As the retail giant Walgreens Boots Alliance (Nasdaq: WBA) delves deeper into the at-home care space, one of its clinical leaders said the company plans to make fewer strategic investments and acquisitions in the near term future.
Instead, the company will look for strategic partnerships and focus on understanding the space from the ground level. That’s according to Dr. Kevin Ban, the chief medical officer of Walgreens Health.
“To a certain extent, we need time,” Ban said last month at the Home Care Innovation + Investment Conference. “We’re putting these pieces together now as we look for partnerships and, to a certain extent, we’re letting that mature a bit. Previously, we may have been guilty of trying to boil the ocean. What we need to be is close to the people, we have to understand where things are moving and then we have to pick the right partnerships.”
Walgreens has invested heavily in its U.S. Healthcare segment. On its recent earnings call, its leaders admitted earnings within the segment have been underwhelming.
The investments Ban alluded to include an over $6 billion infusion into the primary care provider VillageMD, as well as the acquisition of the post-acute care company CareCentrix.
Because of those investments, Walgreens is now easing into a phase where enablement and care coordination is a top priority for the company.
“What we’re doing is putting all these pieces together,” Ban said. “About 20% of people who are in an MA plan program don’t have a primary care doctor. When we identify that through CareCentrix, where appropriate, we’re hooking them up with a VillageMD doctor. Even though I’ve talked about us having over 750 Village MD sites, that isn’t nearly enough to meet demand, so what we’re really trying to do is build muscle around partnering with providers and health care systems so we can drive better outcomes.”
Partnering with providers and other stakeholders who are already taking on risk is something Walgreens will be more open to in the future, Ban said.
Walgreens currently has — across a number of different payers — 3 million patients that are in some type of technical risk program. That number is headed in the right direction, Ban said, but the company is still not far into its risk-based journey.
“Part of what we have to navigate through — and why regulatory and reimbursement support is so important to us — is because as a retail pharmacy, it’s exceptionally difficult for us to take on risk on our own,” Ban said. “And so we have to do that, almost necessarily, through partnerships or VillageMD.”
Now that Walgreens has made those serious investments and has a longer runway to profitability, the focus is on how to succeed in a value-based environment.
From Ban’s perspective, it comes down to that regulatory and reimbursement support.
“The problem we’re always trying to solve is how do we get the regulatory support to do this?” Ban said. “That is managed at the state level and varies greatly. The next piece is how do we get reimbursement support? Pharmacy is almost the definition of a fee-for-service model. So in order to get into some fee-for-value, you’ve got to figure out reimbursement, and for us, that happens inside the contract. We’re really interested in figuring out how we can partner with health care organizations who are taking on risk so that some piece of that reimbursement can come our way to drive these types of outcomes.”
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