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| DATE | 2020-07-08 |
| FROM | Ruben Safir
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| SUBJECT | Subject: [Hangout - NYLXS] No Conflict of Interest there...
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https://www.wsj.com/articles/walgreens-to-open-doctors-offices-at-its-u-s-stores-11594209601?mod=hp_lead_pos11
Walgreens to Open Doctors Offices at Its U.S. Stores
Sharon Terlep
7-9 minutes
Walgreens WBA +0.54% Boots Alliance Inc., hit by slowing profits from
prescription drugs, will attach doctors offices to hundreds of
drugstores as the pharmacy chain seeks to remodel itself as a
health-care provider.
The largest U.S. drugstore chain by stores is pairing with primary-care
provider VillageMD to open 500 to 700 clinics at Walgreens sites across
the country over the next five years. Walgreens will pay VillageMD $1
billion in equity and debt over the next three years in exchange for a
30% stake in the Chicago-based startup by the end of that term.
Walgreens and rival CVS Health Corp. are in a race to become go-to
treatment centers, particularly for patients with costly, hard-to-manage
chronic conditions. Both chains are seeking new ways to counter smaller
revenue from prescription drugs, which drive the bulk of their sales.
They also are battling online rivals such as Amazon.com that have drawn
shoppers away from physical stores.
Insurers and hospitals, meanwhile, have been expanding their clinics or
buying up physicians practices, making more primary-care doctors
employees of larger companies. For example, UnitedHealth Group Inc. has
acquired a network of doctor practices, surgery centers and urgent-care
clinics.
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We heard from patients that they trust their local doctor and they dont
like changing their doctor, said Alexander Gourlay, Walgreens co-chief
operating officer. It became clear that you have to have a primary care
doctor as part of the model both physically and digitally.
Drugstores and doctors practices are getting hurt by the coronavirus
pandemic. Patients are putting off visits to their health-care providers
for fear of catching the virus during visits. Walgreens is part of a
coalition behind a new ad campaign to encourage people to return to
their medical providers as the pandemic continues.
Walgreens in April said store sales had begun to fall sharply following
an initial surge in demand in March as Americans rushed to stock up in
the pandemics early days. The company will report financial results for
its May-ended quarter on Thursday.
VillageMD, a network with more than 2,800 physicians, has had a 15% to
20% drop in primary-care visits amid the pandemic, said Tim Barry, the
startups co-founder and CEO. He said the drop-off is less severe than
declines of 40% or more in the broader industry.
Executives from both companies said the deal was advancing before
coronavirus.
In adding primary-care doctors to its model, Walgreens is diverging from
CVS, which has said that physicians arent needed to create so-called
health-care hubs. CVS is creating hubs inside its stores where patients
would go to seek medicine, consultations and lab tests to manage chronic
conditions such as diabetes and hypertension.
Both drugstore giants say their ubiquity in American communities makes
pharmacies a logical hub for people seeking treatment for chronic
ailments, which are often exacerbated as patients struggle to take their
medications regularly and adhere to medical regimens.
CVS, which acquired insurer Aetna Inc. in 2018, said its health-hub
model will drive down the cost of health care, savings that will then be
captured by its new insurance arm. It aims to have 1,500 health hubs
opened by 2021.
Walgreens, which has opted to partner rather than acquire insurers or
other companies, said the VillageMD pairing will benefit Walgreens
financially by driving up prescription sales as well as sales of related
medical products as more patients visit the stores. The company also
aims to make money off its 30% stake in VillageMD.
SHARE YOUR THOUGHTS
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be the benefits or concerns for you? Join the conversation below.
Walmart Inc., the countrys biggest retailer and a major pharmacy
operator, is also adding medical services. The company has opened a
handful of clinics with doctors and dentists that offer flat-fee primary
care, such as $25 dental X-rays and $40 office visits. The company plans
to expand the clinics broadly across Walmarts 4,700 U.S. stores, said
Sean Slovenski, president of Walmart U.S. health and wellness in an
interview.
The intent is to spread across the majority of the fleet, but the
clinics wont be the same across the entire fleet, he said last October
soon after the first new clinic opened in Georgia. The first locations
were stand-alone clinics next to Walmart supercenters. Newer versions
are inside existing stores.
Critics, including some industry analysts, health-care experts and
physician groups, argue that Americans arent ready to accept their local
drugstore as a trusted health provider. Some also say the depth and
complexity involved in successfully treating chronic conditions cant be
addressed by pharmacy chains.
Health-care industry lines are being redrawn and providers are under
pressure to revamp themselves. A high-profile health venture backed by
Amazon, JP Morgan Chase & Co. and Berkshire Hathaway Inc. has shown
little to the public three years after it was announced. The ventures
chief executive recently stepped aside.
Walgreens has been working with VillageMD since last year when the
companies opened five joint VillageMD locations in Houston. Walgreens
Mr. Gourlay said patients adherence to medications improved at the pilot
locations, convincing the company the model should expand.
VillageMD, which has bought up primary-care offices across the country,
will move existing physicians into the Walgreens-adjacent clinics.
The cost of a VillageMD office visit will vary based on the patients
insurance coverage and services rendered. Half the clinics will be in
medically underserved areas, and will offer a sliding payment scale to
uninsured patients. Walgreens said it hasnt yet set the list of planned
locations.
Sarah Nassauer contributed to this article.
Write to Sharon Terlep at sharon.terlep-at-wsj.com
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