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Corporate Citizenship Report


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Corporate Citizenship Report

  1. 1. VALUES DELIVERING ON OUR DELIVERING ON OUR McKesson’s Corporate Citizenship Report 2005 McKesson’s Corporate Citizenship Report 2007
  7. 7. LETTER FROM THE CHAIRMAN 7 These are very exciting times at McKesson. More than ever, we As one of the world’s leading healthcare companies, McKesson have the resources, the relationships and the know-how to help touches millions of people every day. We also understand that lead the much-needed transformation of healthcare. It is a chal- excellence is not an option; it’s an obligation. We are committed lenge we welcome, and an opportunity that energizes all of the to doing the right thing for healthcare providers and patients, men and women of our company. our employees, shareholders and the communities wherever we do business. This is our second annual McKesson Corporate Citizenship Report. In these pages, you’ll get a snapshot of our company, an overview of recent business highlights and a progress report on the many programs that distinguish us as an employer and cor- porate citizen. John Hammergren Chairman and Chief Executive Officer Healthcare has been our business since McKesson was founded in 1833. We are 32,000 people dedicated to making a differ- ence. Our responsibility to improve the health of the healthcare system, support those in need, take steps to protect the environ- ment, and treat our employees fairly carries over from the workplace to our role as members of the community.
  9. 9. COMPANY HISTORY 9 In 1967, Foremost, a nationwide dairy distributor, and McKesson and Robbins merged to become Foremost-McKesson. Foremost- McKesson, Inc. was the largest U.S. distributor of A commitment to corporate citizenship runs deep through the pharmaceuticals, alcoholic beverages and chemicals. It was the company’s history. Almost 175 years ago, McKesson was found- nation’s largest supplier of milk-based products and was the ed with the goal of helping people get access to vital medicines. largest producer of processed water in the western half of the U.S. McKesson traces its roots back to 1833 when John McKesson and Charles Olcott opened a small drug import and wholesale Throughout the 1980s, Foremost-McKesson divested most of its shop in New York City’s financial district. The Olcott and peripheral businesses and began the process of refocusing on its McKesson business thrived, providing clients with botanical core healthcare supply management businesses and investing in drugs - herbs, roots, leaves, bark and vegetable extracts. Early on new technologies. In 1984, McKesson Corporation became the they brought Daniel Robbins on board and in 1853, after Olcott new name of the company. passed away, the company was renamed McKesson and In the second half of the 1990s, McKesson began expanding its Robbins. reach into additional healthcare areas. McKesson made a num- By 1929, McKesson and Robbins’ profits had reached $4.1 mil- ber of acquisitions during this period, diversifying its presence in lion on unprecedented sales of $140 million. Due to progressive the healthcare industry and building a formidable presence in the business strategies, the company achieved steady growth despite growing healthcare IT market. the Great Depression. For a time the company operated as McKesson HBOC — the Leveraging post-war opportunities, McKesson and Robbins creat- world's largest healthcare services company. In 2000, McKesson ed McKesson Chemical Company, another major operating unit. divested its only remaining non-healthcare asset, McKesson By 1955, McKesson Chemical Company had become a diversi- Water Products, and in 2001, the company changed its name fied national distribution leader. back to McKesson Corporation. Today, McKesson is ranked 18th on the FORTUNE 500 with more than $90 billion in annual revenue. The company delivers vital medicines, medical supplies, and health information technology
  10. 10. OUR COMPANY MCKESSON CORPORATE – Citizenship Report 2007 Company Overview solutions that touch patient lives in every healthcare setting. The depth and breadth of the company’s product and service offer- McKesson’s Vision ings, coupled with the largest customer base in the healthcare industry, uniquely position McKesson to meet the needs of its McKesson is America's oldest and largest healthcare services customers: company, with its pharmaceutical wholesaling roots dating back 175 years. In fact, the company created the first national drug – 300,000 physicians distribution system. Since then, McKesson has grown by provid- – 26,000 retail pharmacies ing pharmaceutical and medical-surgical supply management – 10,000 long-term care sites across the spectrum of care; healthcare information technology for hospitals, physicians, homecare and payors; hospital and – 5,000 hospitals retail pharmacy automation; and services for manufacturers and – 2,000 medical-surgical manufacturers payors designed to improve outcomes for patients. – 750 homecare agencies By combining its industry-leading technology and scale with – 1,800 healthcare payors unsurpassed clinical knowledge, McKesson is helping healthcare – 450 pharmaceutical manufacturers providers deliver better, safer care while reducing unnecessary McKesson’s products and services empower healthcare by ensur- costs. ing the safe and timely delivery of vital medications, improving patient safety and reducing medication errors, and making Headquartered in San Francisco, Calif., McKesson employs over healthcare systems more efficient for providers and more afford- 32,000 people across the nation and around the world dedicated able for patients. to delivering vital medicines, medical supplies and health information technology solutions that touch the lives of patients in every healthcare setting. McKesson’s vision is to bring together clinical knowledge, process expertise, technology and the resources of a FORTUNE 18 company to fundamentally change the cost and quality of healthcare.
