mckesson Corporate Citizenship Report - 7.4M 2005

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mckesson Corporate Citizenship Report - 7.4M 2005

  1. 1. DELIVERING ON OUR VALUES McKesson’s Corporate Citizenship Report 2005
  2. 2. COMMITMENT TO OUR EMPLOYEES
  3. 3. COMMITMENT TO IMPROVING THE QUALITY OF HEALTHCARE
  4. 4. COMMITMENT TO OUR COMMUNITY McKesson Corporation is the leading provider of supply, information and care management products and services designed to reduce costs and improve quality across healthcare. From heart medicines to stethoscopes to electronic medical records records, McKesson solu- tions empower healthcare professionals with the tools they need to deliver care more efficiently and effectively. Founded over 170 years ago, with annual revenues of more than $80 billion, McKesson is among the 15 largest companies in the United States based on Fortune Magazine’s rankings.
  5. 5. MCKESSON CORPORATE – Citizenship Report 2005 “WE ARE A COMMUNITY PARTNER AND WE STRIVE TO ADD VALUE IN WAYS THAT GO BEYOND THE TRADITIONAL DEFINITIONS. WE ARE MCKESSON, EMPOWERING HEALTHCARE.” JOHN HAMMERGREN, CHAIRMAN AND CEO
  6. 6. 7 LETTER FROM THE CHAIRMAN This is McKesson’s first Corporate Citizenship Report. It is a starting point from which we will benchmark ourselves as we move forward. Today’s businesses are increasingly held accountable for their actions by shareholders, employees, government, customers and We are more than the nation’s largest distributor of pharmaceuti- various community stakeholders. This emphasis on increased cals, more than #15 in the Fortune 500. We are a company transparency encourages companies to reflect on their business working to improve the quality of healthcare for generations practices and core values, and provides the opportunity for to come, and a company grounded in positive values. We are an positive change. industry leader that is delivering outstanding results for our cus- tomers, and is always striving to do better. We are also At McKesson, we have a long, rich history of change leadership. committed to treating our employees well, and giving back to We were founded in 1833 on the belief that our company the communities where we do business. We are a community should help provide medicines to those that need them. By the partner and we strive to add value in ways that go beyond the 1970s, our company had become a diverse holding company traditional definitions. We are McKesson, Empowering Healthcare. with distribution operations in pharmaceutical, water, dairy, chemical and food products. In the 1990s, McKesson once again narrowed its focus back to its heritage—healthcare. This evolution has guided our behaviors and actions. It has helped us keep sight of the bigger picture. We concentrate our efforts on our total company value—not just on our near-term financial results, but on our long-term sustainability John Hammergren and our contribution to the quality of life in our communities. Chairman and Chief Executive Officer
  7. 7. MCKESSON CORPORATE – Citizenship Report 2005 OUR CORE VALUES DRIVE OUR CORPORATE CULTURE. OUTLINED IN THIS REPORT IS HOW WE BRING THESE PRINCIPLES TO BEAR ON OUR DAILY OPERATIONS, PRACTICES THAT AFFECT OUR COMPANY, OUR PEOPLE AND OUR WORLD.
  8. 8. 9 COMPANY HISTORY In 1967, Foremost, a nationwide dairy distributor, and McKesson & Robbins merged to become Foremost-McKesson. Foremost- McKesson, Inc. was the largest United States distributor of A commitment to corporate citizenship runs deep through pharmaceuticals, alcoholic beverages and chemicals. It was the McKesson’s history. More than 170 years ago, the company was nation’s largest supplier of milk-based products and was the founded with the goal of helping people receive the healthcare largest producer of processed water in the western half of the they deserve. We trace our roots back to 1833 when John United States. McKesson and Charles Olcott opened a small drug import and wholesale shop in New York City’s financial district. The During the 1980s, Foremost-McKesson divested most of its McKesson and Olcott business thrived, providing clients botani- peripheral businesses and began the process of refocusing on its cal drugs, such as herbs, roots, leaves, bark and vegetable core healthcare supply management businesses and investing in extracts. Early on they brought Daniel Robbins on board and in new technologies. In 1984, McKesson Corporation became the 1853, after Olcott passed away, the company was renamed new name of the company. McKesson & Robbins. In the 1990s, McKesson further focused its mission: To be the By 1929, McKesson & Robbins’s profits had reached $4.1 million world leader in healthcare supply management and information on unprecedented sales of $140 million. Due to progressive busi- technologies by advancing the success of its partners as they ness strategies, the company achieved steady growth despite the restructure and improve healthcare. This focus led McKesson to Great Depression. acquire medical technology company HBOC to bring innovative software solutions to its broad base of retail, hospital, health sys- Leveraging post-war opportunities, McKesson & Robbins created tem, payor, long-term care, physician and home care customers. McKesson Chemical Company, another major operating unit. By 1955, McKesson Chemical Company had become a diversified With annual revenues of more than $80 billion, McKesson now national distribution leader. ranks as the 15th-largest publicly-traded industrial company in the United States.
