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900 CVS Locations To Get The Ax, But Healthcare Ramp-Up Rages On

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CVS Health says that it will reduce its store count by about 900 over the next three years, or about 10% of its locations. At the same time, the retail pharmacy giant plans to add health services at its remaining stores.

The company plans to have three basic models for its stores going forward. There will be traditional drugstores offering prescription services, but also sites dedicated to primary healthcare services, which would essentially be clinics capable of serving thousands of patients a day, a model that the company is already pursuing.

There will also be locations that will be modified versions of the company’s HealthHUBs, which are staffed by healthcare professionals who can offer some diagnostic capabilities, testing and advice. The staff is supplemented by digital kiosks for health and insurance questions. 

“Our retail stores are fundamental to our strategy and who we are as a company,” CVS Health President and CEO Karen Lynch said in a statement. “We remain focused on the competitive advantage provided by our presence in thousands of communities across the country, which complements our rapidly expanding digital presence.”

The closures will begin in the spring of next year. CVS expects to record an impairment charge in Q4 2021 of between $1B and $1.2B, or between 56 cents and 67 cents per share. Shares in the company were up about 1.5% on Thursday. Compared with a year ago, shares are up about 42%.

CVS’ rivals have likewise been expanding their healthcare options. Walgreens Boots Alliance has said it will open 500 to 700 clinics at its retail locations over the next five years in partnership with VillageMD, a Chicago-based primary care provider.

 

Source: Bisnow

Amazon-Led Health Care Venture To Disband As Walgreens, Walmart Ramp Up

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Haven, a joint venture formed in 2018 by Amazon, Berkshire Hathaway and JPMorgan Chase that was supposed to revolutionize the American health care system, is closing down, CNBC reports.

The JV partners formed Haven with the goal of finding ways of lowering costs and improving outcomes in the U.S. health care system, which persistently costs more but delivers worse outcomes than dozens of other nations.

A report comparing 11 high-income nations prepared by the Commonwealth Fund found that the U.S. spends the most on health care as a percentage of its economy (16.2% in 2018). That is nearly twice as much as the average of the other high-income countries (8.8%), but America still has the lowest life expectancy and highest suicide rates among the 11 countries.

Tackling an entrenched problem of that magnitude apparently proved to be too much even for companies as large as the Haven partners. In 2019, in a hint that Haven might not be up to the task, Berkshire CEO Warren Buffett said that there was no guarantee that Haven would succeed in its goals.

One difficulty for the JV was that the three partners tended to pursue their own projects separately, according to CNBC, citing an anonymous source familiar with Haven.

Other corporate giants, retailers in particular, are also out to change the face of U.S. health care delivery. In 2020, Walgreens Boots Alliance, in partnership with VillageMD, announced plans to open 500 to 700 clinics at Walgreens sites in 30 U.S. markets over the next five years, with about 40 opening this year.

Walgreens tested five in-store clinics in the Houston market and said they were successful. The clinics will offer a variety of physician services on-site, as well as care via telehealth and at-home visits.

Another retail giant, Walmart, has expanded into retail health care, opening 15 clinics in 2020, with plans for further expansion, with seven more by the end of 2021. All together, Walmart has more than 4,700 U.S. stores, meaning that its health care locations still represent a tiny fraction of its total so far.

The opportunity for further retail health care has surged as the coronavirus pandemic spurred greater consumer use of retail health care clinics, according to a late 2020 survey by digital signage company UPshow. That is because people have been consolidating errands more than previously, and a visit to a pharmacy can also be one to a retail health care clinic at the same location.

The survey found that 32% of consumers said COVID-19 increased their usage of retail health clinics, with nearly half (49%) saying that they will be more likely to use these clinics even after the pandemic. Also, the majority of health care executives (74%) reported that the pandemic has increased the volume or revenue or both of their health care offerings.

UPshow also found that 77% of consumers have at least one prescription that requires a pharmacy visit for refills on a regular basis, and more than half (56%) would consider visiting on-site retail health care for other services. The company surveyed 500 consumers and 250 retail health care executives nationwide.

 

Source:  Bisnow

Walgreens Strikes $1B Deal To Open Primary Care Offices In Its Drug Stores

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Walgreens Boots Alliance and VillageMD are expanding their partnership with a $1 billion deal in which between 500 to 700 primary care offices will be opened in Walgreens’ drug stores over the next five years.

After that the plan calls for hundreds more to be built. The offices, which will be located in more than 30 US markets. will be staffed by more than 3,600 primary care providers recruited by VillageMD. More than 50% will be located in Health Professional Shortage Areas and Medically Underserved Areas/Populations, as designated by the US Department of Health and Human Services. There will also be 24/7 care available via telehealth and at-home visits.

This  nationwide rollout follows a trial with five in-store clinics in the Houston, Texas area, which opened last November. Most of the clinics will be approximately 3,330 square feet each, with some as large as 9,000 square feet.

“These clinics 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,” said Stefano Pessina, executive vice chairman and CEO of the Walgreens Boots Alliance.

Under the terms of the new agreement, Walgreens will invest $1 billion in equity and convertible debt in VillageMD over the next three years, including a $250 million equity investment to be completed today.

Of Walgreen’s investment, 80% will be used by VillageMD to fund the opening of the clinics and build the partnership, including integration with Walgreens digital assets. Assuming full conversion of the debt, it is anticipated that Walgreens will hold a 30% ownership interest in VillageMD by the end of the investment.

 

Source: GlobeSt.