‘Back to the Future’: Walgreens Invests $1B in VillageMD to Expand Community-Based Care Services

Two major retail chains — Walgreens and Walmart (NYSE: WMT) — are expanding their health care reach while increasing their footprints in the home- and community-based care space.

Walgreens Boots Alliance (Nasdaq: WBA) — Walgreens’ holding company — and VillageMD announced a five-year plan Wednesday to expand the retailer’s full-service physician services at its stores. As part of the plan, Walgreens and VillageMD will add 500 to 700 more physician offices at Walgreens locations over the next five years.

The two organizations will also place further emphasis on at-home care and telehealth services.

Advertisement

The plan, which is dubbed “Village Medical at Walgreens,” is launching after a successful pilot at five in-store clinics in the Houston market. Now, the goal is to hire 3,600 physicians and enter 30 additional U.S. markets.

Chicago-based VillageMD, through subsidiary Village Medical, is a provider of value-based primary care services.

The at-home care initiative is not a new one for VillageMD, which began as a family practice that paid an abundance of attention to at-home care. That has continued during its transformation to a larger player, co-founder and CMO Dr. Clive Fields told Home Health Care News. 

“Home care has been a part of our clinical model since the beginning and will be for as long as I practice medicine and as long as our company is focused on delivering high-quality clinical results for [patients],” Fields said. 

VillageMD also recently launched its own at-home care unit, Village Medical At Home, in December 2018.

Advertisement

“We’re really investing in the resources, technology and training so that we can continue to expand the number of patients that we reach at home, moving from that top 1% of the risk stratification to a little bit lower,” Fields said. 

Broadly, the Village Medical at Walgreens program will bring more physician offices into more Walgreens stores across the country.

But in addition to increasing access to care, it will also make things more seamless for the patient.

“We do anticipate incorporating telehealth and being able to bring specialists in a variety of different medical specialties into the home without actually disrupting the patient,” Fields said. “Wound care is a classic example because [normally] patients will be seen in a wound care center. [There’s a lot] of difficulty for the patients and family to take them or transfer them from the home to a wound care center. Telehealth and wound care match up incredibly well.” 

Of the locations VillageMD and Walgreens are opening, more than 50% will be located in “Health Professional Shortage Areas” and “Medically Underserved Areas/Populations,” as designated by the U.S. Department of Health and Human Services (HHS).

Most of the clinics will be approximately 3,330 square feet, with some as large as 9,000 square feet.

“This rollout is a major advancement of one of Walgreens Boots Alliance’s four key strategic priorities, Creating Neighborhood Health Destinations,” Stefano Pessina, executive vice chairman and CEO of Walgreens Boots Alliance, said in a statement. “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.”

Overall, roughly six in 10 Americans live with at least one chronic condition requiring multiple daily medications, according to VillageMD.

As part of the plan, Walgreens Boots Alliance will invest $1 billion in equity and convertible debt in VillageMD over the next three years, including a $250 million equity investment to be completed Wednesday.

Of that investment total, 80% will be used by VillageMD to fund the opening of the clinics and build the partnership, including integration with Walgreens digital assets. Assuming full conversion of the debt, Walgreens Boots Alliance expects to hold an estimated 30% ownership interest in VillageMD at the completion of the investment.

VillageMD and Village Medical’s network includes 2,800 physicians across nine markets. Combined, VillageMD and Village Medical are responsible for about 600,000 lives and $4 billion in total medical spend in value-based contracts.

Walmart dives into Medicare Advantage

Walmart has already dipped its toes into health care in the past. In fact, last year, the $524 billion company even established home health care partnerships with industry giants like Amedisys Inc. (Nasdaq: AMED).

Now, Walmart has quietly launched Walmart Insurance, which filed with the Arkansas Secretary of State last month, according to MedCity News. The retail giant will reportedly focus on Medicare Advantage, which has been a hot topic in home care as eligible benefits have expanded over the last couple of years.

Other retail giants that have invested in home-based care of late include CVS Health (NYSE: CVS) and Best Buy (NYSE: BBY). CVS expanded its in-home capabilities as recently as April, while Best Buy launched a five-year plan of its own to serve 5 million seniors through in-home health monitoring by 2025.

Overall, the big players seem to agree with the assertion that the future of health care is in the home.

“Just in terms of patient satisfaction, clinical results and cost-of-care quality, being able to deliver care in the home … is, in a weird way, a return back to the future,” Fields said. “And we’re looking forward to extending the services.”

Companies featured in this article:

, , ,