  9. 9. MCKESSON CORPORATE – Citizenship Report 2005 Major Trends Driving Growth Demographics drive drug consumption McKesson delivers 30% of the nation’s daily drug needs Increased involvement by consumers McKesson technology helps drive healthcare quality in their own healthcare Demand by payors and employers McKesson solutions deliver best practice information at point of care for improved outcomes McKesson solutions provide pharmaceutical supply chain Focus on patient safety integrity and reduce medication errors Focus on managing chronic diseases McKesson provides health management solutions across spectrum of care McKesson coordinates solutions between manufacturers, customers, Pressure to control healthcare costs and payors to manage costs, improve quality, and increase efficiency OUR COMPANY LEADING THE EVOLUTION Company Overview McKesson is leading the evolution of healthcare by helping our customers provide patients with the most cost effective, quality- McKesson is a healthcare services and information technology driven, results-based medical care: company dedicated to helping our customers deliver high-quality healthcare by reducing costs, streamlining processes and – Playing an active role in changing the way healthcare improving the quality and safety of patient care. We are helping is delivered. create a healthcare system where quality is higher, mistakes are – Providing tools and technology to pharmacists and fewer, costs are lower, physicians know more and pharmacists hospitals to bring about improvements in efficiency, have more time for customers. safety and patient care. McKesson’s Vision – Collaborating with our customers to improve every Our vision is to bring together clinical knowledge, process aspect of healthcare. expertise, technology and the resources of a leading company to – Creating innovative solutions, delivering exceptional fundamentally change the cost and quality of healthcare. customer service and enabling operational excellence. Every day… – Making changes at McKesson that will enable us— and our customers—to achieve our visions. – We help 25,000 neighborhood drug stores, retail chains and healthcare facilities improve their pharmacy operations. Products and Services – We help more than 600 payor organizations manage McKesson’s products and services empower healthcare providers costs and improve the quality of patient care. to improve the quality of patient care by managing inventory in – We help over 50,000 healthcare facilities and physician retail pharmacies, reducing unnecessary paperwork in hospitals, practices deliver safer, more-efficient care. and freeing pharmacists to counsel patients. Here is a summary – We help some 3,000 pharmaceutical and medical-supply of some of McKesson’s key offerings: manufacturers deliver their products to all points of care.
  10. 10. 11 By embracing the I CARE Shared Principles, we have the foundation necessary to deliver on our vision. OUR SHARED PRINCIPLES – McKesson supplies branded, generic and over-the-counter pharmaceutical drugs to pharmacies, hospitals and other care providers. Employees at successful companies are driven to perform because they share a common vision for their company, and a – McKesson is the nation’s largest supplier of medical- common set of values for the way they interact with each other surgical supplies, distributing more than 150,000 products and their customers. In 1997, a group of employees at McKesson to nursing homes, physician offices and surgery centers. developed the five Shared Principles (I CARE) that described the – McKesson provides hospital and retail pharmacy customers set of behaviors that define the company’s culture. with robots to aid in pharmaceutical dispensing, bedside McKesson’s I CARE Shared Principles: bar-coding technology, and automated inventory and order management. Integrity – McKesson provides disease management services for Customer-first Medicare and state Medicaid programs to improve care Accountability and outcomes for the chronically ill. Respect Excellence – McKesson delivers bio-pharmaceutical drugs to providers to treat patients with chronic conditions such as cancer, These values and their corresponding behaviors connect hepatitis C, arthritis and multiple sclerosis. McKesson employees through a common language and common approach to their jobs. Guiding our decisions using the I CARE – McKesson offers outsourcing services for pharmacy Shared Principles every day helps us reach our company goals management of acute care hospitals, health systems and strengthens our relationships with fellow employees. and other healthcare providers. By embracing the I CARE Shared Principles, we have the founda- – McKesson offers a variety of health information technologies tion necessary to deliver on our vision. to reduce paperwork, facilitate physician access to data at the point of care and expedite accurate payment for providers and payors.
  11. 11. MCKESSON CORPORATE – Citizenship Report 2005 COMPLIANCE AND INTEGRITY – McKesson currently has four standing committees: Audit, Compensation, Finance, and Governance. Each of the committees is composed entirely of independent Rigorous, unwavering compliance with laws and regulations is directors, satisfying applicable legal, regulatory, and the foundation for economic performance and customer and stock exchange requirements. shareholder value creation. McKesson focuses intensely on devel- oping, implementing and continually refining systems and – The Board is also responsible for assuring that McKesson’s processes that enable full compliance with the laws and regula- management and employees operate in a legal and ethically tions that govern our operations. These include: Financial laws responsible manner. To ensure transparent accounting and and regulations such as the Securities and Exchange Commission, reporting practices, independent board members have Sarbanes-Oxley and Financial Accounting Standards Board; the access to the company’s outside advisors and meet in Food and Drug Administration; and all federal and state laws. executive session without company management present We are especially aware of our responsibility to maintain the on a regularly scheduled basis. integrity of the pharmaceutical supply chain and consumer and patient safety. We provide our customers the complete range of Ethics Hotline pharmaceuticals approved for use by the FDA, and apply all nec- Speaking up about misconduct is an important part of McKesson’s essary controls governing the distribution of these substances. dedication to ethical behavior. To make it easier for employees to voice their concerns about suspected illegal, unethical, or unsafe CORPORATE GOVERNANCE AND ETHICS conduct, McKesson has established the McKesson EthicsLine, independently operated by Global Compliance Services. It is a McKesson recently updated its Corporate Governance Guidelines toll-free hotline, available 24 hours a day, 7 days a week. to reflect the Board’s commitment to transparency and oversight When an employee calls the EthicsLine, a trained third-party com- both at the Board and management level, and to provide the munication specialist will ask a series of questions to better framework for the governance of the company. understand the situation. A report is prepared and forwarded to McKesson’s compliance attorney for review and appropriate action.
