Our Take: Walgreens to launch virtual care, welcome new CEO as pharmacy staff considers more walkouts
At the HLTH conference in Las Vegas last week, Walgreens gave a preview of its plans to launch a new direct-to-consumer virtual care option later this month.
Tracey Brown, Walgreen’s chief customer officer, said the company is launching its Virtual Healthcare offering as part of Walgreens’ goal “to be the most convenient health and wellness destination, whether you’re physically in our stores or you visit Walgreens virtually.”
The virtual option will connect patients with physicians and nurse practitioners through on-demand virtual or chat-based consultations and will provide video visits for certain health conditions. Patients who use the service will be able to have prescriptions filled at their “preferred pharmacy,” Walgreens noted.
Initially, Walgreens will not accept insurance for the virtual visits. Chat visits will be priced at $33 and video visits will be priced in the range of $36 to $75. Eventually, the company intends to accept insurance, flex spending accounts, and healthcare savings accounts.
To start, the offering will be available in nine states that “cover nearly half of the U.S. population.” These include California, Florida, Georgia, Illinois, Michigan, Nevada, North Carolina, Ohio, and Texas. Walgreens plans to expand the virtual care service to cover additional health conditions and markets “in the near future.”
Walgreens also announced last week that Tim Wentworth will be the company’s new CEO, effective Oct. 23. He will also be a member of the board.
“He is an accomplished and respected leader with profound expertise in the payer and pharmacy space as well as supply chain, IT, and Human Resources,” said Stefano Pessina, executive chairman of Walgreens Boots Alliance, in a press release. “We are confident he is the right person to lead WBA’s next phase of growth into a customer-centric healthcare company.”
Wentworth previously served as the first CEO of Evernorth, Cigna’s health services organization that includes pharmacy benefit management company Express Scripts, specialty pharmacy Accredo, and medical benefits management company eviCore. Prior to that, he was CEO of Express Scripts, which Cigna acquired in 2018 for $67 billion.
Two days after announcing Wentworth’s appointment as CEO, Walgreens released its fourth-quarter and fiscal 2023 earnings, posting annual revenue of $139 billion, up 4.8% from the previous year, and a net loss of $3.08 billion for the year, compared with a $4.34 billion net profit a year earlier.
The company attributed the loss in part to a $5.5 billion after-tax charge for opioid-related claims and litigation.
“In just six weeks, we have taken a number of steps to align our cost structure with our business performance, including planned cost reductions of at least $1 billion, and lowered capital expenditures by approximately $600 million,” said Ginger Graham, who took over as interim CEO after Rosalind Brewer stepped down on Aug. 31. “We anticipate seeing the impact of these actions in fiscal 2024, beginning in the second quarter.”
As part of the plan to reduce costs, Walgreens will close 60 underperforming VillageMD clinics in five markets next year. Currently there are more than 680 VillageMD practices, including both stand-alone facilities and those located within Walgreens stores.
CVS completed its $10.6 billion acquisition of Oak Street Health and its $8 billion acquisition of home health care provider Signify Health earlier this year. The company also has more than 1,100 retail MinuteClinics and approximately 650 HealthHUBs.
Walgreens starting investing in VillageMD in 2020 and increased its ownership stake to 63% with an additional investment of $5.2 billion in October 2021. At the time there were 52 Village Medical at Walgreens practices and the plan was to open 1,000 of them across the U.S. by 2027.
Then, last November, Walgreens invested $3.5 billion to support VillageMD’s $8.9 billion acquisition of Summit Health-CityMD. That deal increased Walgreens’ total number of primary care physicians by more than 50%.
When Walgreens made its initial investment in VillageMD, it said the practices it planned to open in its stores would “uniquely integrate the pharmacist as a critical member of VillageMD’s multi-disciplinary team to deliver the very best health care to patients,” and would be staffed with primary care providers recruited by VillageMD.
With the shortage of primary care physicians expected to grow significantly in the next decade, pharmacists — with the right training — can take on an expanded role to fill gaps in care. Patients who responded to a survey conducted by Columbia University Mailman School of Public Health on behalf of Express Scripts Pharmacy demonstrated a high level of comfort with pharmacists not just checking vitals but also diagnosing acute conditions and prescribing medications for acute conditions.
Ginger Graham, the interim CEO, said during Walgreens’ earnings call that the company is “intently focused” on accelerating profitability in its U.S. Healthcare segment.
John Driscoll, president of Walgreens’ U.S. Healthcare segment, said although the company has made progress on the build-out of its health care business, “we are not satisfied with the near-term returns on our investments,” adding that VillageMD, Summit Health, and CityMD would be Walgreens’ most “meaningful drivers of growth” in the fiscal year ahead.
Driscoll said the company believes it can “best enhance VillageMD growth and value by focusing on increased density in our highest opportunity markets and expanding integration of our digital assets.”
Regarding the closing of the 60 VillageMD clinics, Driscoll said, “As we exit these non-strategic markets, our long-term focus will be on achieving density in those regions with the greatest potential to drive future profitability growth and where we can best serve patients with our consolidated set of assets.”
“We will continue to grow in 2024 but with a renewed focus on more profitable growth,” he added.
