As drug-store chains struggle to find adequate staffing amid slowing industry growth, Walgreens is moving beyond pharmaceuticals into health care.
Key Details
- Since becoming Walgreens CEO, RosalindBrewer has increased the company’s investment in VillageMD, a chain of primary care clinics.
- Brewer’s plan will attach VillageMD to Walgreens’ existing drug stores. In November, Walgreens directors agreed to a $9 billion deal that combines VillageMD with urgent-care clinics.
- The new deal is just the latest in Walgreens’ move to put more physicians on the drug-store chain’s payroll.
- Walgreens has a 53% stake in VillageMD.
- Walgreens isn’t the only drugstore taking this approach. CVS is making moves into other branches of health care. Earlier this month, the more profitable drugstore acquired Oak Street Health—a series of senior-centered health clinics.
Why it’s news
As pharmacists become more difficult to find, Walgreens is looking to expand into other areas of the health-care industry. In addition to the recent investment in VillageMD, Walgreens acquired ShieldHealth Solutions last September in a $1.37-billion deal. Shield Health Solutions provides specialty pharmacy services to hospitals and health networks. Just after that, Walgreens acquired CareCentrix—a home-health benefits manager.
VillageMD and Walgreens acquired Summit Health together in November. Summit Health is the parent company of CityMD urgent-care centers.
This series of acquisitions gives Walgreens access to a growing number of physicians and draws more Medicare Advantage-covered patients to the drug-store chain. These patients are more lucrative for Walgreens.
By attaching VillageMD clinics to Walgreens pharmacies, patients have an extra incentive to visit a Walgreens location, partly due to the easy convenience of walking over to a pharmacy right after an appointment.
At Walgreens locations that already have clinics attached, the clinics have doubled Walgreen’s market share of U.S. prescriptions, The Wall Street Journal reports. Around half of all patients that visit the VillageMD clinics choose to get their prescriptions filled at Walgreens.
Backing up a bit
Drug-store pharmacies such as CVS and Walgreens have announced reduced hours as a shortage of pharmacists has led to inadequate staffing.
Some of the largest drug-store chains—including CVS, Walgreens, and Walmart—will cut their hours beginning in March. Nearly two-thirds of CVS locations and 4,600 Walmart pharmacies will be affected.
CVS, Walgreens, and Walmart operate nearly 24,000 pharmacies nationwide. Reduced hours are due to labor shortages as pharmacies struggle to hire adequate pharmacists. While demand for pharmacists has risen, the projected employment growth is only 2%, Forbes reports.
Pharmacy labor shortages have led to increasingly stressful working conditions for currently employed pharmacists. Additionally, pharmacists’ wages have not risen with inflation. The new pharmacy hours will vary based on location.
