May 17, 2007
Walgreen Follows CVS Into Clinic Business
Walgreens has followed the lead of its chief rival, CVS, and bought an in-store health clinic operator of its own.
According to Reuters, U.S. antitrust regulators have given approval for Walgreens to acquire Take Care Health Systems and the 50 clinics it operates in Chicago, Kansas City, Milwaukee, Pittsburgh and St. Louis.
With the acquisition, Walgreens has its sites set on having more than 400 clinics operating in its stores by the end of 2008. The drugstore chain currently has 59 in-store clinics with most of those operated by Take Care Health Systems under the Health Corner banner. RediClinic and EasyCare also operate clinics in Walgreens stores in Atlanta and Las Vegas. It is expected that Take Care will eventually open its own clinics in those locations.
Discussion Questions: What is your reaction to the news that Walgreens will purchase Take Care Health System? With CVS and now Walgreens purchasing in-store clinic companies, do you expect others such as Wal-Mart to do the same or is the smart move to continue leasing space to various clinic operators?
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Any high-volume drug location, whether it’s a Wal-Mart, Target, Walgreens, CVS, independent drug store or supermarket, Pathmark, Kroger, etc. could use an in-store clinic. It’s a natural adjunct, with almost no downside risk, since the capital investment is minor. And there’s no reason these stores couldn’t sublet some space to MDs or hire some directly. Optical stores have been subletting to eye doctors (or hiring them directly) for many years.
Interesting. Very interesting. With 2 big clinic operators (Minute Clinic and TakeCare Health) already acquired, the field of available quality clinic operators is small and the number of potential acquirers is large (Wal-Mart, Rite Aid, Longs, Target, etc.).
The clinics have been well received though not much publicized. A recent survey indicated that most folks hadn’t heard of them but those that had tried them were quite satisfied with the results….
The In-Store Clinics are an evolving concept, and combined with PBM Acquisitions, mean very interesting times ahead.
This is a logical extension for Walgreens and I would expect to see others follow suit. Look for this concept to expand to include other services. With profit margins falling on the filling of prescriptions it’s only going to hasten the speed with which pharmacies look for ways to expand their ability to build off of their customer base.
Our neighborhood Walgreens has opened one of the new clinics already but we have not used it or talked to anyone that has. The concept seems to make a lot of sense for both Walgreens and the consumer. This field looks like it will get crowded very quickly as Wal-Mart and others scramble to get on board. The question will be if you are going to use one of these clinics, which one do you trust or like the most? Wal-Mart stands for low prices, but quality? While you want to save money, not at the expense of getting good, dependable medical care. Walgreens has a better chance of winning the trust battle in my opinion. It also may come down to what hours these are open. It seems like everyone always gets sick at night or on the weekend. It will be very interesting to watch this new service as it is rolled out.
No surprises here. Following CVS’s acquisition is a natural move for Walgreens. Drug stores are the logical retailers to benefit from the clinics. In-store clinics are a natural build on their health care positioning and the tremendous trust shoppers place in their pharmacists. Patient visits will bring much needed traffic to the stores. Waiting patients will likely shop while they wait building baskets. Then of course the patient is highly likely to buy their Rx and OTC needs in the host store.
All of these benefits stated, not all retailers should even try to jump on the clinic bandwagon. There is a limited universe of patients today ready to go to retail to see a doctor or nurse. The conditions they treat now are narrow and acute-focused. Patients need a lot of training before this is a big business. Retailers with a less strong health care position are likely better suited finding other in-store services that fit their strategy. Grocery stores are likely better of with nutritionists, banks, or post offices. Mass merchandisers can go many different ways–dry cleaners, take out food and more.
The challenge is for each retailer to prioritize the service offerings that are right for their growth strategies and market position rather than feel that in-store clinics are a requirement.
Interesting to watch the big players in the pharmacy business (Walgreens, Wal-Mart, etc.) fighting it out in a new arena. This really points out the cost and time inefficiencies in the health care industry and how walk-in clinics such as these can bring the power of the “marketplace” to relatively minor medical needs. It really changes the landscape if these clinics can capture market share from doctors’ offices and emergency rooms, and might bring some pricing sanity to a category that no amount of legislation can budge.