  11. 11. TRANSFORMING HEALTHCARE 11 Distribution Infrastructure and Expertise McKesson is helping to create a healthcare system where quality is higher, mistakes are fewer and costs are lower. As the nation's leading healthcare services company, we provide pharmaceuti- Today we are making healthcare transformation a reality in six cals, medical supplies and technologies that make healthcare key ways. safer while reducing costs. McKesson touches virtually every aspect of healthcare. For instance, McKesson: We use our distribution system, scale and supply chain excel- – Is the largest pharmaceutical distributor in North America. lence to ensure the safe and timely delivery of vital medications Every day we distribute one-third of the medicines used in and supplies. North America, supplying more than 25,000 U.S. healthcare locations from Wal-Mart to the Department of Veterans Every day... Affairs to community pharmacies. – Is the nation's leading healthcare IT company, with software – Our people, processes and technology ensure that 1.5 and hardware technology installed in more than 70% of the million medicines and supplies reach patients every day, nation's hospitals with greater than 200 beds. when and where they need them, even in the face of – Provides decision support software to help physicians deter- natural disasters and product recalls. mine the best possible clinical diagnosis and treatment plans – Employees in over 30 McKesson pharmaceutical distribution for patients. centers ensure efficient and timely delivery of medications – Develops and installs electronic systems that eliminate the throughout North America, filling orders with an astounding need for paper prescriptions and paper medical records and 99.96% order accuracy. provides physicians with easy and secure online access to – Our electronic pharmacy network is one of the nation’s patient information. largest, connecting more than 90% of pharmacies and – Helps prevent more than 330,000 medication errors every processing approximately 70% of all pharmacy transactions week through bar-code scanning technology that helps to in the U.S. By connecting pharmacists with payors, we help ensure the right patient gets the right drug at the right time. process more than eight billion healthcare transactions annually. – We operate the largest independent pharmacy franchise in the country, a partnership that includes marketing and
  12. 12. 12 MCKESSON CORPORATE – Citizenship Report 2007 Personal Health Management for Patients Patient Safety and Error Reduction – purchasing programs to help independent pharmacies thrive bedside, and physician’s office, so patients are safeguarded in an increasingly competitive environment. against counterfeit or damaged goods. – Our online ordering system processes more sales than any of – To help prevent mistakes, we provide clinicians with clinical the top four retail Internet sites in the world, including information, decision support and an electronic view of their patients’ entire medical record. More than 100,000 physicians log on to our physician portal three million times – We distribute more than 150,000 medical-surgical products – per month to access electronic medical records. ranging from gloves and bandages to surgical lasers and flu vaccines – to more than 300,000 physician offices as well as many other customers. – Through our knowledge and resources, we provide inventory We help make healthcare more convenient and personal for management solutions, robotics and software, and high patients. volume packaging to help our customers serve patients and Every day... run their businesses more effectively and efficiently. – We offer patients more convenient access to routine services, providing home delivery of medical supplies and specialty We develop processes and technologies that improve patient drugs, patient-friendly billing and scheduling solutions, and safety and reduce medication errors. numerous patient assistance programs. – We improve communication among patients, providers, and Every day... payors through secure, easy-to-use online services, Internet- enabled home monitoring devices and insurer-reimbursed – We reduce errors by automating healthcare delivery. Our bar- online connections to the physician’s office. code scanning, electronic prescription, and medical imaging solutions help eliminate manual and paper-based processes. – We provide personalized care for patients with cancer and We also automate tasks like medication counting, packaging chronic illnesses such as asthma, diabetes, and heart disease and dispensing through pharmacy automation and mobile through personal health support and home delivery of medi- workstations for nurses. cines and supplies. McKesson’s nursing call centers, specialty drug distribution, and disease management serve 1.5 million – We protect the integrity of pharmaceuticals and medical sup- Medicaid and Medicare patients. plies from the manufacturer to the pharmacy, hospital
  13. 13. 13 Smarter Healthcare Spending Higher Quality Care and More Effective Clinicians We ensure that healthcare dollars are well spent We help clinicians improve the quality of patient care. Every day... Every day... – We provide support and medication to chronically ill patients, – Our clinical software improves doctors’ medical decisions by whose illnesses account for 80% of today’s U.S. healthcare providing evidence-based guidelines grounded in the latest costs. Our disease management solutions, specialty drug dis- clinical research at the point of care. tribution and medication adherence programs provide higher – We help clinicians focus on what they do best – caring for quality care and reduce cost by helping patients avoid emer- patients – by reducing administrative work and other manual gency room visits and hospital stays. tasks. – We ensure healthcare dollars are well spent by improving rev- – We ensure clinicians are better connected to patients and enue and resource management in hospitals, physician payors. For example, we provide: offices and pharmacies, ensuring more appropriate care that • software to help home care providers connect to their is better managed and paid for. patients and the hospital – As the leading pharmaceutical distributor in North America, • claims management solutions to help providers submit we use our purchasing power and supply chain to increase more accurate claims, and health plans to pay them more the availability of affordable medicines like generic drugs. For accurately example, our programs help retail pharmacies simplify pur- • internet-enabled home monitoring devices and online chasing of cost-saving generics. connections to the physician’s office – We also help our customers effectively manage their limited resources by automating and streamlining work, removing paper and film costs, reducing re-work, and improving supply chains.
  14. 14. OUR SHARED PRINCIPLES MCKESSON CORPORATE – Citizenship Report 2007 Next Generation of Healthcare McKesson Shared Principles Manager Resources By embracing the ICARE Shared Principles, we have the foundation necessary to deliver on our vision. We facilitate the next generation of healthcarents. Every day... As part of the McKesson team, we all strive to work in ways that reflect our Shared Principles and promote the success of our – We are a leader in digitizing healthcare to connect payors, company, our customers and each of us as individuals. Our pharmacies, hospitals, physician offices, and patients and Shared Principles, reflected in the acronym ICARE, brings to life ultimately to deliver a better care experience for those who the outcome that the Shared Principles seek to create, and aligns need it most. Our goal is to enable care that is not just auto- our personal behaviors with the goal of our customers, to mated within a single setting, but fully connected across the improve healthcare and lives. healthcare spectrum. Integrity: We do what’s right – We are also selectively exploring opportunities to take our Customer-first: We succeed when they succeed products and services abroad, participating in global trends Accountability: We do what we say we will do including generic drug sourcing, demand for healthcare IT Respect: We treat people with dignity and consideration and preventive care. Excellence: We insist upon quality – Additionally, we are providing the support required for groundbreaking next-generation therapies and approaches. We encourage employees to embody the ICARE Shared Principles through a comprehensive set of manager meeting materials as well as an ICARE Recognition Program. Our employee portal (McKNet) provides the tools and resources employees need to integrate ICARE into their daily management practices.
