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Walgreens signs an agreement to open hundreds of medical offices in stores

Walgreens and VillageMD

Source: Walgreens

Walgreens Boots Alliance will soon have medical offices inside hundreds of US pharmacies.

The pharmacy chain said Wednesday that it had entered into an agreement with VillageMD, which will provide staff and manage primary care clinics. The companies said they will open clinics in 500-700 stores in over 30 US markets over the next five years.


7; news, which is valued at $ 37 billion, rose by about 3% in premier market trades. Since January the stock has fallen by over 28%.

Walgreens will invest $ 1 billion in equities and convertible debt in VillageMD over the next three years as part of the deal, including a $ 250 million equity investment completed Wednesday. Much of the money will be used by VillageMD to open the clinics and integrate its technology with Walgreens.

VillageMD will hire and pay employee salaries, cover other operating expenses and pay Walgreens to use the space. Walgreens said it will hold approximately 30% of the primary care company after the multi-year investment.

Walgreens is expanding its focus on medical care as it reduces costs and invests in new areas. He closed hundreds of stores and laid off employees while experimenting with innovative business models. The company wants to turn its pharmacies into destinations for health and wellness where people spend more time and money. For example, in some stores it leases space to the optical company For Eyes and to the weight loss company Jenny Craig. The chain is also testing a small-format pharmacy designed to strengthen relationships between pharmacists and patients, particularly those taking multiple medications.

Walgreens already has 14 primary care centers in its pharmacies, through partnerships with VillageMD suppliers, Partners in Primary Care and Southwest Medical Associates.

Investors and analysts will receive an update on how the company’s efforts are underway during the coronavirus pandemic during a earnings call Thursday morning.

Wide range of services

Through the new partnership, patients will be able to visit Village Medical at Walgreens clinics for a wide range of medical services, from annual checkups to walk-in appointments if they feel bad. Each clinic will have nine examination rooms, a waiting area and a staff of four led by a doctor who will coordinate with the store’s pharmacists. They can also request a home visit or receive 24-hour assistance through telemedicine.

Walgreens and VillageMD will convert an existing part of the pharmacies into clinics. Most clinics will be around 3,300 square feet – nearly a quarter of the average pharmacy size of 13,500 square feet. Some will be as large as 9,000 square feet.

Walgreens and VillageMD

Source: Walgreens

The companies did not share specific costs for the services, but Village Medical clinics will accept different types of health insurance, often with reimbursements of up to $ 10, and will allow people to pay out of their own pockets. For those without insurance, he uses an escalator to make assistance accessible, he said.

Rivals that expand in the healthcare sector

Walgreens and VillageMD will face stiff competition. Walmart has opened four primary care clinics, with plans for others. The big box giant’s clinics, called Walmart Health, emphasize its low signing costs and starting prices. Amazon’s acquisition of the PillPack online pharmacy underscores its broader health care ambitions. And CVS Health, which acquired Aetna health insurance, plans to open 1,500 HealthHUB stores by the end of 2021. The redesigned stores have a variety of health-related features such as expanded clinics, yoga spa rooms and other medical products.

Alex Gourlay, Chief Operating Officer of Walgreens, said there is still a lot of demand to be made. He stressed the high number of Americans living with at least one chronic condition requiring multiple daily medications – 6 out of 10 Americans.

In recent months Walgreens and VillageMD have tested the new primary care model. In November, they opened five in-store clinics in the Houston area and said they had decided to expand after getting positive reviews from patients.

Gourlay said clinics will help Walgreens increase the number of prescriptions it distributes and the health products it sells – something he said has already been seen in pilot locations. He said it will go further, shaping how the public thinks about it.

“It will begin to change Walgreens’ feeling, particularly in these places, of becoming a health care company,” he said.

It serves to satisfy unmet needs

Tim Barry, CEO of VillageMD, said the new model can contain costs and improve health outcomes, particularly for those with chronic diseases such as diabetes. Since many of Walgreens’ locations are close to people’s homes, he said that people will be more likely to go to the doctor for regular appointments or to get a doctor’s visit first. That previous intervention and ongoing relationships with a doctor might help keep people out of the emergency room or hospital – or at least cut costs that can increase when a health problem becomes a crisis, he said.

He said the format encourages frequent communication between pharmacists and doctors, as they work nearby. For example, the pharmacist may suggest a low-priced drug, mark potential drug interactions, or help synchronize multiple prescriptions so that the patient can collect refills all on the same day.

Barry said the company aims to reverse the typical approach. Instead of “giving someone a report or giving them a prescription,” he wants to be proactive. He said clinics can see 100 to 120 patients per day.

Walgreens and VillageMD

Source: Walgreens

Over 50% of the new primary care clinics will open in areas with a shortage of health professionals and a population that is underserved. The U.S. Department of Health and Human Services designates those areas based on certain criteria, such as the number of people in the vicinity who have low incomes, qualify for Medicaid or experience homelessness.

Barry said these locations will help VillageMD reach “older, poorer and poorer populations” who often do not have access to care.

Gourlay said it also promotes Walgreens’ mission.

“We want to be everywhere in America where people need health care,” he said. “This has always been our position and always will be.”

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