Walgreens and VillageMD kickstarting the ‘Go Big’ strategy of over 500 co-located primary care offices

Va-room! Back in July, Walgreens Boots Alliance and VillageMD announced a Really Big Deal that involved 500 to 700 co-located full-service Village Medical primary care offices in more than 30 markets over the next three to five years, along with a billion-dollar investment by Walgreens in VillageMD over the next three years. This week, they announced the opening of the first 40 “Village Medical at Walgreens”, in addition to the 5 pilot offices in Houston, by the end of summer 2021. The first openings will be in Phoenix starting in two weeks, with the remaining flight of offices in Houston, El Paso, and Austin, Texas, plus Orlando, Florida.

The coordination of the Village Medical office with Walgreens pharmacy and in-store services is apparent in the announcement, with much made of coordination among them in influencing patient medication adherence (right dose at the right time), health outcomes, and lowering the cost of care. Many of the clinics will be in traditionally underserved areas with high rates of medical disparities and multiple chronic conditions. In the July announcement, they pledged that over 50 percent would be located in HHS-designated Health Professional Shortage Areas and Medically Underserved Areas/Populations. Release.

For Walgreens Boots, it confirms that they aren’t wavering from their ‘go big or go home’ strategy, clearly targeted to revitalize their retail locations and pharmacy in higher potential markets. Since then, Amazon has opened up Pharmacy in addition to PillPack, CVS is integrating SDOH into pharmacy as a trial, and Walmart Health continues to waver with a limping expansion of 22 clinics in four states. Walgreens picked a very strong partner in VillageMD and Village Medical, which now have more than 2,800 physicians across nine markets, cover approximately 600,000 lives, and manage $4 billion in total medical spend in value-based contracts. They also haven’t slacked in their own efforts. Only last month, they acquired Complete Care Medicine in Phoenix, opening 17 clinics there by summer 2021, along with announcing 10 new offices in Atlanta. VillageMD is also featuring 24/7 telehealth and virtual care in its offices. 

News roundup: Amwell’s socko IPO raises $742M, Walmart and the Clinic Wars, Taskforce on Telehealth Policy report released, Israel’s Essence releases fall detection sensor system

Telehealth bullishness shows no sign of diminishing. On Wednesday, Amwell‘s (the former American Well) IPO stunned markets by not only debuting at $18 per share (a price only large investors received) but also opening at $25.51 on the NYSE (AMWL) and floating more than 41 million shares for a raise of $742 million. If underwriters exercise all their options, the raise could exceed $850 million. Only last week, the SEC filing projected a sale of 35 million shares at $14 to $16 a share. Back in August, the raise was estimated to be only about $100 million. (One could consider this a prime example of ‘sandbagging’.) Friday closed at $23.02 in a week where Mr. Market had a lot of IPOs and hammered traditional tech stocks. As reported earlier, Amwell is backed by Google via a private placement and also Teva Pharmaceutical.

Smaller and lower profile than Teladoc, Amwell provides services for 55 health plans, 36,000 employers, and in 150 of the nation’s largest health systems, with an estimated 80 million covered lives. Like Teladoc, Amwell has yet to be profitable, with 2019 losses of $88 million and $52 million in 2018. FierceHealthcare, Marketwatch. Meanwhile, the Teladoc acquisition of Livongo has gone quiet, as is usual.

The Clinic Wars continue. Another front in the consumer health wars (and repurposing retail) is more, bigger, better clinics onsite. CVS drew first blood early this year with the expansion of MinuteClinics into fuller-service HealthHUBs, with a goal of 1,500 by end of 2021. Walgreens flanked them with 500 to 700 Village Medical full-service offices [TTA 9 July]. In this context, the expansion of Walmart Health locations looks limp, with their goal of 22 locations in Georgia, Florida, Arkansas, and Chicago metro by end of 2021. Another concern is with scale and modularizing the Walmart Health locations’ construction via constructor BLOX,  One wonders with recently reported layoffs of 1,000 at corporate and the replacement of industry innovation veteran Sean Slovenski with Lori Flees, whether there’s some radical rethinking of their clinic business investment as not mass but targeted to underserved areas that avoid CVS and Walgreens. FierceHealthcare, Walmart blog  CVS also announced the doubling of their drive-thru COVID-19 testing sites to 4,000 by mid-October. FierceHealthcare

More Weekend Reading. Here in the US, the Taskforce on Telehealth Policy, a joint effort between the National Committee for Quality Assurance (NCQA), the Alliance for Connected Careand the American Telemedicine Association, has issued a report that focuses on maintaining quality care, fitting telehealth into value-based care models, enforcing HIPAA for patient privacy, and ensuring widespread and equitable access to broadband and technology. The involvement of the NCQA is a major step forward in advancing policy in this area. Press release/summary, Report page, Powerpoint slides, and webinar recording  Hat tip to Gina Cella for the ATA.

New entrant in passive fall detection. Israel’s Essence SmartCare is launching MDsense, a multi-dimensional fall detection solution for the residential market. It is sensor-based, using wall mounted intelligent sensors rather than wearable devices that statistically are not worn about half of the time and have their own well-documented performance concerns. The release also mentions it can differentiate between multiple persons and pets, which this veteran of QuietCare would like to see. MDSense is part of Essence’s Care@Home system which uses AI and machine learning to continuously collect actionable data to respond to fall events and manage care better towards improved outcomes.

Walgreens Boots goes big with billion-dollar medical office deal with VillageMD

Go big or go home. That seems to be Walgreens Boots Alliance’s’ theme in its 8 July announced deal with and investment in primary care provider VillageMD. They will set up 500 to 700 co-located full-service Village Medical offices in more than 30 markets over the next three to five years. The “Village Medical at Walgreens” offices will be staffed by a projected 3,600 primary care providers and fully integrated with Walgreens pharmacists for one-stop shopping. According to the release:

  • Most of the Village Medical medical offices will be approximately 3,330 square feet each, up to 9,000 square feet, and utilize existing store space. “80% will be used by VillageMD to fund the opening of the clinics and build the partnership.”
  • 24/7 care will be available via telehealth and at-home visits
  • Fees will be covered by insurance or for those without, on a sliding scale
  • Over 50 percent will be located in Health Professional Shortage Areas and Medically Underserved Areas/Populations, as designated by HHS. These would reach underserved “older, sicker, and poorer patients” without regular access to care, said VillageMD CEO Tim Barry in an interview with CNBC
  • Capacity would be 100 to 120 patients per day 

This follows on a pilot of five Village Medical clinics at Walgreens locations in Houston, and Village Medical’s eight-state expansion in the Find Care telehealth program announced in April.

Walgreens Boots Alliance 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 which will culminate in about 30 percent ownership.

To this Editor, Walgreens is sitting at a giant poker table, stacking the $1,000 chips, and saying to its rivals, ‘see ya and raise ya’. These are full-service offices, not urgent care clinics, and they are investing in their provider. It could be transformative–or flop on executional niceties such as location, medical competition, or even COVID keeping down physical visits. The competition is also daunting on the retail side. Recently Walgreens has pared back hundreds of locations and faces the deep pockets of CVS-Aetna, which plans to open 1,500 HealthHUBs which integrate stores, MinuteClinics with nurse-practitioners, pharmacies, and health data, Amazon with PillPack aimed at its pharmacy business, and Walmart with its toe in the water with clinics. 

Village Medical, formerly Village Family Health, is a multi-state primary care provider which is part of Chicago-based VillageMD. Both include more than 2,800 physicians across nine markets, so the Walgreens deal will more than double their size. Also Forbes (Photo: Walgreens)