  15. 15. CORPORATE GOVERNANCE AND ETHICS 15 COMPLIANCE AND INTEGRITY Our Managers are encouraged to use the ICARE Guide to help them: In January 2007, McKesson’s Board of Directors approved the – Reflect on ways to incorporate Shared Principles into the following significant corporate governance changes that many aspects of managing their employees. demonstrate the Board’s commitment to strong, stockholder- – Ensure that they’re not just talking the values, but that they focused, contemporary corporate governance practices which are living the values. we believe are consistent with our goal of creating long-term, – Develop management skills through such things as ICARE sustainable value for McKesson’s shareholders: case studies and scenario assessment. – Understand the history of our Shared Principles and the best – Declassification of the Board so that all directors are elected practices that have made us successful. on an annual basis beginning with the 2008 Annual Meeting of Stockholders. This replaced a Board divided into three classes, elected in three successive years, each for a term of three years. – Implementation of a majority vote standard in uncontested As the largest pharmaceutical distributor in North America, director elections, in place of the plurality vote standard, McKesson has an unwavering commitment to protect the integrity with the result that a director nominee will be elected only if of the distribution network while ensuring the safe, efficient and the number of votes cast “for” the nominee exceeds the cost-effective delivery of medicines to our customers and their number of votes cast against the nominee. patients. Compliance with laws and regulations is the foundation for eco- nomic performance and customer and shareholder value creation. McKesson focuses on developing, implementing and continually refining systems and processes that enable compli- ance with laws and regulations. We are especially aware of our role in supporting the integrity of the pharmaceutical supply chain and consumer and patient safety.
  16. 16. MCKESSON CORPORATE – Citizenship Report 2007 EthicsLine PUBLIC AFFAIRS McKesson’s Corporate Governance Guidelines reflect the Board's commitment to transparency and oversight both at the Board Speaking up about misconduct is an important part of McKesson’s and management level, and the Guidelines provide the frame- dedication to ethical behavior. To make it easier for employees to work for the governance of the Company. voice their concerns about suspected illegal, unethical or unsafe conduct, McKesson has established the McKesson EthicsLine, – McKesson currently has four standing committees: Audit, which is a toll-free number, available 24 hours a day, 7 days a Compensation, Finance and Governance. Each of the com- week. mittees is composed entirely of independent directors, satisfying applicable legal, regulatory and stock exchange When an employee calls the EthicsLine, 1-888-475-4358, a trained requirements. third-party communication specialist will ask a series of questions to better understand the situation. A report is prepared and for- – The Board is also responsible for assuring that McKesson’s warded to McKesson’s Law Department for review and management and employees operate in a legal and ethically appropriate action. responsible manner. To ensure transparent accounting and reporting practices, independent board members have Callers may remain anonymous if they choose to do so. Any access to the Company's outside advisors and meet in exec- employee who chooses to reveal his or her identity and makes a utive session without company management present on a good faith complaint is protected by the company’s Code of regularly scheduled basis. Business Conduct and Ethics from retaliation for making such a complaint. As the nation’s largest healthcare services company, McKesson Corporation recognizes its responsibility to participate in the public policy process on healthcare issues and concerns. Through our Public Affairs Department, the company builds and maintains working relationships with elected and appointed offi- cials at every level of government, from Washington, D.C. to
  17. 17. state capitals to HISTORY COMPANY city halls across America. More importantly, we 17 Patient Safety Protecting the Integrity of the Pharmaceutical Supply Chain In 1967, Foremost, a nationwide dairy distributor, and McKesson As the world’s largestto become Foremost-McKesson. Foremost- & Robbins merged provider of health information technology encourage these policymakers to visit our facilities and customer (HIT), McKesson offers comprehensive solutions distributorto McKesson, Inc. was the largest United States designed of sitescommitment to corporate citizenship runs firsthand, how A to meet with our executives and to witness, deep through pharmaceuticals, alcoholic beverages and chemicals. It was the our healthcare businesses and innovative solutions company the McKesson’s history. More than 170 years ago, the improve was enhance patient safety at every touch point of the healthcare sys- tem. Our largest supplier of milk-based products and was of nation’s barcoding technology promotes the safe delivery the quality and delivery goal of while removing unnecessaryhealthcare founded with the of care helping people receive the costs. medicines from pharmacy robotic systemsthe bedside medication largest producer of processed water in to western half of the they deserve. We trace our roots back to 1833 when John Every day, McKesson actively works withsmall drug import and McKesson and Charles Olcott opened a industry colleagues, United States. administration. This unique medication management process government shop in New electedCity’s financial solutions The wholesale agencies, and York officials to find district. to saves lives and time, removes rework, and reduces human error During the 1980s, Foremost-McKesson divested most of its some of theand Olcott businessproblemsproviding clients botani- McKesson most challenging thrived, facing the healthcare and resulting costs. This isbegan the process of refocusing on its peripheral businesses and just the first step, however, on the system. cal drugs, such as herbs, roots, leaves, bark and vegetable path to ensure patient safety through greater use andtechnology. core healthcare supply management businesses of investing in extracts. Early on they brought Daniel Robbins on board and in Digitizing the healthcare system through Corporationadoption the new technologies. In 1984, McKesson widespread became of 1853, after Olcott passed away, the company was renamed HIT will improve the quality of care for all Americans. new name of the company. For 175 years,Robbins. McKesson & McKesson has led the industry in the delivery of medicines to pharmacies. We purchase medicines from 450 McKesson has developed solutions that enable healthcarebe the In the 1990s, McKesson further focused its mission: To pro- manufacturers and supply more than 75,000 customer sitesmillion By 1929, McKesson & Robbins’s profits had reached $4.1 in all fessionals to in healthcare supply managementfrom information world leader capture discrete patient data and disparate 50 states. McKesson has of $140 million. Due in developing and on unprecedented sales long been a leader to progressive busi- sources, includingadvancing the success of its partners as they technologies by the pharmacy, physician’s office, laboratory implementing cutting-edge technology steady growth despite the ness strategies, the company achieved to enhance the security and hospital,andform a comprehensive, portable and McKesson to restructure to improve healthcare. This focus led confidential Great Depression. of the pharmaceutical supply chain. We were the first wholesaler electronicmedical technology company HBOC to millions of dol- acquire patient record. Thousands of lives and bring innovative to fully automate our warehouses and distribution Robbins created Leveraging post-war opportunities, McKesson & networks with software solutions to its broad base of retail, hospital, health sys- lars can be saved in reduced healthcare spending through the radio frequency and scanning technology. Today, we areunit. By McKesson Chemical Company, another major operating again rapid adoption of HIT. care, continue to work with our govern- tem, payor, long-term We physician and home care customers. taking the lead as we work with manufacturers and major retail- 1955, McKesson Chemical Company had become a diversified ment partners revenues thismore than $80 billion, McKesson now With annual to make of dream a reality. ers to testdistribution leader. national radio frequency identification (RFID) technology that ranks as the 15th-largest publicly-traded industrial company in will track pharmaceutical products from the manufacturer to the the United States. wholesaler to the pharmacy. In addition to more stringent whole- saler licensure standards and tougher criminal penalties for those who counterfeit drugs, RFID technology will limit the ability and opportunity for compromised or adulterated products to enter the pharmaceutical distribution network.