I’ve seen two stories in the past few weeks about how happy Wal-Mart has been with their trial of in-store clinics (12 to date) and plans to roll-out 400 or so in the next 2-3 years and up to 2000 over 5-7 years. Alicia Ledlie, senior director for Wal-Mart’s health business development, reportedly told an industry convention in April that Wal-Mart is “considering providing its in-store clinics with a common electronic medical records system so patient care can be tracked from store to store. She said the system could ultimately be part of a universal electronic medical record system for the country.” So they could be planning to buy every other in-store clinical practice that exists anywhere….
Both CVS and Walgreens are attempting to position themselves as integrated healthcare service providers rather than just pharmacy and OTC product retailers.
Witness the recent merger of CVS and Caremark. Walgreens also runs a Benefits Management operation as well as other health related services. The development of in-store clinics is a natural outgrowth of this strategy.
This may be an effective strategy for the major drugstore retailers but would not be appropriate for other retailers unless they wish to compete in the larger healthcare space.
An excellent strategic move that fits their brand offer. The more mass retailers can take hold of this concept, the more we can democratize healthcare.
How ironic that drug chains, who’ve done an historically poor job of getting paid for health consultations by their pharmacists, will likely find a profits path through in-store clinics.
Yet retailers still need to weigh many issues. Among them: Consider that some consumers may blur the lines between pharmacists, who have the knowledge to help people manage chronic, life-threatening conditions, and clinic staff, who’ll be offering routine health convenience. Will clinics consistently be run as rigorously as pharmacy? How might the perceived quality of clinics affect the marquee retail brand? Numerous questions surround this work in progress, yet I believe the trend will continue because of the promise of extra trips, larger baskets and the easy transferability of the hard-earned health care image to another department in the store.
I feel like we’ve come full circle–you used to go to your doctor’s office, and stop by the pharmacy right outside their door to fill the prescription. And then pharmacy became its own business, with locations closer to people’s homes. And now the doctors offices are moving into pharmacies.
Soon the clinic will take up too much space in the drugstore, and we’ll be right back to the doctor’s office with the pharmacy right outside the door….
Nikki makes a very interesting point. Except, it is my impression that most of the clinics are staffed by Nurse Practitioners instead of doctors. I wonder what the supply on NPs looks like? Maybe I will try to get my three college students to reconsider their majors….
More competition means more choices for consumers. Quality, accessibility, affordability and reliability are key factors in the future success of in-store clinics. It is too early to tell if they will be successful in the long term since they are still a new concept for retailers and consumers.
I can’t help wonder if a local “affiliation” with a hospital, doctor, university or health facility might add credibility to the whole concept for a segment of consumers. Applications for the retailers’ own employees should be explored as well.
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Any high-volume drug location, whether it’s a Wal-Mart, Target, Walgreens, CVS, independent drug store or supermarket, Pathmark, Kroger, etc. could use an in-store clinic. It’s a natural adjunct, with almost no downside risk, since the capital investment is minor. And there’s no reason these stores couldn’t sublet some space to MDs or hire some directly. Optical stores have been subletting to eye doctors (or hiring them directly) for many years.
Interesting. Very interesting. With 2 big clinic operators (Minute Clinic and TakeCare Health) already acquired, the field of available quality clinic operators is small and the number of potential acquirers is large (Wal-Mart, Rite Aid, Longs, Target, etc.).
The clinics have been well received though not much publicized. A recent survey indicated that most folks hadn’t heard of them but those that had tried them were quite satisfied with the results….
The In-Store Clinics are an evolving concept, and combined with PBM Acquisitions, mean very interesting times ahead.
This is a logical extension for Walgreens and I would expect to see others follow suit. Look for this concept to expand to include other services. With profit margins falling on the filling of prescriptions it’s only going to hasten the speed with which pharmacies look for ways to expand their ability to build off of their customer base.
Our neighborhood Walgreens has opened one of the new clinics already but we have not used it or talked to anyone that has. The concept seems to make a lot of sense for both Walgreens and the consumer. This field looks like it will get crowded very quickly as Wal-Mart and others scramble to get on board. The question will be if you are going to use one of these clinics, which one do you trust or like the most? Wal-Mart stands for low prices, but quality? While you want to save money, not at the expense of getting good, dependable medical care. Walgreens has a better chance of winning the trust battle in my opinion. It also may come down to what hours these are open. It seems like everyone always gets sick at night or on the weekend. It will be very interesting to watch this new service as it is rolled out.
