Walgreens and VillageMD have 52 primary care clinics in the same location, including this one in Phoenix. They plan to open 1,000 stores by 2027. Photo Credit: Walgreens
Eight months after her tenure WalgreensThe new CEO Roz Brewer explains the growing healthcare ambitions of the pharmacy chain by telling the story of her mother.
Brewer told investors in a phone call on October 14 that her mother was diagnosed with a variety of serious health problems, including diabetes, high blood pressure and kidney failure. Even with good health insurance and family members who can provide support—some of whom work in the healthcare field—navigating her care is “confusing, awkward, and burdensome.”
It involves coordinating her care between different experts in different health systems and taking time out for dialysis. Tracking the influx of bills is even worse.
“This is when our family should be able to focus mainly on enjoying the rest of us. But instead, we are distracted by many unnecessary tasks and details,” Brewer said. “I just want to mention this experience because what I am about to discuss with you is very personal to me. I want to help our patients avoid similar situations in the future.”
Walgreens recently launched a plan to integrate multiple medical services with the goal of helping patients like Brewer’s mother. Last month, it revised its strategy and planned to establish several primary care clinics under its new business unit.
It has made some investments to advance this strategy-it Purchased a majority stake recently At the primary care company Doctor of Rural Medicine And home care company Nursing Center -And plan to make more in the future.
The company plans to open 1,000 primary care clinics in VillageMD by 2027 and are co-located with its stores, and is renovating the “health corner” of some of its stores, where patients can talk to health consultants and obtain information about over-the-counter drugs. It They have been added to its 40 stores and hope to reach 3,000 stores.
Brewer described one day being able to provide a wide range of health services in Walgreens stores, including finding a doctor, managing chronic diseases, obtaining health records, setting up equipment, and obtaining nutrition and prevention information.
“Ultimately, our goal is to move to value-based care and directly affect costs and outcomes,” she said.
However, Walgreens is not the only retailer with this vision. As other retailers such as Amazon, CVS Health and Wal-Mart develop their own primary care strategies, it faces strong competition.
It will take time to see if these changes work. Credit Suisse managing director AJ Rice wrote in an investor report that although the company’s new strategy is more focused, it is still a “model story.”
Need a certain amount of capital
The key to Walgreens’ primary care strategy is the partnership with VillageMD. The idea is to integrate the clinic with the Walgreens pharmacy so that the patient’s doctors and pharmacists can know if their prescriptions have adverse side effects or high deductibles.
“Starting with a few clinics, we have proven that this model is indeed effective,” VillageMD CEO Tim Barry said in an interview with Zoom, adding that these clinics received high net referral scores in the 1980s.
So far, Walgreens has The total committed investment is US$5.2 billion At VillageMD, it plans to open 80 clinics in its stores by the end of this year and more than 1,000 clinics by 2027.This is about one-ninth of the total number of Walgreens stores in the United States
Barry said that VillageMD will occupy a “large portion” of the top 100 metropolises in the country, although it is also focusing on some rural areas and other underserved communities. They are currently located in Houston, Austin, Phoenix, northern Indiana and Orlando, and plan to expand to Tampa in the next step.
Walgreens did not directly acquire VillageMD, but intends to let it continue to operate independently, including plans to conduct an IPO next year. The listing will allow it to obtain more funds, while also allowing Walgreens to continue to make more investments.
“Our business needs funding to achieve our entire growth target,” Barry said.
Walgreens predicts that starting from 2024, the clinic’s profits will increase. However, analysts are a little skeptical, expecting that Walgreens’ new healthcare department may take longer to gain momentum.
“Although we certainly believe in the growth potential of the various assets that make up this segment, we would not be surprised if it takes longer than expected to achieve the 6.5% to 7.5% (adjusted earnings per share) growth target. Because Charles Rhyee, the managing director of Cowen and Company, wrote in an investor report, other people who are trying to advance in the healthcare field usually encounter setbacks.
Scott Shreeve, Chief Executive Officer of Primary Care Cross health, He summarized these challenges because he noticed the influx of interest from retailers.
He wrote in an email: “People are becoming more and more interested in solving our country’s extremely challenging nursing service problems.” “It is encouraging to see those with scale and influence step up their efforts. But as we have seen in the past, given the long-standing obstacles and systemic inertia that have kept our broken healthcare system alive, some entrants are easily discouraged.”