  18. 18. $93 23.8 % 7% increase in revenues $2.0 $1.5 31,800 billion in revenue debt-to-capital ratio FISCAL YEAR MARCH 31, 2007 FINANCIALS billion in cash billion cash flow from employees operations MCKESSON CORPORATE – Citizenship Report 2007 Disease Management $ BILLIONS Corporate Financial Highlights Business Segments Net revenues for our segments for the last two fiscal years were as follows: our Distribution Solutions segment, we are a leading distributor 2007 2006 Distribution Solutions $ 90.7 98% $ 85.1 98% Technology Solutions 2.3 2% 1.9 2% Total $ 93.0 100% $ 87.0 100% McKesson provides disease management programs for com- McKesson strives to be a leader in the corporate citizenship mercial, Medicaid and Medicare populations in which we efforts of our industry. We believe that through ethical corporate leverage our experience with patient services, pharmacy man- governance, fair employment policies and sound environmental agement and healthcare quality improvement activities. These practices, we will experience strong financial performance. outcomes-focused, evidence-based interventions improve patients’ abilities to participate in their care and help physicians by reinforcing their medical recommendations. McKesson’s strategy is to create strong, value-based relationships with customers. While we always remain focused on healthcare, As federal and state governments consider new ways to our diverse business segments allow us to offer our customers a improve the quality and delivery of healthcare to populations full range of products and services that reduce the cost of provid- with chronic illnesses, McKesson believes greater utilization of ing patients with quality care. disease management programs is vital to enhancing care out- comes for the elderly and vulnerable populations, while McKesson conducts business through two segments. Through concurrently reducing the cost of care. In eight states where we provide disease management services to Medicaid patients, of ethical and proprietary drugs, medical surgical supplies, first- physician and patient satisfaction has improved along with aid products and equipment, health and beauty care products health outcomes. We estimate these states are saving approxi- and provide logistics and other services throughout North mately two dollars for every dollar spent with McKesson. America. This segment also provides medical management and specialty pharmaceutical solutions for biotech and pharmaceuti- cal manufacturers, patient and other services for payors, software and consulting and outsourcing services to pharmacies and, through its investment in Parata Systems, LLC (quot;Parataquot;), sells automated pharmaceutical dispensing systems for retail pharmacies.
  19. 19. $ MILLIONS $ MILLIONS 100000 4500 Gross Profit 4000 3500 90000 3000 2500 2000 80000 1500 Net Income** 1000 500 70000 0 05 06 07 05 06 07 FISCAL YEAR ENDED MARCH 31 FISCAL YEAR ENDED MARCH 31 COMPENSATION Revenues ** Excludes impact of the shareholder litigation charge $ MILLIONS $ DOLLARS Gross Profit & Net Income Revenues 19 25000 200 20000 150 15000 100 Our Technology Solutions segment delivers enterprise-wide 10000 50 5000 0 0 05 06 07 02 03 04 05 06 07 FISCAL YEAR ENDED MARCH 31 FISCAL YEAR ENDED MARCH 31 Value Line HealthCare Sector Index Stockholders' Equity OUR PEOPLE BENEFITS McKesson Corporation Total Assets S & P 500 Index Total Debt * Assumes $100 invested in McKesson Common Five Year Cumulative Stock and in each index on March 31, 2002 and Total Return* Total Assets, Equity, Debt that all dividends are reinvested. patient care, clinical, financial, supply chain, and strategic man- agement software solutions, pharmacy automation for hospitals, McKesson believes that every employee has the potential to add as well as connectivity, outsourcing and other services, to health- value to our business, which is why we follow a “pay-for-per- care organizations throughout North America, the United formance” compensation philosophy. This compensation Kingdom and other European countries. This segment also pro- philosophy rewards employees of all levels based on their contri- vides claims processing software to physicians and payors and bution to the company’s success. Depending on market pay disease management services primarily to state Medicaid pro- practice and company approach, and the supply and demand for grams. Its customers include hospitals, physicians, homecare specific skills, these rewards generally include salary or draw, and providers, retail pharmacies, payors and state Medicaid pro- may include participation in incentive programs, such as bonus grams. or long term programs. McKesson believes that our most valuable and important asset is McKesson’s benefits programs are another way of adding value our workforce. It is for this reason that McKesson continually to our employees’ total compensation package and focus on strives to be an employer of choice, by treating our employees improving the long-term health and welfare of our employees. with respect, fairness and dignity. Our benefits program can add as much as 27% percent or more McKesson employee compensation and benefits programs in value to an employee’s pay. According to our 2006 Employee reflect the wide-variety of needs faced by our employees. From Survey, 75% of employees responded favorably to McKesson's retirement planning to chronic disease management to adoption benefits offering. This score is five points higher than the global assistance, McKesson is committed to offering our employees high-performing benchmark. Due to the fact that McKesson has the tools they need to manage the demands of both work and grown over many years of mergers and acquisitions, our Human family life. Resources department has recently been focused on aligning the entire employee benefits offered so that they are fair and equi- table across the company.
