Your local Walgreens could soon include a doctor's office

Walgreens wants to turn its drugstores into health and wellness destinations where people spend more time and money.
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Pedestrians pass in front of a Walgreens Boots Alliance Inc. store in San Francisco on Nov. 6, 2019.David Paul Morris / Bloomberg via Getty Images file

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/ Source: CNBC.com
By Melissa Repko, CNBC

Walgreens Boots Alliance will soon have doctor offices inside of hundreds of its U.S. drugstores.

The pharmacy chain said Wednesday it has struck a deal with VillageMD, which will staff and run the primary-care clinics. The companies said they will open the clinics in 500 to 700 stores in more than 30 U.S. markets over the next five years.

Walgreens will invest $1 billion over the next three years as part of the deal. Most of the money will be used by VillageMD to open the clinics and integrate its technology with Walgreens.

VillageMD will recruit and pay employees’ salaries, cover other operating expenses and pay Walgreens to use the space. Walgreens said it will own about 30 percent of the primary-care company after the multiyear investment.

Through the new partnership, patients will be able to visit the Village Medical at Walgreens clinics for a wide range of medical services from annual checkups to walk-in appointments. Each clinic will have nine exam rooms, a waiting area and a four-person physician-led staff that coordinates with store pharmacists. They can also request a home visit or get care around the clock through telemedicine.

The companies did not share specific costs for services but said Village Medical clinics will accept different kinds of health insurance, often with copays of up to $10, and allow people to pay out of pocket. For those without insurance, it uses a sliding scale to make care affordable, it said.

Walgreens is expanding its focus on medical care as it cuts costs and invests in new areas. It has closed hundreds of stores and laid off employees, while experimenting with various business models. The company wants to turn its drugstores into health and wellness destinations where people spend more time and money. For example, it leases space in some stores to optical company For Eyes and weight loss company Jenny Craig. The chain is also testing a small-format pharmacy designed to strengthen relationships between pharmacists and patients, particularly those on multiple medications.

Walgreens already has 14 primary-care centers in its drugstores, through partnerships with providers VillageMD, Partners in Primary Care and Southwest Medical Associates. But the company faces stiff competition. Walmart has opened four primary-care clinics, with plans for more. The big-box giant’s clinics, called Walmart Health, emphasize its signature low costs and upfront pricing. Amazon’s acquisition ofonline pharmacy PillPack underscores its broader health-care ambitions. And CVS Health, which acquired health insurer Aetna, plans to open 1,500 HealthHUB stores by the end of 2021.

VillageMD CEO Tim Barry said the new model can rein in costs and improve health outcomes, particularly for those with chronic diseases. Since many of Walgreens’ locations are near people’s homes, he said people will be more likely to go for regular doctor appointments or get a medical matter checked sooner.

“We want to be everywhere in America where people need health care,” said Walgreens co-Chief Operating Officer Alex Gourlay. “That’s always been our position and always will be."