Walgreens Challenges DTC Telehealth Market With VillageMD Deal

July 08, 2020 - Health systems seeking to lure new business through direct-to-consumer telehealth platforms will soon have a new competitor.

Walgreens has announced a partnership with VillageMD to open connected health clinics in as many as 700 locations across the country over the next five years. The “Village Medical at Walgreens” clinics would be staffed by primary care practitioners and include telehealth and mHealth services.

The $1 billion deal will target some 30 US markets, with preference given to regions designed by the Health and Human Services Department as Health Professional Shortage or Medically Underserved Areas.

The project, the latest in a string of retail health endeavors launched by Walgreens, CVS, Walmart and others, poses a challenge to the DTC telehealth market. Retailers are looking for ways to capture healthcare dollars from consumers who don’t have a primary care provider or who are looking for care outside the doctor’s office or hospital.

Like its competitors, Walgreens – which has roughly a dozen co-located clinics and partnerships with health systems, weight loss and eyecare companies – sees these clinics as an ideal way to capture business from consumers who are already heading into the store to fill prescriptions or for other healthcare needs.

“This rollout is a major advancement of one of Walgreens Boots Alliance’s four key strategic priorities, Creating Neighborhood Health Destinations,” Stefano Pessina, the company’s executive vice chairman and CEO, said in a press release. “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 the US, we spend $4 trillion per year on healthcare, over 85 percent of that is tied to patients with chronic diseases,” added VillageMD Chairman and CEO Tim Barry. “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.”

The nationwide launch follows a five-store pilot program in Houston, as well as an expanded telehealth collaboration through the Walgreens Find Care platform, announced in April. The clinics will run between 3,300 and 9,000 square feet and be staffed by care providers hired by Chicago-based VillageMD, the virtual care subsidiary of Village Medical.

The announcement comes as health systems look to shift more of their services outside the hospital or doctor’s office to address consumer demands for convenient care, and to address challenges posed by the ongoing coronavirus pandemic. In this atmosphere, many health systems are launching or expanding DTC telehealth platforms to give their patients round-the-clock access to care and to attract new patients.

Just last year, Walgreens announced plans to shut down roughly 160 of its own in-store clinics, veering away from the quick care model favored in DTC telehealth. The company hinted then that it would cast a net for more detailed healthcare partnerships, such as the doctor’s office model now being pitched with the VillageMD program.

The emergence of retail clinics may very well test the theory in the healthcare industry that people want their healthcare from providers they trust – either their own or those employed by health systems – rather than companies using call centers or a pool of hired doctors and nurses.