  20. 20. MCKESSON CORPORATE – Citizenship Report 2007 Health Benefits Employee benefits include a wide variety of life services, including: HealthMedia health risk assessment and healthy living programs, and the McKesson CareEnhance Disease Management program – Help with medical, dental and vision care costs and 24/7 nurse line. – Domestic partner benefits Through a Section 125 cafeteria plan, McKesson offers employee – Retirement savings the opportunity to pay their portion of benefit costs on a pre-tax – Disability coverage basis. In addition, employees can set aside a designated amount – Life insurance in pre-tax dollars for out of pocket healthcare expenses and/or dependent childcare needs through Flexible Spending Accounts. – Tuition reimbursement Eligible McKesson employees are offered employer-sponsored – Adoption assistance health coverage in the United States and Canada, and state – Access to a triage nurse call-in center sponsored health coverage in Europe, which is partly funded – Learning opportunities focused on healthy living and through required contributions. U. S. employees are given the work-life balance opportunity to “Build Your Own Point of Service (POS) medical option.” Employees choose the deductible, copays, coinsurance – Enhanced eldercare assessment and referral and out of pocket maximum that meets their individual needs for Through “My McKesson HR,” the company’s human resources coverage and the right balance of between cost of deductions intranet, employees have access to detailed information on ben- versus cost at time of treatment. All medical plans cover office efit plans, along with contact information and features to help visits, hospital stays, surgery and other common medical services. employees make the most of the available programs. Through HealthMedia, employees can take a free, confidential health risk assessment. Employees answer a simple health ques- McKesson is dedicated to providing employees with access to tionnaire and provide their basic health history to receive quality healthcare through a wide variety of programs and servic- personalized information about their risk factors and guidance es. McKesson strives to provide employees with the tools they about which HealthMedia healthy living programs they might need to proactively manage their own health by offering a wide find helpful. HealthMedia offers online programs on nutrition, range of subsidized health options, discounts for use of high per- weight management, stress management, back care, overcom- formance physicians, incentives for participation in the ing depression and overcoming sleep problems. Employees are
  21. 21. 21 EAP Retirement Savings encouraged to participate in all HealthMedia activities to earn Basic life, AD&D and short term disability coverage are automati- discounts on their portion of health plan coverage. cally provided to McKesson employees. Employees may purchase reduced cost vision, dental, long term disability, supplemental life Preventive health management is encouraged. Company spon- and AD&D coverage, as well as dependent life insurance for a sored benefits include 100% coverage for preventive care spouse, domestic partner and children. services, 100% reimbursement for in-home and on-site Weight Watchers programs, and 100% reimbursement for the American Cancer Society smoking cessation program, which includes tele- The McKesson Employee Assistance Program (EAP) provides toll- phonic counseling and nicotine replacement. In some locations, free, 24-hour, 365-day support services at no cost to our gym memberships are also subsidized. employees. EAP representatives can help with everyday prob- lems, including referrals for locating child care, getting advice on McKesson Health Solutions offers employees disease manage- legal matters and help with financial planning to more serious ment programs for control of asthma, diabetes, cardiac problems related to stress, marital and relationship concerns and problems, dyslipidemia and hypertension. In addition, employees alcohol or other drug problems. An Enhanced Eldercare program enrolled in the POS plan can contact the nurse line for guidance offers assessment of elderly relatives capabilities to live independ- and information. Employees can also research a medical concern, ently and referrals to appropriate assisted living read articles online and listen to audio health information on the accommodations. Health Solutions web site. Pharmacy customers make up a large part of our business, and McKesson’s Profit-Sharing Investment Plan is a 401(k) plan that those relationships allow our Company to offer a generous affords employees a smart, convenient way to save for a secure employee prescription benefit plan. There are over 55,000 phar- financial future. It offers financial choice and flexibility, and gives macies in McKesson’s drug benefit plan network, allowing our employees the opportunity to become a Company shareholder. employees maximum choice. Our employees also have the Approximately 70% of our employees are currently taking option to maximize savings by ordering prescriptions by mail for advantage of the plan. a three-month supply of any brand name medication. Whether our employees visit a pharmacy or fill their prescriptions online, there is an annual cap on out-of-pocket costs.
  22. 22. MCKESSON CORPORATE – Citizenship Report 2007 Stock purchase plan Adoption Assistance Educational Assistance McKesson believes strongly in providing our employees with the tools they need to be financially prepared for retirement. The Employee Stock Purchase Plan (ESPP) allows eligible employ- Beginning April 1, 2005, McKesson’s matching contribution is ees to participate in the plan and purchase shares of the 100% on the first 3% of pay contributed and 50% on the next Company's common stock at a 15% discount through payroll 2% of pay. Since the plan’s inception in 1972, McKesson has deductions. Each participating employee receives shares of the matched employee contributions, up to the first six percent of Company's common stock based on their contributions over a salary. Company contributions for the past three years were as three-month Purchase Period. follows: Plan Year Ended Company Match Adoption Assistance is available to help our employees with the cost of adoption. This program reimburses up to $2,000 in March 31, 2007 4% of pay expenses for adoptions. March 31, 2006 4% of pay March 31, 2005 3.6% of pay McKesson believes in life-long learning, and the Company offers an education reimbursement program that pays 100% of eligible expenses for approved courses. All course required fees (such as tuition, lab fees, and registration fees) are considered eligible expenses. The lifetime maximum for undergraduate courses is $21,000 and the graduate lifetime maximum is $10,500.
