for products like Wisely Well from seniors, caregivers, health plans and community organizations.
WOLDT: You mentioned that you’re considering restructuring Tivity Health. What might that entail?
ASHWORTH: The main thing is organizing for growth — our tools, our processes, our people, our structure. All of those things are being reviewed to focus on the drivers of this business that create value for the member and value for the payer. And then value for Tivity. We’re going to organize around those drivers of growth and of value. And then what’s left over we’ll change or find a better place for it. What we’ll do after that is determine where we’re going to invest for growth.
Right now, you know, we’ve got an organizational structure that’s built on a model that delivers value. But I don’t think it’s as efficient as it could be. We’re going to reengineer how we do our work. Since I’ve been on the job, I had to reduce quite a bit of cost because we had some stabilizing of the business to do. So, we’ve accomplished that. Now I feel really confident about our stability in the short and medium term.
We’ve been able to make sure our balance sheet and banking condition are stable. But we had to take make hard choices that resulted in about 15% of the workforce being eliminated. Part of the catalyst was related to COVID. That hit our revenues pretty heavily. But our model is fairly adaptable and resilient, because our health plans care about the longer-term value of the member, and we continue to partner with them to deliver value.
WOLDT: Cutting costs has also been a priority at Walgreens, so you’ve had some experience with that.
ASHWORTH: Yes, I have. I don’t like that work, to be honest. I like the growth work better, but it is a required element of the job. I’m the chief executing officer, not just the chief executive officer. So you’ve got to get in there and you’ve got to do the work to identify opportunities for improvement, then take action that will enable the business to grow.
WOLDT: Richard, you did some great things to communicate with people throughout the Walgreens organization. Are you using the same tools at Tivity?
ASHWORTH: Communication is a top priority. It is required for the organization to understand where we’re headed, and in times of crisis like COVID it just means that communication needs to be more frequent and transparent than typical.
It needs to be more direct, and it requires leaders to be more present when they’re engaging. I do a weekly video to the whole organization, hitting on tough topics. I’ve done meet-and-greets with pretty much all of the team. And then I have something we call coffee talk, which is a smaller subset of colleagues on Zoom. And we engage in open dialogue through something called ask me anything calls, where anyone within the entire organization can ask a question of me or the executive team. In addition, we offer a lot of written communication.
WOLDT: I know you’ve only been there a short time, but have you had much opportunity to interact with customers — the people who actually make use of what the company offers?
ASHWORTH: Not as much as I would like to. I’ve been spending time with our gyms, so talking to the executives there. I’ve been talking to our health plans, and I’ve been talking to our instructors — the people who actually conduct the classes. I just spent time with three of our trainers who were finalists for our Instructor of the Year program. They are just fantastic, people who wake up every day excited to get into a group with Medicare beneficiaries and teach them how to build strength and focus on their core or how to navigate stairs. The passion they have for it is pretty infectious. In terms of talking to members, not as much as I’d like to as yet. But that’s coming. I have, however, attended some of our virtual classes with members, and many of them are outstripping me in their physical capabilities.
WOLDT: Is the biggest part of Tivity’s future going to be built around creating that ecosystem that you mentioned?
ASHWORTH: It’s still a bit early to talk about where the strategy is ultimately going, but I’ll give the preamble. Yes, it’s creating SilverSneakers as a lifestyle brand. A modern destination for healthy living. So how do we think about that? First, we are focused on physical fitness with our gyms being a core component but also physical activity outside the gym and accelerating the social connection opportunities within that focus. Second, a real emphasis on engagement, clinical outcomes, and data. Then the third part of it will be the adjacencies. What else can Tivity do to help beneficiaries live their best lives? We have chiropractic, massage, PT/OT- integrative medicine. We have fitness. We have nutrition. But if you look under Medicare Advantage supplemental benefits and you think about all things that have been added or will be added over time, I can see some natural places that SilverSneakers or Tivity could go that would be new revenue streams that are capital-lite, digital-first, technology-oriented platform businesses.
WOLDT: Do you see an opportunity to cooperate with a company like Walgreens and other retailers?
ASHWORTH: Yes. We already partner with Aetna/CVS Health. Prior to COVID, we were coming to life at their CVS HealthHUBs, and we recently did a combined webinar with them to talk about the importance of physical activity and social connection. In 2019 we did a lot with CVS in Houston when they were opening their HealthHUBs, where SilverSneakers conducted classes. The same with Walmart Health.
WOLDT: As you think about the company’s strategy, how long do you think it will be before you knew precisely what it is you want to do? Is that a six-month process or what?
ASHWORTH: Hopefully not that long. I’ve got the hypothesis-infused thinking here already, meaning I kind of have an idea about where I want the company to go. It has become the prevailing wisdom here too among the leadership team. But we have to do this in partnership with the board. I’d like to have our strategy be something that the board is heavily invested in.
WOLDT: Do you think people at Tivity will be open to a new direction?
ASHWORTH: The hardest part of changing jobs was leaving my friends at Walgreens. I’ve met thousands of them, and they’re just salt-of-the-earth people trying to help customers. It’s such a good culture. But I come here and the passion and focus from the employees feels very, very similar — just really being relentlessly focused on the member and doing what’s right every day.
As CEO, I’ve been focusing a lot of time on diversity and inclusion. It’s my obligation and passion to make sure that we have an inclusive work environment at Tivity Health. I joined more than 1,300 other CEOs and signed the CEO Pledge for Diversity and Inclusion which is an action-focused commitment on these issues. And then with COVID, it’s all about safety. I closed all the offices and made coming in volunteer only. We’re following all our protocols.
WOLDT: You said that promoting diversity and inclusion is a priority. Does that effort extend to customers as well as employees?
ASHWORTH: Absolutely. COVID-19 has created an increased awareness of health care disparities, particularly in the senior population. The most basic needs of far too many of our beneficiaries, their families and their caregivers are not being met, and that is impacting their physical health. It is impacting their access to health care and health care services. And it is sadly influencing outcomes related to COVID-19. We’re beginning to get focused on the fact that there’s an economic impact to that for health plans, in addition to the fact that families themselves are really struggling.