Walgreens Opening Doctors’ Offices at US Stores


Retailer to invest $1 billion in VillageMD to add doctors’ offices, reflecting attempt to expand healthcare services.

Walgreens Boots Alliance Inc. will add physicians’ offices to hundreds of drugstores as the pharmacy chain aims to redefine itself as a healthcare service. The largest US drugstore chain was hit by slowing profits from prescription drugs, so it is partnering with VillageMD, a primary care provider. 

The team will open 500 to 700 clinics in Walgreens sites across the US over the next five years. Walgreens will pay VillageMD $1 billion in equity and debt in exchange for a 30% stake in their startup business. 

Walgreens and CVS Health Corp. fight to be the top treatment centers, seeking to expand beyond the smaller revenue from the prescription drugs that dominate their sales. Adding primary care doctors will distinguish Walgreens from CVS, which creates health care hubs including medicine, consultations, and lab tests for chronic conditions, but no doctors. 

Online retailers, like Amazon.com, have pulled customers away from in-person drugstores. Insurers and hospitals have expanded clinic or purchased physicians’ practices, so more primary care doctors are becoming employees of larger companies. 

“We heard from patients that they trust their local doctor and they don’t 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.”

The COVID-19 pandemic threatens drugstores and doctors’ practices, as patients put off visits for fear of catching the infection. Walgreens joined a new ad campaign encouraging people to return to their health providers amidst the pandemic. 

In April, Walgreens’ sales declined after the initial boost in demand in March, when Americans stocked up on supplies at the beginning of lockdowns. VillageMD saw a 15% to 20% drop in primary care visits in the pandemic, according to co-founder and CEO Tim Barry. 

Walgreens says the VillageMD partnership will drive up prescription and medical product sales as more patients visit the stores. The additional medical services offer flat-fee primary care, though the cost of a VillageMD office visit depends on the patient’s insurance and the services provided. The company plans to expand the clinics across Walmart’s 4,700 US stores, according to Sean Slovenski, president of Walmart U.S. health and wellness.

Critics argue that Americans are not ready to accept their drugstores as a trustworthy medical provider, especially for treating complex chronic conditions. 

Read the full report.


Economics, Finance and Investing