  12. 12. 13 Callers may remain anonymous if they choose to do so; no call- Protecting the Integrity of the Pharmaceutical Supply Chain tracing or recording devices are used. Any employee who For more than 170 years, McKesson has led the industry in the chooses to reveal his or her identity is protected by the compa- delivery of medicines to drug stores. We purchase medicines ny’s Code of Business Conduct and Ethics, which explicitly directly from 450 manufacturers and supply more than 75,000 forbids any action that could be construed as retaliation. customer sites in all 50 states. McKesson has long been a leader in developing and implementing cutting-edge technology PUBLIC AFFAIRS to enhance the security of the pharmaceutical supply chain. We were the first wholesaler to fully automate our warehouses As the nation’s largest healthcare services company, McKesson and distribution networks with radio frequency and scanning Corporation recognizes its responsibility to participate in the technology. Today, we are again taking the lead as we work with public policy process on healthcare issues and concerns. Through manufacturers and major retailers to test radio frequency our Public Affairs Department, the company builds and maintains identification (RFID) technology that will track pharmaceutical working relationships with elected and appointed officials at products from the manufacturer to the wholesaler to the every level of government, from Washington, D.C., to state capi- pharmacy. In addition to more stringent wholesaler licensure tals to city halls across America. More importantly, we encourage standards and tougher criminal penalties for those who these policymakers to visit our facilities and customer sites to counterfeit drugs, RFID technology will limit the ability and meet with our executives and to witness firsthand how our opportunity for compromised or adulterated products to enter healthcare businesses and innovative solutions improve the the pharmaceutical distribution network. quality and delivery of care while removing unnecessary costs. Patient Safety Each day, McKesson actively works with industry colleagues, gov- As the world’s largest provider of healthcare information technol- ernment agencies, and elected officials to find solutions to some ogy (HIT), McKesson offers comprehensive solutions designed to of the most challenging problems facing the healthcare system. enhance patient safety at every touch point of the healthcare system. Our barcoding technology promotes the safe delivery of
  13. 13. MCKESSON CORPORATE – Citizenship Report 2005 Corporate Financial Highlights FISCAL YEAR ENDING MARCH 31, 2005 $81 18.7% billion in revenue debt-to-capital ratio 16% $1.8 increase in revenues billion in cash $1.5 25,200 billion cash flow from employees operations Net revenues for our segments for the last three years were as follows: 2005 2004 2003 $ BILLIONS Pharmaceutical Solutions $ 76.3 95% $ 65.6 94% $ 53.2 93% Medical-Surgical Solutions 2.9 4 2.7 4 2.8 5 Information Solutions 1.3 1 1.0 2 1.1 2 Total $ 80.5 100% $ 69.3 100% $ 57.1 100% medicines from pharmacy robotic systems to bedside medication As federal and state governments consider new ways to administration. This unique medication management process improve the quality and delivery of healthcare to populations saves lives and time, removes rework, and reduces human error with chronic illnesses, McKesson believes greater utilization of and resulting costs. This is just the first step, however, on the disease management programs is vital to enhancing care out- path to ensure patient safety through greater use of technology. comes for the elderly and vulnerable populations, while Digitizing the healthcare system through widespread adoption of concurrently reducing the cost of care. In states where we pro- HIT will improve the quality of care for all Americans. McKesson vide disease management services to Medicaid patients, has developed solutions that enable healthcare professionals to physician and patient satisfaction has improved along with capture discrete patient data from disparate sources, including health outcomes. We estimate these states are saving approxi- the pharmacy, physician’s office, laboratory and hospital, to form mately two dollars for every dollar spent with McKesson. a comprehensive, portable and confidential electronic patient FINANCIALS record. Thousands of lives and millions of dollars can be saved in reduced healthcare spending through the rapid adoption of HIT. We continue to work with our government partners to make this McKesson strives to be a leader in the corporate citizenship dream a reality. efforts of our industry. We believe that through ethical corporate governance, fair employment policies, and sound environmental Disease Management practices, we will deliver enhanced financial performance. McKesson provides disease management programs for com- Business Segments mercial, Medicaid and Medicare populations in which we leverage our experience with patient services, pharmacy McKesson’s strategy is to create strong, value-based relationships management and healthcare quality improvement activities. with customers. Our diverse business segments allow us to offer These outcome-focused, evidence-based interventions our customers a full range of products and services that reduce improve patients’ abilities to participate in their care and help costs and improve quality care. physicians by reinforcing their medical recommendations.