No surprises here. Following CVS’s acquisition is a natural move for Walgreens. Drug stores are the logical retailers to benefit from the clinics. In-store clinics are a natural build on their health care positioning and the tremendous trust shoppers place in their pharmacists. Patient visits will bring much needed traffic to the stores. Waiting patients will likely shop while they wait building baskets. Then of course the patient is highly likely to buy their Rx and OTC needs in the host store.
All of these benefits stated, not all retailers should even try to jump on the clinic bandwagon. There is a limited universe of patients today ready to go to retail to see a doctor or nurse. The conditions they treat now are narrow and acute-focused. Patients need a lot of training before this is a big business. Retailers with a less strong health care position are likely better suited finding other in-store services that fit their strategy. Grocery stores are likely better of with nutritionists, banks, or post offices. Mass merchandisers can go many different ways–dry cleaners, take out food and more.
The challenge is for each retailer to prioritize the service offerings that are right for their growth strategies and market position rather than feel that in-store clinics are a requirement.
Interesting to watch the big players in the pharmacy business (Walgreens, Wal-Mart, etc.) fighting it out in a new arena. This really points out the cost and time inefficiencies in the health care industry and how walk-in clinics such as these can bring the power of the “marketplace” to relatively minor medical needs. It really changes the landscape if these clinics can capture market share from doctors’ offices and emergency rooms, and might bring some pricing sanity to a category that no amount of legislation can budge.
I’ve seen two stories in the past few weeks about how happy Wal-Mart has been with their trial of in-store clinics (12 to date) and plans to roll-out 400 or so in the next 2-3 years and up to 2000 over 5-7 years. Alicia Ledlie, senior director for Wal-Mart’s health business development, reportedly told an industry convention in April that Wal-Mart is “considering providing its in-store clinics with a common electronic medical records system so patient care can be tracked from store to store. She said the system could ultimately be part of a universal electronic medical record system for the country.” So they could be planning to buy every other in-store clinical practice that exists anywhere….
Both CVS and Walgreens are attempting to position themselves as integrated healthcare service providers rather than just pharmacy and OTC product retailers.
Witness the recent merger of CVS and Caremark. Walgreens also runs a Benefits Management operation as well as other health related services. The development of in-store clinics is a natural outgrowth of this strategy.
This may be an effective strategy for the major drugstore retailers but would not be appropriate for other retailers unless they wish to compete in the larger healthcare space.
An excellent strategic move that fits their brand offer. The more mass retailers can take hold of this concept, the more we can democratize healthcare.
How ironic that drug chains, who’ve done an historically poor job of getting paid for health consultations by their pharmacists, will likely find a profits path through in-store clinics.
Yet retailers still need to weigh many issues. Among them: Consider that some consumers may blur the lines between pharmacists, who have the knowledge to help people manage chronic, life-threatening conditions, and clinic staff, who’ll be offering routine health convenience. Will clinics consistently be run as rigorously as pharmacy? How might the perceived quality of clinics affect the marquee retail brand? Numerous questions surround this work in progress, yet I believe the trend will continue because of the promise of extra trips, larger baskets and the easy transferability of the hard-earned health care image to another department in the store.
I feel like we’ve come full circle–you used to go to your doctor’s office, and stop by the pharmacy right outside their door to fill the prescription. And then pharmacy became its own business, with locations closer to people’s homes. And now the doctors offices are moving into pharmacies.
Soon the clinic will take up too much space in the drugstore, and we’ll be right back to the doctor’s office with the pharmacy right outside the door….
Nikki makes a very interesting point. Except, it is my impression that most of the clinics are staffed by Nurse Practitioners instead of doctors. I wonder what the supply on NPs looks like? Maybe I will try to get my three college students to reconsider their majors….
More competition means more choices for consumers. Quality, accessibility, affordability and reliability are key factors in the future success of in-store clinics. It is too early to tell if they will be successful in the long term since they are still a new concept for retailers and consumers.
I can’t help wonder if a local “affiliation” with a hospital, doctor, university or health facility might add credibility to the whole concept for a segment of consumers. Applications for the retailers’ own employees should be explored as well.