  23. 23. 23 National Merit™ Scholarships Award and Recognition Programs Scholarship America Total Rewards McKesson also offers two scholarship programs for employees’ Compensation represents the pay and incentives, as well as other children. financial payments we make in return for this contribution. Other rewards include company-sponsored programs that can make an employee’s life easier and more enjoyable. Up to 20 four-year college scholarships, ranging from $1,000 to $2,500 per year are awarded to employees’ children each year. This is a competitive academic scholarship and winners are deter- McKesson also recognizes outstanding achievement through a mined by an independent scholarship administrator. wide variety of awards programs, such as the company-wide ICARE and President’s Awards. The ICARE Award is for employees who continually display behaviors exemplifying the Shared Up to 20 four-year awards ranging from $1,000 to $2,500 are Principles. The President’s Award recognizes consistently excellent made each year to employees’ children enrolled full-time in records of sustained contributions having significant impact on accredited colleges or vocational schools. This scholarship is McKesson’s pharmaceutical division. awarded based upon the student’s overall potential to succeed, rather than strictly focusing on academic achievement. Winners Additionally, the Community Relations department offers two are determined by an independent scholarship administrator. award programs for employees showing leadership involvement in the community. The President’s Award is a quarterly award given by each business unit president to employees that have McKesson provides employees with a Total Rewards web site demonstrated outstanding community service, and the Neil which explains the value of both pay and benefits. The personal- Harlan Award, an annual national employee volunteer recognition ized web site includes compensation, retirement and health care program, provides five award winners with cash grants ranging coverage, as well as life and disability insurance. Total Rewards from $1,000 to $5,000 to the non-profits of their choice. even embodies life, career and community opportunities, as well as other compelling rewards. Every day on the job, each employee makes a significant contribution to McKesson's success.
  24. 24. WORKPLACE SAFETY DIVERSITY MCKESSON CORPORATE – Citizenship Report 2007 McKesson takes employee safety very seriously, and is constantly When you hear the word “diversity” at McKesson, we are not striving to improve the safety of our workplaces. only speaking of gender, age and race. We believe that diversity can be found everywhere - a diverse upbringing or life experi- In addition to complying with all Occupational Safety and Health ence can cause diversity of thought and enable employees to Administration (OSHA) regulations, McKesson also provides each bring a new perspective to the workplace. McKesson believes of our facility managers with emergency preparedness courses, that valuing diversity gives us a competitive advantage and is a fire drills, automatic defibrillators, first aid kits, and emergency cornerstone of our reputation as a great company. To that end, preparedness posters for all break rooms. The Corporate Safety we promote a business model of diversity excellence. Department has also developed and tailored an OSHA 10-Hour Course for General Industry for McKesson’s operations. The McKesson was voted number one in workplace diversity by training provides McKesson managers, supervisors and mainte- Computer World Magazine in 2003, was voted one of the best nance personal information on workplace safety, accident places for minorities in Atlanta by The Atlanta Business Times, prevention and investigation, and OSHA standards. and was voted number 14 of the top 25 companies for women in the Bay Area by the San Francisco Chronicle. As a company, In 2007, McKesson received six OSHA violations and $2,700 in McKesson is acknowledged internationally as one of the top ten OSHA fines. companies related to women on the Board of Directors by the National Association of Women Business Leaders. McKesson was in the top 10 in a recent study published by the University of California at Davis Graduate School of Management that looked at the presence of director and officer roles held by women in the 200 largest publicly held companies headquartered in California.
  25. 25. 25 Supplier Diversity McKesson employees, under the guidance of the EVP of HR, McKesson is in the process of rolling out a virtual mentoring pro- have formed Diversity Councils in four of the company’s offices gram throughout the company in an effort to ensure consistent around the country. In January 2006, The Dubuque office accept- development opportunities to all employees. This program is ed the CommUNITY Award for Diversity Initiatives. The award, mentee-driven with the mentee identifying his or her individual sponsored by the Faces & Voices Awards Committee in conjunc- development needs and utilizing the system to help find a men- tion with the Dubuque Human Rights Department, is given to a tor to fit that development need. The program allows traditional local business that is a recognized leader in promoting and sup- advocacy based relationships, as well as peer-to-peer relation- porting events and programs that embrace diversity. ships for skills building or information sharing. The purpose of these Councils is to: In addition to our focus on existing employees, McKesson is involved in diversity outreach efforts, specifically networking and – Create awareness by conveying the company’s diversity recruitment for diverse talent. We have enterprise-wide efforts to message. find talent throughout the country and have specific localized ini- – Help create the environment for living diversity daily. tiatives in place as well. In the San Francisco Bay Area, for example, we participate in the “Bay Area Diversity Summit” – – Recommend diversity management implementation sponsoring monthly receptions for various primary demographics strategies to senior management. of diversity such as race, gender, and sexual orientation. These – Share information across business units and local councils. receptions allow networking with other bay area companies for – Lead development of and alignment with local council best practice sharing and with associations representing specific tactical objectives. demographic groups. – Create change-agents in our individual business units in support of the diversity vision. Our belief in diversity extends to our suppliers as well. McKesson – Empower McKesson’s workforce to meet business recognizes and promotes the outstanding contributions made by objectives through a diversity focus. diverse businesses to the economic health and diversity of com- munities throughout the US. Our business partners include small,
  26. 26. OUR WORLD MCKESSON CORPORATE – Citizenship Report 2007 The Environment Electricity and CO2 Emissions Fleet Fuel Usage and CO2 Emissions disadvantaged, historically underutilized, minority-owned, women-owned, veteran-owned, service-disabled and Historically Underutilized Business Zones (HUB) businesses, as well as Javits- Wagner-O’Day Act (JWOD) non-profit agencies. Today’s most pressing environmental issues are issues that are important to all of us, both as individuals and as business leaders. Through our company-wide subcontracting and purchasing pro- McKesson’s dedication to reducing our energy, water and fuel grams, McKesson encourages and facilitates small and diverse consumption drives us to continue the complex task of measur- business sales opportunities for qualified businesses. In addition ing these resources. to subcontracting opportunities, McKesson’s supplier diversity program supports the viability and growth of diverse businesses through contractual mentoring relationships that advance mean- In this third year of data gathering and consolidation, we have ingful growth opportunities. Since 1994, McKesson has monitored nearly 4.8 million square feet of real estate for pur- maintained a mentoring program that provides extraordinary chased electricity usage and resultant carbon dioxide emissions. support and guidance to its business protégés. To calculate carbon dioxide emissions from our purchased elec- tricity and from our fleet fuel usage, we used the highly esteemed GHG Protocol, a corporate accounting and reporting standard for greenhouse gas (GHG) emissions. McKesson’s CO2 emissions are mainly derived from the impact of our delivery vehicles and those of our outsourced carriers. We have begun to measure our fleet fuel usage statistics in order to monitor, manage and reduce our CO2 emissions. The average CO2 emissions per vehicle in FY07 was 18.4 metric tons, up from 16.7 in FY06 and 17.4 in FY05.