  14. 14. * Assumes $100 invested in McKesson Common Stock and in each index on March 31, 2000 and that all dividends are reinvested. $ MILLIONS $ MILLIONS 90000 3500 Revenues Gross Profit 3000 80000 2500 70000 2000 1500 60000 Net Income 1000 50000 500 40000 0 01 02 03 04 05 01 02 03 04 05** FISCAL YEAR ENDING MARCH 31 FISCAL YEAR ENDING MARCH 31 OUR PEOPLE ** Excludes impact of the shareholder litigation charge $ DOLLARS $ MILLIONS Revenues Gross Profit & Net Income 15 20000 Market Value Per Common Share 200 $ MILLIONS $ DOLLARS 72 40 15000 150 35 10000 100 McKesson Conducts Business Through Gross Profit & Net Income Three Segments 70 Market Value/Common Share 30 5000 50 68 25 0 0 01 02 03 04 05 00 01 02 03 04 05 66 20 FISCAL YEAR ENDING MARCH 31 FISCAL YEAR ENDING MARCH 31 01 02 03 04 05 01 02 03 04 05 Stockholders’ ENDING MARCH 31 FISCAL YEAR Equity S&P 500 Index FISCAL YEAR ENDING MARCH 31 Total Assets McKesson Corporation COMPENSATION Total Debt Value Line HealthCare Sector Index * Assumes $100 invested in McKesson Common Five Year Cumulative Stock and in each index on March 31, 2000 and *Assumes $100 invested reinvested. Common Stock and in each index on March 31,1999 and that all dividends are in McKesson Total Return* Total Assets, Equity, Debt that all dividends are reinvested. Cash Dividends Declared $ MILLIONS $ MILLIONS 90000 3500 Revenues Gross Profit 3000 80000 2500 70000 2000 1500 60000 Net Income 1000 50000 500 40000 0 01 02 03 04 05 01 02 03 04 05** and outsourcing MARCH 31 to pharmacies,FISCAL YEAR ENDING MARCH 31of FISCAL YEAR ENDING services McKesson’s OSHA Finesthecharge ** Excludes impact of shareholder litigation DOLLAR AMOUNT OF FINES PER YEAR INSPECTIONS/VIOLATIONS PER YEAR 20 6000 OSHA Inspections 5000 OSHA Violations 15 Revenues 4000 McKesson’s Medical-Surgical Solutions segment distributes med- Fines OSHA 10 $ MILLIONS $ DOLLARS Through our Pharmaceutical Solutions segment, McKesson is a 3000 72 40 McKesson believes that our most valuable and important asset is 2000 leading distributor of ethical and proprietary drugs, and health 5 our workforce. It is for this reason that McKesson continually 1000 35 and beauty care products throughout North America. This seg- 70 Market Value/Common Share strives to be an employer of choice, by treating our employees 0 0 ment also manufactures and sells automated pharmaceutical 01 02 03 04 01 30 02 03 04 with respect, fairness, and dignity. dispensing systems for retail pharmacies, medical management FISCAL YEAR ENDING MARCH 31 FISCAL YEAR ENDING MARCH 31 68 25 and specialty pharmaceutical solutions for biotech and pharma- McKesson employee compensation and benefits programs ceutical manufacturers, patient and payor services, consulting 66 20 reflect the wide variety of needs faced by our employees. From 01 02 03 04 05 01 02 03 04 05 and distribution retirement planning to chronic disease management to adoption NumberYEARMcKesson’s 31 FISCAL of ENDING MARCH Cost of McKesson’s Worker’s 31 FISCAL YEAR ENDING MARCH Trends in McKesson’s OSHA first-aid products in the United States. Inspections & Violations assistance to partner benefits, McKesson is committed to $ MILLIONS TOTAL CLAIMS PER YEAR offering our employees the tools they need to manage the 1500 15 demands of both work and family life. *Assumes $100 invested in McKesson Common Stock and in each index on March 31,1999 and ical-surgical supplies and equipment, and provides logistics and 12 that all dividends are reinvested. 1200 OSHA Fines Cost of Claims related Dividendswithin the United States. Market Value Per Common Share Cash services Declared 9 McKesson’s Provider Technologies segment delivers enterprise- 900 6 wide patient care, clinical, financial, supply chain, managed care, McKesson believes that every employee has the potential to add automation and strategic management software solutions, as value to our business, which is why we follow a “pay-for-per- well as outsourcing and other services, to healthcare organiza- formance” compensation philosophy. This compensation tions throughout North America, the United Kingdom and other philosophy rewards employees of all levels based on their contri- European countries. bution to the company’s success. Worker’s Compensation Claims Compensation Claims
  15. 15. MCKESSON CORPORATE – Citizenship Report 2005 BENEFITS – Access to a triage nurse call-in center – Learning opportunities focused on healthy living and McKesson’s benefits programs are another way of adding value work-life balance to our employees’ total compensation package, and focusing on improving the long-term health and welfare of our employees. Through “MyMcKessonHR,” the company’s human resources Our benefits program can add as much as 27% percent or more intranet, employees have access to detailed information on ben- in value to an employee’s pay. According to our 2005 Employee efit plans, along with contact information and features at their Survey, 76% of employees responded favorably to McKesson’s fingertips, in order to help employees make the most of the benefits offering. This score is five points higher than the global available programs. high-performing benchmark. Due to the fact that McKesson has Health Benefits grown over many years of mergers and acquisitions, our Human Resources department has recently been focused on aligning McKesson is dedicated to providing employees with access to all of the employee benefits offered so that