Walgreens’ Virtual Care Launch Signals Retailers’ Healthcare Edge  

October 18, 2023 - Walgreens, one of the largest pharmacy store chains in the United States, made headlines late last week when it announced plans to enter the virtual care arena. The news spotlights retailers' advantages in virtual care, even amid a downturn in patient demand.

At the HLTH conference in Las Vegas, Walgreens unveiled its virtual healthcare solution, slated to launch in late October. The solution will provide on-demand care for common healthcare needs through video and chat-based capabilities and prescription services.

The news comes within weeks of Costco and Walmart announcing their virtual care offerings, setting the stage for increased competition in an already crowded digital health market. Not only that, but consumer preference has changed since the peak of the COVID-19 pandemic, further intensifying the competition.

A recent report by market research firm Trilliant Health showed that though telehealth visit volume remains higher than pre-pandemic levels, it dropped significantly from 76.6 million visits in the second quarter of 2020 to 41.5 million visits in the fourth quarter of 2022. This represents a 45.8 percent decline.

“There are more telehealth suppliers competing for a small share of virtual care consumers, or limited demand, which suggests heightened competition,” Sanjula Jain, PhD, senior vice president of market strategy and chief research officer at Trilliant Health, told mHealthIntelligence. “The consistent decline reflects how the expanded availability of virtual care options has not shifted widespread consumer preference.”

Still, non-traditional stakeholders, like technology companies, retailers, and pharmacy chains, are continuing to chase the prophesized gold at the end of the virtual care rainbow. According to experts who spoke with mHealthIntelligence, retailers have a competitive edge in this space where other stakeholders have stumbled.

NON-TRADITIONAL PLAYERS ARE STAKING CLAIMS IN THE VIRTUAL CARE MARKET

As demand for virtual care slows, telehealth use will likely be relegated to niche applications and consumer segments, according to Jain. For instance, most non-traditional healthcare stakeholders view telehealth as a means to expand care for lower acuity conditions, behavioral healthcare, and chronic condition management.

This is true of Walgreens Virtual Healthcare solution, which connects patients to care for common health conditions, including respiratory illness, allergies, urinary tract infections, and acne. Users can connect with clinicians via chat or video using their own devices. After the consultation, they can access prescriptions at Walgreens stores or through the Walgreens prescription delivery service.

Most chat-enabled virtual visits will cost $33 out-of-pocket, and video visits will vary from $36 to $75. Insurance is currently not accepted for Walgreens Virtual Healthcare visits.

Similarly, Costco is providing members access to virtual primary care at $29, health check-ups with a standard laboratory panel and a virtual follow-up with a provider at $72, virtual mental health therapy at $79, and 10 percent off other services, including in-person appointments. The virtual care services are being offered through a partnership with Sesame, a marketplace platform that connects healthcare consumers with providers nationwide across various specialties.

Last week, Walmart also announced plans to launch a no-copay virtual primary care service for employees and their families. The service includes access to preventive care, chronic care management, and mental health support through digital tools.

“The list of conditions that can be treated via these service models are pretty consistent in that they are low acuity/low complexity and can be safely treated and managed virtually and/or asynchronously,” said Eve Cunningham, MD, chief of virtual care and digital health at Providence health system. “Patients and consumers desire these access points for convenience and ease of access.”

Though there are similar features, virtual care approaches among non-traditional healthcare entrants differ in the scope of services, business models, and ownership models, noted Chris Lew, consulting engagement manager at Rock Health Advisory.

According to Lew, CVS and Walmart’s virtual care offerings are the most mature, covering a wide range of services, including care for common conditions, primary care, behavioral healthcare, and some chronic condition management services. Costco’s virtual care program also covers a relatively broad scope of services.

Meanwhile, newer market offerings from Walgreens and Amazon Clinic are focused on treating common conditions as well as providing access to medication refills.

The difference between retailers’ virtual care business models can be seen in CVS and Walmart's plans to target virtual care as a benefit through health plans and employers, while others are operating cash-pay models, Lew said.

Additionally, Costco and Amazon are providing their virtual care offerings through third-party companies, including Sesame, Wheel, and SteadyMD, while CVS and Walgreens appear to be operating their offerings on their own.

Ultimately, however, all virtual care providers are facing the same primary challenge of encouraging adoption. Some experts believe that retailers may have an advantage on this front.

