Renton, Wash.-based Providence Health & Services will lease space to own and operate healthcare clinics in multiple Walgreens drugstores across Oregon and Washington state.
The deal marks the first time Deerfield, Ill.-based Walgreens Boots Alliance has allowed a health system to own and operate its in-store healthcare clinics, and it's the first time Providence has placed providers in a drugstore setting. Together, the companies plan to outfit up to 25 stores with clinics within the next two years, and expect to open the first six clinics in the Portland and Seattle metropolitan areas by early 2016.
Neither company would talk about the cost of this move, which is a geographic expansion for Walgreens' healthcare clinic program because it doesn't currently have a presence in Washington or Oregon.
Nurse practitioners from Seattle-based Swedish Health Services, a Providence affiliate, will staff the three Seattle-area clinics, while Providence will staff the other three in the Portland area.
Providence-owned clinics that run on the system's protocols and, more importantly, its electronic health record, will make for a smoother experience than what customers are used to now in retail clinics, said Mike Waters, the system's senior VP of physician services. He said primary-care providers have increasingly complained about a disconnect, especially with EHRs, between what happens to a patient at the retail clinic and what happens in the health system and their EHR.
“We've heard loud and clear it's incredibly important for us to understand the continuity of care for all of our patients,” Waters said. “We have market disruptors that have entered all of our markets offering episodic appointments.”
Providence has several other walk-in and episodic-care options, some of which are in free-standing facilities, Waters said. The system agreed that Walgreens would be its only drugstore clinic partner, but it is also piloting care sites in grocery stores and other retail settings.
Creating low-cost, convenient-care options is one of Providence's “core strategies” as it moves from volume- to value-based care, Waters said.
Although the deal gives Providence ownership rights for clinic space within its store, it represents much more than a lessee-lessor relationship, said Dr. Pat Carroll, Walgreens' chief medical officer overseeing healthcare clinics. Providence won't be sharing revenue from the clinics, but the two organizations will engage in a “collaborative leadership governance council” made up of representatives from both who will jointly work on furthering their retail health efforts.
As Walgreens moves away from managing its own retail clinics, Woonsocket, R.I.-based CVS Health, its major competitor, is investing in more. Following the acquisition of big-box retailer Target Corp.'s pharmacy and clinics business, CVS said it will take over as many as 80 of Target's clinics and rebrand them as CVS Minute Clinics, with plans to add 20 new clinics in Target stores over the next three years.
CVS plans to operate as many as 1,500 clinics by 2017.
U.S. retail pharmacy sales for Walgreens Boots Alliance, the parent company of Walgreens, were $20.4 billion in its third quarter ended May 31, with total sales in comparable drugstores (those open at least a year) up 6.3%. The company does not break down its healthcare clinic revenue, but they are included in its retail pharmacy sales figures.
Carroll said Walgreens hasn't yet decided whether it will partner with more health systems under this model. When asked whether Walgreens sees clinic ownership as a sustainable part of its business, he said retail clinics remain an important part of the company's overall strategy.
“We're a healthcare company—retail health plays into our pharmacy programs and plays into a lot of our value-based programs,” Carroll said. “It is a part of what we do and our strategy going forward.”
Convenience and access for consumers is obviously a priority for the retailer. Earlier this year, the company said it planned to expand a telemedicine app it started testing in 2014 that lets people see doctors for minor ailments.
Walgreens plans to make it available in 25 states and estimates that would allow it to reach about half the country.