they are fair and quality healthcare through a wide variety of programs and servic- equitable across the company. es. McKesson strives to provide employees with the tools they need to proactively manage their own health through subsidized Employee benefits include a wide variety of life services, including: health coverage, the McKesson CareEnhance website, health – Help with medical, dental and vision care costs education lunch-and-learns, McKesson’s nurse triage hotline, chronic disease management information, free on-site health – Domestic partner benefits screenings, and other preventative measures. – Retirement savings Through CareEnhance, the company’s online web service that – Disability coverage allows employees to get a full range of information on most any – Life insurance health topic, employees can take a free, confidential health risk – Tuition reimbursement assessment. Employees answer a simple health questionnaire and provide their basic health history to receive personalized – Adoption assistance
  16. 16. 17 information about their risk factors. Employees can also research EAP a medical concern, read articles online and listen to audio The McKesson Employee Assistance Program (EAP) provides health information. toll-free, 24-hour, 365-day support services at no cost to our employees. EAP representatives can help with everyday prob- Eligible McKesson employees are offered employer-sponsored lems, including referrals for locating child care, getting advice on health coverage in the United States and Canada, and state legal matters and help with financial planning to more serious sponsored health coverage in Europe, which is partly funded problems related to stress, marital and relationship concerns, and through required contributions. All medical plans cover office alcohol or other drug problems. visits, hospital stays, surgery, and other common medical services. Pharmacy customers make up a large part of our business, and Retirement Savings those relationships allow our Company to offer a generous McKesson’s Profit-Sharing Investment Plan is a 401(k) plan that employee prescription benefit plan. There are over 55,000 phar- affords employees a smart, convenient way to save for a secure macies in McKesson’s drug benefit plan network, allowing our financial future. It offers financial choice and flexibility, and gives employees maximum choice. Our employees also have the employees the opportunity to become a company shareholder. option to maximize savings by ordering prescriptions by mail for Approximately two-thirds of our employees are currently taking a three-month supply of any brand name medication. Whether advantage of the plan. our employees visit a pharmacy or fill their prescriptions online, McKesson believes strongly in providing our employees with the there is an annual cap on out-of-pocket costs. tools they need to be financially prepared for retirement. Since Basic life and AD&D insurance are automatically provided to the plan’s inception in 1972, McKesson has matched employee McKesson employees. Employees may purchase reduced cost contributions, up to the first six percent of salary. In recent years, vision, dental, disability, supplemental life and AD&D coverage, McKesson has contributed a monthly match, as well as an addi- as well as dependent life insurance for a spouse, domestic tional amount tied to annual business performance. Company partner, and children. contributions for the past five years were as follows:
  17. 17. MCKESSON CORPORATE – Citizenship Report 2005 Plan Year Ending Company Match Educational Assistance McKesson believes in life-long learning, and the company offers March 31, 2005 See Below an education reimbursement program that pays 100% of eligible March 31, 2004 60% expenses for approved courses. All course required fees (such as March 31, 2003 65% tuition, lab fees, and registration fees) are considered eligible March 31, 2002 78% expenses. The lifetime maximum for undergraduate courses is March 31, 2001 70% $21,000 and the graduate lifetime maximum is $10,500. Beginning April 1, 2005, McKesson’s matching contribution is McKesson also offers two scholarship programs for employees’ 100% on the first 3% of pay contributed and 50% on the next children: 2% of pay. National Merit™ Scholarship Program Stock purchase plan Up to 20 four-year college scholarships, ranging from $1,000 to The Employee Stock Purchase Plan (ESPP) allows eligible employ- $2,500 per year are awarded to employees’ children each year. ees to participate in the plan and purchase shares of the This is a competitive academic scholarship and winners are deter- company’s common stock at a 15% discount through payroll mined by an independent scholarship administrator. deductions. Each participating employee receives shares of the company’s common stock based on their contributions over a Scholarship America three-month purchase period. Up to 20 four-year awards ranging from $1,000 to $2,500 are made each year to employees’ children enrolled full-time in Adoption Assistance accredited colleges or vocational schools. This scholarship is Adoption Assistance is available to help our employees with the awarded based upon the student’s overall potential to succeed, cost of adoption. This program reimburses up to $2,000 in rather than strictly focusing on academic achievement. Winners expenses for adoptions. are determined by an independent scholarship administrator.