  27. 27. ECO-EFFICIENCY INITIATIVES 27 Electricity and Water Consumption Fiscal Year 05 Fiscal Year 06 Fiscal Year 07 LEED Certification McKesson’s Commitment to Recycling Facilities monitored for kWh 21 20 20 sq ft monitored for kWh 4,580,233 4,724,099 4,722,893 Total MWh (kWh/1000) 65,421 66,565 70,570 kWh /sq ft 14.28 14.09 14.94 lbs. CO2 /sq ft (resulting from consumption of electricity) 20.72 19.53 19.98 lbs. SO2 /sq ft (resulting from consumption of electricity) 0.10 0.10 0.07 lbs. NOx /sq ft (resulting from consumption of electricity) 0.04 0.04 0.03 % of RE monitored for kWh /sq ft and CO2 /sq ft 29% 31% 28% Green Facilities Facilities monitored for gallons of water 23 23 22 sq ft monitored for gallons of water 5,091,510 5,265,880 5,134,429 Gallons /sq ft 6.66 9.01 8.71 % of RE monitored for gallons /sq ft 32% 35% 30% Total Fleet Fuel Usage in Thousands of Gallons 3,408 3,513 3,480 Total Fleet CO2 Emissions in Metric Tons 31,673 32,022 31,635 McKesson’s Environmental Council Average CO2 emissions per Vehicle in Metric Tons 17.35 17.63 18.35 mental strategy that supports the company’s business objectives, increases employee engagement and strengthens our position as a good corporate citizen. The Council researches, develops and In addition to beginning to measure and reduce our water, fuel implements initiatives that preserve natural resources and reduce and electricity consumption, we are also committed to a variety of environmental risks while furthering our competitive advantage. eco-efficiency initiatives aimed at conserving natural resources, McKesson’s Environmental Council Mission Statement which in turn, saves money and adds shareholder value. The Leadership in Energy and Environmental Design (LEED) Green Building Rating System™ is the nationally accepted McKesson has established recycling programs in a majority of our benchmark for the design, construction, and operation of high locations. Additionally, McKesson’s Procurement Department performance green buildings. McKesson is currently working to strives to source recycled products whenever possible. In FY06, secure LEED certification for its headquarter facility and is build- we began to track the percentage of post-consumer recycled ing its newest distribution center to LEED certification standards. materials that we purchase compared to total spending on office products. According to Corporate Express, the largest supplier of office products to American corporations, McKesson’s recycled McKesson has a wide variety of environmental initiatives in place office products spending is 12.5%. In addition, our enterprise in facilities around the country. Here is a small example of what wide online supply purchasing system highlights items with recy- we are doing: cled content for easy ordering. – We use energy-efficient lighting and many facilities have lighting on motion sensors In 2006, a group of employees formed McKesson’s first Environmental Council. This group presented to and received – We use non-toxic cleaning products support from the Executive Committee to further pursue envi- – We purchase and install recycled carpeting and certified ronmental initiatives within McKesson. The group meets monthly environmentally friendly office products to discuss best practices and encourage sustainability within the – We are working to replace all ozone depleting cooling, air company. conditioning and fire suppression systems – We have drinking water filtration systems McKesson's Environmental Council advocates for an environ-
  28. 28. COMMUNITY INVOLVEMENT MCKESSON CORPORATE – Citizenship Report 2007 Headquarters Sustainability Employee Volunteer Support: McKesson’s AngelPoints Program McKesson's headquarters building's ENERGY STAR Rating is an The McKesson Foundation was established in 1943 and the com- 84 which means it is in the top 25% of the nation in terms of pany’s commitment to giving back has grown deeper ever since. energy efficiency. Buildings that qualify for the ENERGY STAR Investing in the communities where we live and work truly brings typically use 35% less energy than average buildings. In 2006, our ICARE Shared Principles to life. the building was awarded 2nd place in the Commercial Recycler of the Year Awards (the CoRY) in the medium building category. In addition to cash grants from the McKesson Foundation, In 2007, the building was awarded 1st place in the medium McKesson employees donate their time to the causes most building category for the 2007 BOMA SF Earth Award (formerly important to them. Our employees volunteered an incredible the CoRY award). 28,039 hours in FY07, which, according to The Independent Sector, has a cash value of $526,292. The Earth Award acknowledges the efforts by local commercial properties to reduce water and energy usage, reduce or elimi- The McKesson Foundation and the Community Relations nate use of toxics that affect indoor air quality, educate Department are committed to building healthier communities by commercial tenants in sustainable operating practices, promote investing our company’s resources in non-profit agencies and the use of public transportation and bicycling in daily commut- supporting employees in their volunteer activities. ing, and recycle everything from paper, bottles, cans, cardboard and food waste to construction debris. In addition, building management offers used battery drop-off McKesson’s AngelPoints Program promotes employee participa- locations, desk side recycling bins and uses fresh air in the build- tion at non-profit organizations by providing grants linked to ing until the temperature reaches 74 degrees. 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,