Beyond the cold and flu vaccine
Walgreens has long hoped to play a greater role in providing customers with the convenience of primary care.But it encountered some setbacks in the process, including Close several walk-in clinics, And a tense partnership with the now-defunct blood testing startup Theranos.
As early as 2013, Walgreens cooperated with this lively blood testing startup and opened dozens of health centers in its stores.Three years later, it Sever ties with the company, Citing poor test results because Theranos faces criminal investigations and increasing lawsuits.
The concept of retail health is nothing new in itself. CVS started to establish its first MinuteClinics in the early 2000s, as did Wal-Mart. Tried a few deductions In-store clinic.
Now, these companies are beginning to vigorously promote health care, hoping to become a place for patients, rather than colds, ear infections or urinary tract infections. They hope to become primary care providers for patients and help them manage more complex diseases in the long term.
Some patients still prefer to keep their primary care doctors and industry groups, such as the American College of Physicians, Opposition to retail health clinics For the management of chronic and complex diseases. But experts concerned about consumerism in healthcare say it makes sense that retailers are moving in this direction.
Neal Batra and David Betts studied consumer perceptions of healthcare for Deloitte. They stated that people mainly look for three things: meaningful interaction with providers, economically meaningful access, and convenience. It’s not cost-effective to make an appointment for 10 minutes with the doctor once a month.
“For a long time, we have believed that this is the direction of consumer healthcare. What we are seeing now is this situation,” said Bates, who leads Deloitte Consulting’s public health transformation work.
In some ways, the pandemic has accelerated this process. People do not want to sit in a busy waiting room and are more open to other forms of care, such as telemedicine. Chain pharmacies have also won large contracts for Covid-19 testing and vaccines, which has attracted more people to their stores.
Batra, head of Deloitte’s life sciences and healthcare business, said that it is “very logical” for retailers to focus on primary care because it involves regular visits and participation points.
“This is a very natural place,” he said. “Will you see some of these models continue our so-called high-end market march, pursuing more and more complex primary care aspects, and even more specialized specific treatment areas? This remains to be seen, but our expectations are certain. “
For example, a pharmacy can provide blood pressure measurement and blood glucose testing for pre-diabetic or diabetic patients. For retailers, the cost of doing so will be relatively low, and the value to patients will be high.
Other retailers are considering this as they develop their aggressive plans. CVS is planning to transform more than 1,000 of its stores into “HealthHUB” and use more space for medical services, and Recently hinted at the plan Turn some of its stores into primary care clinics.
The company hopes to guide patients to these locations through its subsidiary Aetna. The company has been testing new insurance models. Provide CVS’s MinuteClinics consultation service without out-of-pocket costs. At the same time, CVS will close 900 pharmacies in the next three years as it shifts to this new strategy.
As far as Wal-Mart is concerned, it has established 20 health centers Attached to its store, centralizing primary care, treatment, X-ray, dental care, and other preventive services in one place.This is also recent Acquired MeMD, a telemedicine startup, Began to integrate with Epic’s EHR, and recently hired Dr. David Carmouche of Ochsner to be responsible for its clinical nursing program, According to insiders.
Amazon also launched telemedicine services for its employees and cooperated with door-to-door visits. Since opening to other companies’ health plans. However, when it competes with telemedicine services that other companies may already own, it is unclear how attractive it is to other companies.
Who will succeed?
James Gardner, a retail consultant in Boston, said that with the huge change in the $5 billion Walgreens spent on these clinics, “they are all invested now.” “That’s it. It’s either valid or invalid.”
It is too early to say how different competitors will compete with each other, but there are many reasons to be concerned. Deloitte’s Betts sees the current layout as several early versions of the new model, rather than the finished product.
“What we saw today is definitely not the end,” he said. “We have seen competition. We have seen various large retailers, technology companies and start-ups trying to compete for retail healthy consumers on different competitive bases.”
One group loses the most. Bates said bluntly that in some respects, the health system should be “frightened” because these fringe efforts begin to move upstream.
As for the winner?
“It remains to be seen who wins in that market,” he said. “It’s kind of exciting to see real competition emerge.”