  18. 18. 19 DIVERSITY Award and Recognition Programs McKesson’s Community Relations department offers two award When you hear the word “diversity” at McKesson, we are not programs for employees showing leadership involvement in only speaking of gender, age and race. We believe that diversity the community. The President’s Award is a quarterly award can be found everywhere—a diverse upbringing or life experi- given by each business unit president to employees that have ence can cause diversity of thought and enable employees to demonstrated outstanding community service, and the Neil bring a new perspective to the table. McKesson believes that Harlan Award, an annual national employee volunteer recognition valuing diversity gives us a competitive advantage and is a program, provides five award winners with cash grants ranging cornerstone of our reputation as a great company. To that end, from $1,000 to $5,000 to the non-profits of their choice. we promote a business model of diversity excellence. WORKPLACE SAFETY McKesson was voted #1 in Workplace Diversity by Computer World Magazine in 2003, was voted one of the best places for McKesson takes employee safety very seriously, and is constantly minorities in Atlanta by The Atlanta Business Times, and was striving to improve the safety of our workplaces. In addition voted #14 of the Top 25 Companies for Women in the Bay Area to complying with all Occupational Safety and Health by the San Francisco Chronicle. As a company, McKesson is Administration (OSHA) regulations, McKesson also provides each acknowledged internationally as one of the Top Ten Companies of our facility managers with emergency preparedness courses, for Women on the Board of Directors by the National Association fire drills, automatic defibrillators, first aid kits, and emergency of Women Business Leaders. preparedness posters for all break rooms. McKesson employees, under the guidance of the Vice President OSHA violations have decreased from 18 in 2001 to 0 in 2005 of Diversity, have formed pilot Diversity Councils in four of the and OSHA fines have decreased from $5,938 in 2001 to $0 in company’s largest offices. 2005. Worker’s compensation claims have decreased from 960 claims in 2001 to 701 claims in 2005, reflecting the company’s emphasis on improved workplace safety.
  19. 19. MCKESSON CORPORATE – Citizenship Report 2005 The purpose of these councils is to: Through our company-wide subcontracting program, McKesson encourages and facilitates small and diverse business sales – Create awareness by conveying the company’s diversity opportunities. message. In addition to subcontracting opportunities, McKesson’s supplier – Help create the environment for living diversity daily. diversity program supports the viability and growth of diverse – Recommend diversity management implementation businesses through contractual mentoring relationships that strategies to senior management. advance meaningful growth opportunities. Since 1994, McKesson – Share information across business units and local chapters. has maintained a mentoring program that provides extraordinary support and guidance to its business protégés. – Lead development of and alignment with local chapter tactical objectives. OUR WORLD – Create change agents in our individual business units in support of the diversity vision. The Environment – Empower McKesson’s workforce to meet business It is common knowledge in the business world that what you can objectives through a diversity focus. measure, you can manage. McKesson’s dedication to reducing our energy, water and fuel consumption has driven us to begin Supplier Diversity the complex task of measuring these resources. Our belief in diversity extends to our suppliers as well. McKesson recognizes and promotes the outstanding contributions made by Electricity and CO2 Emissions diverse businesses to the economic health and diversity of com- In this first year of data gathering and consolidation, we have munities throughout the United States. Our business partners been able to monitor a quarter of our 16.5 million square feet of include small, disadvantaged, historically underutilized, minority- real estate for purchased electricity usage and resultant carbon owned, women-owned, veteran-owned, service-disabled, and dioxide emissions. Historically Underutilized Business Zones (HUB) businesses, as well as Javits-Wagner-O’Day Act (JWOD) non-profit agencies.