  29. 29. 29 Volunteer Recognition Neil Harlan Award AngelPoints Volunteer Grants Volunteer Leaders AngelPoints Board of Director’s Grants Regional Volunteer Coordinators AngelPoints Team Volunteer Grants read stories and view photos from volunteer events, log their vol- unteer hours and download grant application forms. This web portal can be accessed from employees’ home or work comput- The Neil Harlan Award, named after a former Chairman and ers, giving them the flexibility they need to find the perfect champion of community involvement, is presented each year to volunteer event. five outstanding employee volunteers. The first prize is a $5000 grant to the employee’s non-profit choice, and the four other winners receive grants ranging from $1000-$2500. Over the For every 25 hours (25 AngelPoints) of volunteer work completed years, employees have won this award for their outstanding per calendar year, a $250 grant will be made to the employee’s achievements with a variety of non-profits, from Habitat for charity of choice. In order to encourage employees to volunteer Humanity to the Humane Society to grassroots non-profits that with any cause that they are connected to, employees do not train immigrants for professional work in the U.S. need to volunteer with the same agency each month. McKesson values the leadership role played by the Board of In 74 McKesson offices around the country, 105 outstanding Directors of non-profit organizations. In order to recognize these employee volunteers serve as Regional Volunteer Coordinators leaders, employees that serve on the Board of Directors of a qual- (RVCs). These RVCs have volunteered to serve in a leadership ifying non-profit organization are eligible for a $500 grant. capacity in their area to motivate employee volunteers and organ- ize group volunteer activities. Our Regional Volunteer Coordinators allow us to foster a sense of “One McKesson” by In order to encourage teamwork among McKesson employees bringing company-wide initiatives into our regional offices. and to support volunteer projects that require a long-term com- mitment, we offer employees AngelPoints Team Volunteer Grants. These grants require a minimum of four employees participating, and each must volunteer a minimum of 25 hours (earn 25 AngelPoints) with the same organization before receiving a grant.
  30. 30. 30 MCKESSON CORPORATE – Citizenship Report 2007 Community Day Educational Support Educational Matching Gifts Pharmacy Scholarships Heart Walk In spring of 2006, San Francisco headquarter employees celebrated The McKesson Foundation supports education through a variety the 9th annual Community Day, and the program was expanded to of educational grants, scholarships for employees’ children and forty-seven regional offices. Employees volunteered at community our educational matching gift program. Each year, the McKesson health clinics and hospitals painting murals to spruce up the patient Foundation awards 160 scholarships to employees’ children and areas, furthering the impact of our giving beyond cash and gives over $250,000 in cash grants to employees’ favorite schools strengthening our commitment to these important healthcare through our matching gifts program. agencies. In addition, 2006 marked the launch of our in-house vol- unteer projects, allowing employees with mission-critical jobs to participate throughout the day. Employees gathered in break The Foundation matches gifts made by employees dollar for dollar to rooms around the country and painted canvas mural panels which accredited educational institutions (elementary through graduate) for were then donated to local community clinics and children’s hospi- educational purposes up to a total of $2,500 per employee per year. tals. Around the country, nearly 2,050 McKesson employees In FY07, 552 McKesson employees took advantage of this company participated in Community Day and painted more than 200 murals. match to their favorite schools. In 2007, our employee participation increased by 107% and 71 dif- ferent sites created nearly 800 fleece blankets which were donated In order to help address the need for more pharmacists, fifty to foster youth agencies in the communities where we live and $1,000 McKesson Pharmacy Scholarships are awarded annually to work. pharmacy students who are nominated by one of our company's pharmacy customers. Once awarded, scholarships can be renewed for an additional three years. As a healthcare company, McKesson understands the importance of taking preventative measures to preserve good health. That is why our company encourages all employees to participate in the American Heart Association’s Heart Walks. In FY07, 1,528 McKesson employees in offices around the country focused on their own heart health by participating in their local Heart Walk and helped fight heart disease and stroke by raising money for the cause.
  31. 31. 31 Nursing Scholarships Quest for Quality Award Philanthropic Programs McKesson Foundation Regional Grant Committees In order to help address the need for more nurses, twenty-five This cash award is a joint effort by the American Hospital $1,000 McKesson Nursing Scholarships are awarded annually to Association (AHA), McKesson Corporation and the McKesson low-income nursing students. Once awarded, scholarships can be Foundation to recognize hospitals or health systems for leadership renewed for an additional year. and innovation in quality, safety and commitment to patient care. Winning hospitals gain recognition as a leader in patient safety and receive a $75,000 cash grant to continue their work. We believe that healthy communities are tied to the health of our The McKesson Foundation’s philosophy is one of decentralized company. If people are well educated, provided with job training, grantmaking—the Foundation staff in the San Francisco head- have access to the childcare and healthcare they need, then quarters is not as intimately aware of the needs of the grassroots McKesson will have access to a qualified, healthy and diverse tal- organizations in cities across the country as the employees who ent pool that is focused on work. To that end, the McKesson live and work in those regions. To support this philosophy, we Foundation contributes more than $5 million every year to non- have created 20 Regional Grant Committees around the country profit organizations working to improve the health of our to determine where grants will be given on a local level. The com- communities. Grants are focused on organizations and programs mittee members are volunteers and come from various business providing access to healthcare services for low-income children units throughout the organization, allowing for an opportunity to and are made in cities where we have the greatest concentration build relationships across different parts of the organization. of employees.
  32. 32. MCKESSON CORPORATE – Citizenship Report 2007 Areas with Regional Grant Committees: Alpharetta, GA Broomfield/Louisville, CO Canada Carrollton, TX Charlotte, NC Chicago, IL Delran, NJ/Philadelphia, PA Dubuque, IA Hadley, MA Hartford, CT Livonia, MI Los Angeles, CA Memphis, TN Newton, MA Pittsburgh, PA Richmond, VA San Francisco, CA Scottsdale/Phoenix, AZ Springfield, MO Twin Cities, MN For further information, or to provide us with your feedback on this report, please contact or call (415) 983-9478.