Walgreens will be opening 500 to 700 full-service doctor's offices co-located at its stores via an expanded partnership between Walgreens Boots Alliance and VillageMD. The companies are expanding the offering on a large scale following a successful trial that started last year.
Over the next five years, the companies expect to open hundreds of Village Medical at Walgreens primary care clinics in more than 30 markets across the country, with plans to build hundreds more after. The physician-led clinics will be staffed by more than 3,600 primary care providers who will be recruited by VillageMD.
The move furthers the retailer's direction toward health and wellness, something the retailer alluded to during a presentation in the fall at the Path to Purchase Expo, and could dramatically shift the store layouts and potentially even store brand health-focused assortment in adjacent stores.
“This rollout is a major advancement of one of Walgreens Boots Alliance’s four key strategic priorities, Creating Neighborhood Health Destinations,” said Stefano Pessina, executive vice chairman and CEO of Walgreens Boots Alliance. “These clinics at our conveniently located stores are a significant step forward in creating the pharmacy of the future, meeting many essential health needs all under one roof as well as through other channels.”
In addition to in-person physician services, the clinics will offer 24/7 telehealth visits, as well as at-home visits. More than half of them will be located in areas seeing a shortage of health professionals or that are medically underserved according to Health and Human Services criteria.
The wide rollout follows a five-store pilot that started last year in the Houston, Texas, area, which garnered Net Promoter Scores over 90. Walgreens and VillageMD noted that the integrated care model is particularly important right now, with 6-in-10 Americans living with at least one chronic condition that requires multiple daily medications. Village Medical clinic data shows that integrating pharmacy and primary care can improve medication adherence and contribute to improved patient outcomes.
“In the U.S., we spend $4 trillion per year on healthcare, over 85% of that is tied to patients with chronic diseases. To improve our healthcare system and reverse the trajectory of health spending, we must meet the needs of all patients. This partnership allows us to unleash the power of primary care doctors and pharmacists, enabling them to work in a coordinated way to enhance the patient experience,” said Tim Barry, chairman and CEO, VillageMD. “The results of our initial pilot clinics highlight that these outcomes are infinitely achievable.”
With the clinics co-located with Walgreens stores, it is possible that the retailer will look to expand the selection of health-and-wellness-focused private label items it offers in-store. Most of the clinics will be roughly 3,300 sq. ft., with some as large as 9,000 sq. ft. They will optimize existing in-store space.
The expansion of in-person clinics follows Walgreens and VillageMD’s addition of Village Medical telehealth providers to the Walgreens Find Care platform.
The new agreement between the companies will see WBA investing $1 billion in equity and convertible debt in VillageMD over the next three years, including a $250 million equity investment to be completed today. VillageMD said 80% of the investment would be used to fund the opening of the clinics and build the partnership, including integration with Walgreens’ digital assets. Assuming full conversion of the debt, Walgreens will be a 30% owner of VillageMD by the end of the investment.