  20. 20. 21 Electricity and Water Consumption Fiscal Year 04 Fiscal Year 05 Facilities monitored for kWh 24 21 sq ft monitored for kWh 4,247,814 4,580,233 Total MWh (kWh/1000) 66,612 65,421 kWh /sq ft 15.68 14.28 lbs. CO2 /sq ft (resulting from consumption of electricity) 22.42 20.72 lbs. SO2 /sq ft (resulting from consumption of electricity) not tracked 0.10 lbs. NOx /sq ft (resulting from consumption of electricity) not tracked 0.04 % of RE monitored for kWh /sq ft and CO2 /sq ft 27% 29% Facilities monitored for gallons of water 11 23 sq ft monitored for gallons of water 2,062,285 5,091,510 Gallons /sq ft 12.25 6.66 % of RE monitored for gallons /sq ft 13% 32% To calculate carbon dioxide emissions from our purchased elec- to source recycled products whenever possible. In Fiscal Year tricity and from our fleet fuel usage, we used the highly 2004, we began to track the percentage of post-consumer recy- esteemed GHG Protocol, a corporate accounting and reporting cled materials that we purchase compared to total spending on standard for greenhouse gas (GHG) emissions. office products. According to Corporate Express, the largest supplier of office products to American corporations, McKesson’s Fleet Fuel Usage and CO2 Emissions recycled office products spending is 22%, which is 10% greater than the national average McKesson is not a manufacturer; therefore our CO2 emissions are mainly derived from the impact of our delivery vehicles and McKesson’s Energy-Efficiency Lighting Program those of our outsourced carriers. We have begun to measure our fleet fuel usage statistics in order to monitor, manage and reduce In 2002, McKesson began a major initiative to increase energy our CO2 emissions. The average CO2 emissions per vehicle efficiency in its distribution centers. In this first phase (ending in Fiscal Year 2005 was 17.4 metric tons, down from 18.4 in Fiscal Year 2004), 17 facilities have retrofitted their lights with Fiscal Year 2004. energy efficient technology. The cost savings from these projects was $260,513 in Fiscal Year 2004 alone. There were also ECO-EFFICIENCY INITIATIVES significant energy savings that translated into a reduced impact on the global climate: 2,888,212 kilowatt-hours were conserved in Fiscal Year 2004. In addition to beginning to measure and reduce our water, fuel and electricity consumption, we are also committed to a variety of Ozone Depleting Substances (ODS) eco-efficiency initiatives aimed at conserving natural resources, McKesson is concerned with the existence of ozone depleting which in turn, saves money and adds shareholder value. substances in operations. Where these materials exist (in cooling, McKesson’s Commitment to Recycling air conditioning, and fire suppression systems) we have been making extensive efforts to replace these substances with McKesson has established recycling programs in more than environmentally-preferable options. 84% of our locations, with a goal of 100% by end of Fiscal Year 2006. Additionally, McKesson’s Procurement Department strives
  21. 21. MCKESSON CORPORATE – Citizenship Report 2005 COMMUNITY INVOLVEMENT Savings Realized through McKesson’s Plastic Tote Program Each week, McKesson delivers 583,000 boxes of pharmaceuti- The McKesson Foundation was established in 1943 and the com- cals to its customers. The Company was spending an average of pany’s commitment to giving back has grown deeper ever since. $338,000 per week on cardboard boxes for these deliveries. Investing in the communities where we live and work truly brings McKesson decided to make an initial investment of $3 million for our I CARE Shared Principles to life. reusable plastic totes to replace the cardboard boxes. That investment has paid off. McKesson now saves over $17 million In addition to cash grants from the McKesson Foundation, each year on cardboard costs and has saved an incredible 16.8 McKesson employees donate their time to the causes most metric tons of cardboard each year. important to them. Our employees volunteered an incredible 16,521 hours in 2004, which has a cash value of $290,312. ENVIRONMENTAL, HEALTH, AND SAFETY The McKesson Foundation and the Community Relations Department are committed to building healthier communities by Environmental Health and Safety at investing our company’s resources in non-profit agencies and Current McKesson Operations supporting employees in their volunteer activities. Because the amount of potentially hazardous materials McKesson handles is so small, the Environmental Protection Agency has Employee Volunteer Support: labeled us a “conditionally-exempt, small-quantity generator.” McKesson’s AngelPoints Program Although McKesson has been labeled “exempt,” we still proac- McKesson’s AngelPoints Program promotes employee participa- tively monitor any potential hazardous waste issues. tion at non-profit organizations by providing grants linked to individual volunteer involvement with no personal monetary donation required. Employees earn one AngelPoint for every hour of completed volunteer work. McKesson’s volunteer web portal allows employees to search for volunteer opportunities, read stories, and view photos from volunteer events, log their volunteer hours, and download grant application forms.
  22. 22. 23 This web portal can be accessed from employees’ home or work The Foundation makes AngelPoints grants totaling a maximum computers, giving them the flexibility they need to find the per- of $1000 per calendar year per employee. fect volunteer event. Volunteer Recognition AngelPoints Volunteer Grants Neil Harlan Award For every 50 hours (50 Angel Points) of volunteer work complet- The Neil Harlan Award, named after a former Chairman and ed per fiscal year, a $250 grant will be made to the employee’s champion of community involvement, is presented each year to charity of choice. In order to encourage employees to volunteer five outstanding employee volunteers. The first prize is a $5000 with any cause that they are connected to, employees do not grant to the employee’s non-profit choice, and the four other need to volunteer with the same agency each month. winners receive grants ranging from $1000-$2500. Sheila Pacheco, the 2003 Gold Award winner, started a local Rebuilding AngelPoints Board of Director’s Grants Together chapter that does home improvements for low-income McKesson values the leadership role played by the Board of seniors and disabled people in nine counties. Mike Kassmeier, Directors of non-profit organizations. In order to recognize these our 2004 Gold Award winner, trains dogs for adoption by those leaders, employees that serve on the Board of Directors of a with disabilities. He brings his puppies-in-training to work with qualifying non-profit organization are eligible for a $500 grant. him every day to prepare them for life in the real world. AngelPoints Team Volunteer Grants Volunteer Leaders In order to encourage teamwork among McKesson employees Regional Volunteer Coordinators and to support volunteer projects that require a long-term com- In dozens of McKesson offices around the country, outstanding mitment, we offer employees AngelPoints Team Volunteer employee volunteers serve as Regional Volunteer Coordinators Grants. These grants require a minimum of four employees partic- (RVCs). These RVCs have volunteered to serve in a leadership ipating, and each must volunteer a minimum of 25 hours (earn 25 capacity in their area to motivate employee volunteers and AngelPoints) with the same organization before receiving a grant. organize group volunteer activities. Our Regional Volunteer Coordinators allow us to foster a sense of “One McKesson” by bringing company-wide initiatives into our regional offices.
