Walgreens Eyes Further Expansion Into Healthcare Turf. Good!
Walgreens (WAG), the country's largest drugstore chain, is poised to expand even further into healthcare. At Walgreens' annual shareholder conference, company officials talked about a new educational program for patients with chronic and complex diseases, and even mentioned the possibility of a Walgreens role in the emerging accountable care organizations.
To those who worry about the additional competition for primary care doctors and the intrusion of a nontraditional provider on healthcare turf, I say, "bring it on." Because as the reform law transforms healthcare, we're going to need all of the primary care providers we can find.
Walgreens: Healthcare behemoth
Walgreens is a behemoth that operates 7,600 pharmacies, 359 Take Care retail clinics, and 370 worksite clinics. So it's understandable that some physicians might be concerned about the company's intentions. But all health care is local, and in most markets, Walgreens' enterprises are not so concentrated that they present a threat to local providers.
I've argued in the past that the lower operating expenses and fees of retail clinics could pose a threat to primary care practices. But it's becoming clear that in nearly every market, primary care physicians can be as busy as they want to be. That being the case, lower charges at retail clinics shouldn't put doctors' incomes at risk.
Until recently, most retail clinics have confined themselves to minor acute care. Now, however, Walgreens and some other outlets are beginning to branch into chronic disease care, as well. Considering the limitations of this kind of care in most primary care practices -- where doctors are on the treadmill of 10- or 15-minute visits -- the Walgreens initiative to help educate these patients on proper self-management should be welcomed by all concerned. The program will initially focus on type 2 diabetes.
Walgreens has the chronic
As for the worksite clinics, more and more employers are trying to provide primary care to their employees onsite. That's both to encourage them to get appropriate care and to reduce time away from the job.
Walgreens' Take Care division recently expanded this side of its business by opening an onsite medical center at Intel's facility in Hillsboro, Ore. Take Care also operates Intel's wellness and occupational programs in Washington, Oregon, California, Arizona, New Mexico and Massachusetts, and provides primary care services to Intel employees in Arizona.
With a primary care shortage in many areas and with the number of generalist doctors expected to decline further, these worksite clinics should help fill some of gaps. But they won't solve the whole problem, any more than community health centers will. We still need to train more primary care doctors and make the occupation attractive enough that medical students will want to go into it.
Regarding accountable care organizations, Walgreens' press release about the shareholders meeting said:
The company, through its pharmacy, health and wellness services, also is becoming a critical component of new accountable care organizations by expanding opportunities with health systems such as Northwestern Memorial Hospital in Chicago and Truman Medical Centers in Kansas City, Mo., as well as physician groups across America.
It's not clear what this means. But there's no doubt that the fledgling ACOs will need help from pharmacies and retail clinics as part of their effort to improve the coordination of care. Moreover, population health management requires the very kind of work that Walgreens is starting to do in patient education. So once again, this looks like an important player in healthcare stepping up to the plate.
Will Walgreens make money by expanding its healthcare operations? Undoubtedly. But beyond being a smart move, it's one that can help buoy the system as it goes through a painful transition.
Image supplied courtesy of Flickr.
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