Sell for More News is a weekly blog series with interesting information from the world of commercial real estate.
In my opinion, the pharmacy of the future will offer telehealth and in-office doctor visits. The goal should be to offer the most convenient treatment at the lowest possible cost while driving traffic to the store.
It seems Walgreens agrees.
Walgreens is jumping into primary care by bringing the doctor’s office into hundreds of their retail pharmacies.
Walgreens and primary-care provider VillageMD are planning to open 500 to 700 primary-care clinics in stores over the next five years. The second-largest U.S. pharmacy chain, with 9,277 stores, said it will be the first national drugstore giant to have a doctor in the house.
“These clinics within 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,” Walgreens CEO Stefano Pessina said in a statement.
Walgreens plans to pay $1 billion to VillageMD, also based in Chicago, in equity and debt over the next three years to take a 30% stake in the startup, including a $250 million equity investment immediately.
The model differs from what CVS, its biggest rival, is unfolding with its HealthHUB initiative that includes walk-in MinuteClinics staffed with nurses.
Village Medical at Walgreens
Called “Village Medical at Walgreens”, VillageMD will staff the clinics with more than 3,600 primary-care providers in more than 30 markets.
Walgreens plans to wedge the clinics into spaces from 3,000 square feet to as large as 9,000 square feet within stores, a design challenge that will rework the footprints of many locations. The clinics also will sell medical equipment and products that could include wheelchairs and as well as inhalers and wearable gear that can measure blood pressure, heart rate and carbon dioxide levels.
The clinics plan to offer comprehensive primary care across a broad range of physician services with 24/7 care available through telehealth and even at-home visits.
Walgreens said more than 50% of the clinics will be located in underserved areas.
Walgreens recently tested the in-store clinic concept in the Houston area. The results were “very strong” with high patient satisfaction. Walgreens expects to expand into another 20 markets after the first 30 are opened.
The partnership follows a nationwide move toward transforming the traditional corner drugstore into a go-to center for regular visits and treatments of chronic conditions to overall healthcare advice as prescription sales, which once powered profits, have shrunk.
Chronic illnesses are the problem and the opportunity
The U.S. spends some $4 trillion a year on healthcare with more than 85% covering the costs of treatments tied to chronic diseases ranging from diabetes and cardiovascular disease to cancer.
“To improve our healthcare system and reverse the trajectory of health spending, we must meet the needs of all patients,” Tim Barry, VillageMD’s chief executive, said in a statement. “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.”
It also is aimed at keeping people out of costly hospitals and emergency centers, which is the primary driver of escalating healthcare costs. An integrated model that takes advantage of the ubiquity of drugstores in most cities and towns is expected to help drive down the costs chronic conditions that require multiple daily medications and regular checkups incur.
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About Beau Beach, MBA CCIM
Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.
Beau leads Beachwood which is a commercial real estate broker for sellers in the Nashville, Milwaukee and South Florida markets.
He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.
Beau can be reached at 800-721-3287, click to schedule a call or Beau@BeachwoodSells.com