  23. 23. MCKESSON CORPORATE – Citizenship Report 2005 McKesson Foundation has awarded 1400 scholarships to Community Day employees’ children and given over $1.3 million in cash grants to In 2005, San Francisco headquarter employees celebrated the 7th employees’ favorite schools. Annual Community Day, and the program was expanded to twenty- nine regional offices. Employees volunteered with agencies that As mentioned in the benefits section of this report, McKesson have recently received grants from the McKesson Foundation, believes strongly that one of the most important keys to a child’s furthering the impact of our giving beyond cash and strengthening success is through education. To that end, McKesson offers two our commitment to these important agencies. Around the country, scholarship programs for employees’ children to help defray the nearly 2,000 McKesson employees participated in Community Day costs of higher education, the National Merit Scholarships and and contributed over 8,500 volunteer hours. Scholarship America educational awards. Heart Walk Educational Matching Gifts As a healthcare company, McKesson understands the importance The Foundation matches gifts made by employees dollar for dollar of taking preventative measures to preserve good health. That’s to accredited educational institutions (elementary through grad- why our company encourages all employees to participate in the uate) for educational purposes up to a total of $1,000 per year. American Heart Association’s Heart Walks. In 2004, 1,100 Last year, 3,500 McKesson employees took advantage of this McKesson employees in 23 offices focused on their own heart company match to their favorite schools. health by participating in their local Heart Walk and helped fight Pharmacy Scholarships heart disease and stroke by raising $166,000. In order to help address the need for more pharmacists, 50 Educational Support $1,000 McKesson Pharmacy Scholarships are awarded annually The McKesson Foundation supports education through a variety to pharmacy students who are nominated by one of our compa- of educational grants, scholarships for employees’ children ny’s pharmacy customers. Once awarded, scholarships can be and our educational matching gift program. Since 1990, the renewed for an additional three years.
  24. 24. 25 Philanthropic Programs Quest for Quality Award McKesson Foundation This cash award is a joint effort by the American Hospital Association (AHA), McKesson Corporation, and McKesson We believe that healthy communities are tied to the health of our Foundation to recognize hospitals or health systems for leader- company. If people are well-educated, provided with job training, ship and innovation in quality, safety, and commitment to patient and have access to the childcare and healthcare they need, then care. Winning hospitals gain recognition as a leader in patient McKesson will have access to a qualified, healthy, and diverse safety and receive a $75,000 cash grant to continue their work. talent pool that is focused on work. To that end, the McKesson Foundation contributes more than $4 million every year to non- Regional Grant Committees profit organizations working to improve the health of our The McKesson Foundation’s philosophy is one of decentralized communities. Grants are focused on organizations and programs grantmaking—the Foundation staff in the San Francisco head- providing access to healthcare services for low-income children quarters are not as intimately aware of the needs of the and are made in cities where we have the greatest concentration grassroots organizations in cities across the country as the of employees. employees that live and work there, so they should not make In 2004 alone, the McKesson Foundation was recognized by the grant giving decisions on behalf of the employees that live there. following organizations: To support this philosophy, we have created 20 Regional Grants Committees around the country to determine where grants will National Philanthropy Day’s be given on a local level. The committee members are volunteers Outstanding Corporate Grantmaker Award and come from various business units throughout the organiza- San Francisco Business Times’ tion, allowing for an opportunity to build relationships across Corporate Grantmaker of the Year Award different parts of the organization. Alta Bates Hospital’s Foundation of the Year Award
  25. 25. MCKESSON CORPORATE – Citizenship Report 2005 Areas with Regional Grants Committees: Amherst, MA Atlanta, GA Broomfield/Louisville, CO Canada Carrollton, TX Charlotte, NC Chicago, IL Delran, NJ/Philadelphia, PA Dubuque, IA Hartford, CT Livonia, MI Los Angeles, CA Memphis, TN Orlando, FL Phoenix, AZ/Scottsdale, AZ Pittsburgh, PA San Francisco, CA Springfield, MO Richmond, VA Twin Cities, MN For further information, or to provide us with your feedback on this report, please contact community.relations@mckesson.com.
  26. 26. Design: Howry Design Associates SF/CA

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