CAN RETAILERS OFFER VIRTUAL CARE BENEFITS THAT OTHERS CANNOT?

The market is evolving past the first generation of virtual care, that is, virtual visits with minimal in-person care integration, Lew stated.

Today, the virtual-first care experience must include an omnichannel experience that integrates virtual and in-person care for healthcare consumers. This is where retailers can flex their long-standing brick-and-mortar presence in communities.

“Retailers uniquely bring a physical scale and community presence that are hugely valuable for delivering an omnichannel experience,” Lew said. “For example, a consumer may want to see his primary care provider in person at a VillageMD [clinic] but have discreet virtual visits to receive treatment for ED [eating disorders] and get his medications both by delivery and in person depending on the day or need. The recent moves retailers have made to bolster their virtual capabilities enable consumers like this to get all their needs met under one ‘roof’ in a highly integrated way.”

In fact, the lack of a physical presence may end up hurting virtual-only healthcare providers like Hims & Hers and Lemonaid Health, he added.

Stephen Buck, healthcare entrepreneur and pharmaceutical supply chain expert, echoed Lew, noting that retail pharmacies can leverage virtual care to integrate diagnoses, medication prescribing, drug dispensing, pricing, and treatment delivery into one visit. This helps reduce delays in care access as all services are provided within one organization.

Walgreens, especially, has historically “performed well by creating a positive consumer experience in their pharmacy app. One would assume they would invest enough in this new offering to compare favorably with a number of innovative competitors,” he said.

Trilliant Health’s Jain agreed that retailers have an edge over their competitors regarding the healthcare consumer experience.

“Retailers certainly have an advantage with respect to their seamless integration from the virtual care visit to receiving a tele-prescribed medication given pharmacy is a large part of the retailer business model, which is a lot easier than what traditional providers can offer today,” she said.

This is not necessarily bad news for traditional healthcare stakeholders, who can learn from and partner with retailers to enhance care.

WHAT RETAILERS PUSH INTO HEALTHCARE MEANS FOR PROVIDERS AND PAYERS

Even with the advantages retailers have in the virtual care arena, they are not currently in a place to replace traditional primary and complex care delivery.

“Most retail clinics do not manage anything complex or requiring specialty-level care,” Providence’s Cunningham said. “For example, as an OB-GYN physician, I can attest to the experience of being on the receiving end of patients who risk out of the standard virtual care delivery algorithm for a specific condition on their list that requires specialty care.”

Also, many retailers are not accepting insurance for virtual care services or are only targeting commercial payers, which leaves a wide swath of the population, including those who are low-income, underinsured, or otherwise medically vulnerable, unable to access these services.  

That said, Cunningham noted that healthcare providers and payers can learn from retailers, including gaining insights into healthcare consumer behaviors that drive business to retailer care models and strategies to improve patient access and experience.

In addition, provider organizations and retailers can achieve shared healthcare goals. For instance, retailers can work with integrated care delivery networks to support the escalation of lower acuity virtual care to in-person care in brick-and-mortar facilities and transfers to specialized care clinics for certain populations, Cunningham said.

Further, several win-win collaboration opportunities exist between retailers and payers amid the move toward value-based care.

“By working together to mutually succeed in risk-based models, payers hope to drive down cost of care, and retailers hope to build deep consumer relationships that translate to shared savings and a differentiated primary care delivery experience,” Lew said.

While partnership is possible in some areas, retailers' growing virtual care offerings will result in heightened competition. Lew said lower-acuity specialty care may be an emerging battleground, with retailers looking for partners to boost specialty care access. Walgreens appears to be already planning for this, announcing plans last year to acquire multispecialty medical group Summit Health-CityMD.

Ultimately, retailers' growing virtual care footprint could drastically reduce the total addressable market for telehealth. Jain noted that as more retailers enter the market and telehealth is increasingly commoditized, the total addressable market for telehealth will approach $0 in the commercially insured market.  

Thus, retailers’ virtual care presence could ultimately prove the most beneficial for healthcare consumers.

“The competition will be fantastic for consumers on price, availability, experience, and perhaps even on quality of providers,” Buck said. “More options at better prices means people will get better faster and miss less work or family time, which will increase consumer satisfaction.”