Bristol Myers Squibb agreed to acquire Mirati Therapeutics in a deal that could be worth up to $5.8 billion. Based in San Diego, Mirati develops targeted oncology drugs such as Krazati (adagrasib), which the FDA approved on an accelerated basis in December as a second-line treatment for patients with locally advanced or metastatic non-small cell lung cancer (NSCLC) with a KRAS G12C mutation. Both companies’ boards have approved the acquisition, which is subject to customary closing conditions. BMS and Mirati anticipate closing the deal in the first half of 2024. The per-share price represents a 52% premium to a 30-day average of Mirati’s stock before Bloomberg reported on Oct. 5 that Sanofi might acquire Mirati, causing a spike in the stock’s price.
Cigna’s Evernorth Health Services acquired Bright.md’s technology platform for an undisclosed sum. Evernorth will integrate Bright.md’s asynchronous care, triage, and navigation capabilities into MDLive’s virtual care platform, thereby allowing patients to initiate care on-demand without the need for real-time clinician interaction, the company said in a press release. Evernorth noted that MDLive would begin offering asynchronous care for low-acuity health conditions in 2024 and eventually expand the service to include chronic disease management and wellness visits. Healthcare Dive reported that Cigna will license Bright.md’s technology back to the company through a continuing services agreement so that Bright.md’s existing clients can continue using the platform. Additionally, MDLive is expanding its chronic care management to include physician-prescribed health coaching powered by Welldoc.
Walmart is extending its virtual primary care program to employees throughout the U.S. The retailer launched its virtual primary care pilot for employees in three states in January 2020, subsequently expanding it to 16 states and then to 21 states earlier this year. With this latest expansion, employees and their covered dependents who are enrolled in a Walmart self-insured medical plan will have access to the company’s virtual primary care service in all states except Hawaii. Virtual care options for digestive health and physical therapy are being included in the expansion, along with access to basic at-home lab services starting early next year, according to an article written by Walmart’s vice president of well-being. Covered individuals have a $0 copay for most virtual care visits.
Amazon is considering partnering with providers to offer in-person care as an enhancement to Amazon Clinic, the company’s telehealth marketplace, Healthcare Dive reported, citing Amazon Clinic’s chief medical officer, Dr. Nworah Ayogu, who spoke at the HLTH conference. Neither Dr. Ayogu nor an Amazon spokesperson provided Healthcare Dive with additional specifics about timing or the types of providers Amazon Clinic might seek to partner with. The news outlet noted that Dr. Ayogu’s remarks could indicate that Amazon Clinic is considering referred patients to One Medical, which Amazon acquired last year for $3.9 billion.
UnityPoint Health and Presbyterian Healthcare Services abandoned their plans for a potential $11 billion merger. The not-for-profit health systems, based in West Des Moines, Iowa, and Albuquerque, N.M., respectively, said Wednesday in a press release they would no longer be pursuing a partnership but did not provide a specific reason. The organizations announced in March that they had signed a letter of intent to explore the possibility of merging. UnityPoint also announced Wednesday that its CEO, Clay Holderman, was leaving the organization. Scott Kizer, who previously served as chief legal officer, is UnityPoint’s new president and CEO.
More than 10 of the nation’s leading health systems, including Banner Health, Memorial Hermann Health System, Novant Health, and Ochsner Health, participated in a strategic $50 million investment round for Capital Rx, a pharmacy benefit management technology company. Capital Rx said in a press release the funds would be used to support research and development related to the company’s enterprise pharmacy platform called JUDI, and to expand its workforce. Growth equity firm Transformation Capital also participated in the funding round.
Kaiser Permanente reached a tentative agreement with worker unions, The Associated Press reported Friday. Earlier this month, an estimated 75,000 of the health system’s workers went on a three-day strike after the Oakland, Calif.-based health system and unions representing the workers failed to agree on wage increases and staffing commitments in earlier contract negotiations. The AP said the tentative agreement includes a minimum hourly wage of $25 for workers in California and $23 for those in other states, as well as a 21% increase in wages over the next four years and “protective terms around subcontracting and outsourcing” of labor.
Dr. Marc Harrison, former CEO of Intermountain Health, is the CEO of a new spinoff of venture capital firm General Catalyst called Health Assurance Transformation Corp., or HATCo. Dr. Harrison and Hemant Taneja, General Catalyst’s managing director, wrote in the announcement that HATCo plans to acquire and operate an unspecified health system, which it will use as a proving ground to build an interoperability model supported by technology solutions, subsequently using the health system as a blueprint for transformation for “the rest of the industry.”
Bruce Broussard will step down as Humana’s CEO in the second half of next year. He has been with Humana since 2011, taking on the CEO role in 2013. In the meantime, Jim Rechtin will assume the roles of president and chief operating officer at the Louisville, Ky.-based insurer, effective Jan. 8, 2024. He will report to Broussard and then take on the CEO role when Broussard leaves. Rechtin’s career history spans 22 years of health care experience, most recently as president and CEO of Envision Healthcare, and before that as president of UnitedHealth Group’s OptumCare, according to the news release.
Gabrielle Finley-Hazle will become Aurora Health Care’s new president on Nov. 27, taking over for Dennis Potts, who is retiring. In her new role, Finley-Hazle will lead the growth, development, and strategic direction of Advocate Health’s Wisconsin market, the announcement noted. For more than 25 years, she has held executive roles at not-for-profit, faith-based, and investor-owned health systems, including Dignity Health (in the Southwest division of CommonSpirit Health) and with Tenet Healthcare.
What we’re reading
Algorithms at the Gate—Radiology’s AI Adoption Dilemma. JAMA, 10.6.23
Will Medicare Price Negotiation Delay Cancer-Drug Launches? NEJM, 10.11.23
Are Payers and Providers Ready for Digital Change in Health Care? BCG, 10.2.23