Walgreens is converting some of its store space to doctors offices.
Walgreens Boots Alliance has entered into a partnership with VillageMD that will make Walgreens the first national pharmacy chain to offer full-service doctor offices co-located at its stores on a large scale. The retailer will open 500 to 700 “Village Medical at Walgreens” primary care clinics in more than 30 U.S. markets during the next five years, with a plan to build hundreds after that.
The rollout follows a pilot of five in-store clinics in the Houston area. The trial produced very strong results after opening last November, according to Walgreens, including high patient satisfaction scores.
Walgreens said its pharmacists will be a critical member of VillageMD’s multi-disciplinary clinic team. The clinics, which will be staffed by more than 3,600 primary care providers to be recruited by VillageMD, will accept a wide range of health insurance options, and offer comprehensive primary care across a broad range of physician services. Additionally, 24/7 care will be available via telehealth and at-home visits.
Most of the clinics will be approximately 3,300 sq. ft. each — which is nearly a quarter of Walgreens’ average size of 13,500 sq. ft. — with some as large as 9,000 sq. ft. They will use existing space in the store, which will still provide a vast range of retail products to customers, the retailer said.
More than 50% of the clinics will be located in area with a shortage of health professionals and a population that’s underserved, with the areas designated by the U.S. Department of Health and Human Services.
“This rollout is a major advancement of one of Walgreens Boots Alliance’s four key strategic priorities: creating neighborhood health destinations,” said Stefano Pessina, executive VP and CEO, Walgreens Boots Alliance. “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.”
The move comes as Walmart is also diving deeper into the health care space, opening freestanding Walmart Health facilities. CVS Health is expanding its HealthHub store store format, with plans to have some 1,500 in operation by the end of 2020.
VillageMD and Walgreens also recently announced the availability of Village Medical telehealth providers on Walgreens online platform Find Care, which connects patients with a wide range of health services.
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. It is anticipated, assuming full conversion of the debt, that Walgreens will hold an approximately 30% ownership interest in VillageMD at the completion of the investment. (Sidley Austin LLP represented Walgreens in its agreement with VillageMD.)
Of WBA’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.