Chris Deacon’s Post

Just two years ago, Walgreens Boots Alliance (WBA) was being hailed as the next big thing in healthcare at conferences like HLTH and J.P. Morgan Health. Their big plans to combine primary care, in-home care, and pharmacy services were going to "revolutionize healthcare." As Roz Brewer, CEO of WBA, confidently stated at HLTH 2022: “Healthcare is local, and most times healthcare happens outside of the current health system. We have the ability to take our relationship between the pharmacist and the consumer, combine that with the primary care that VillageMD delivers, and the in-home care that CareCentrix offers… and we can patch together a continuum of care and deliver healthcare services through a brand that everyone knows and trusts.” Brewer highlighted investments in VillageMD, CareCentrix, and Shields Health Solutions as key to building this “continuum of care,” leveraging nearly 9,000 stores to bring healthcare services to people's doorsteps. John Driscoll, EVP and President of U.S. Healthcare, added: “We will continue to invest in, expand and leverage partnerships with entrepreneurs throughout the healthcare system because we know that with our 86,000 healthcare providers along with our partners, we can provide a more accessible and better-connected experience for patients.” Fast forward and it's a completely different story. Walgreens is shutting down stores and scaling back its healthcare ventures. The latest financial results for Walgreens Boots Alliance show significant losses and unmet expectations. The Wall Street Journal and other outlets have detailed the decline. And it's not just Walgreens. Big players like CVS and Walmart have also pumped huge sums into primary care and digital health, only to watch these investments fall short and cut their losses. The truth is, we can't expect corporations like CVS, Walmart, or Walgreens to solve our healthcare woes. Why? If a healthcare solution doesn’t align perfectly with their financial model, it’s doomed from the start. Healthcare is fundamentally local, and these giant corporations simply aren’t. They lack the ability to tailor their services to the unique needs of different communities. What's missing from these grand strategies? Understanding that healthcare models need to be customized for specific populations. Few organizations have effectively used data and analytics to address unique needs, and the crucial provider-patient relationship is overlooked in large-scale corporate plans. Moral of the story? HLTH may not be worth the investment if you're looking for good predictors of success. And... a more localized, patient-focused approach is necessary to truly transform healthcare. *Credit to Jeffrey Hogan for highlighting the HLTH connection. Brian KlepperAl Lewis 🇺🇦Alex J.Lee LewisShawn Gremminger John TozziAnn M. Richardson, MBA

Walmart and other retail giants are facing significant challenges in their attempts to apply a big-box approach to healthcare, as reported by The Wall Street Journal. Despite positive patient feedback, Walmart is closing its health centers and discontinuing virtual care due to an unsustainable business model. Walgreens and CVS Health are also grappling with setbacks; Walgreens is reducing its stake in VillageMD, and CVS Health is seeking investors for its Oak Street expansion. The difficulties highlight the complexity of integrating cost-reduction strategies into healthcare, compounded by rising medical professional costs and decreasing Medicare reimbursements. #healthcare #costreduction #strategies

Great read from the Advisory Board! In a statement, Walmart cited unsustainable economics as the primary reason for its departure. This highlights the unique demands of the healthcare sector - where factors like staffing, demand, and reimbursement complexities pose significant hurdles. Despite its retail expertise, Walmart struggled to navigate the complexities of healthcare delivery. A quote from the article that I believe sums up the industry well: "healthcare is like if you were at a restaurant, and one person ordered, another ate, and a third paid." I think this restaurant analogy does a great job highlighting how the stakeholders in healthcare (patient, payer, provider) are intertwined each having their own interests/motivations. In conclusion, the challenges that led to Walmart's exit exist across the industry - providers must continue to adapt and innovate to win in this environment.

The latest from AHA Market Scan: 4 Insights into Walgreens’ Health Strategy Review Walgreens recently has undergone significant leadership changes while facing financial challenges on several fronts. The pharmacy chain operator last month was replaced on the Dow Jones Industrial Average by Amazon and halved its dividend two months earlier to conserve cash as it tries to grow its business. In the roughly four months since new CEO Tim Wentworth took over, analysts have been trying to determine how the company will adjust its long-term vision — particularly since some of its huge investments to grow its health care business have yet to deliver the intended results. https://lnkd.in/e5S8HcJ9

Walmart became the world’s largest company by revenue because it figured out how to use its size to offer consumers rock-bottom prices. Yet when the big-box retailer tried to apply that winning formula to healthcare, it failed miserably. In late April, the company said it would close its 51 health centers across five states and shut down its virtual-care offering. The company said that many patients loved the convenience of the clinics, but that it couldn’t find a sustainable business model. In other words, the clinics were bleeding money.  Walmart isn’t alone in pulling away from the doctor’s office. Walgreens Boots Alliance Chief Executive Tim Wentworth recently told The WSJ that the company would reduce its stake in VillageMD, a primary-care provider, as part of a broader turnaround plan. That came after the pharmacy chain had already been closing clinics. In recent years, everyone from large retailers to private-equity firms to insurers have been jockeying to acquire doctor chains. The market top came sometime between mid-2022 and early 2023. Within a span of eight months, Amazon.com said it was spending $3.9 billion to buy the primary-care chain One Medical; a Walgreens unit struck a $9 billion deal to expand its medical practices; and CVS Health agreed to spend a whopping $10.6 billion on the primary-care chain Oak Street Health. At the time, it seemed inevitable that the doctor’s office was increasingly going to be a big-box service—something you do on your way to the snack aisle. It hasn’t worked out that way. “To put it bluntly, primary care is hard,” said Stephanie Davis, an analyst at Barclays. The problem for Walmart, said Craig Garthwaite, a strategy professor at Northwestern University, is that in medicine you can’t really build economies of scale by driving the costs of such things as purchasing and advertising down to charge lower prices and gain market share. In a doctor’s office, your big-ticket costs are the people: A family physician might make something like $250,000, while a nurse practitioner is paid around $150,000. “None of that is scalable,” he said. “Each one of those doctors can only work eight to 10 hours a day. So you can’t run the business the same way.” These investments were always going to be difficult, but they also suffered from bad timing. In recent years, the cost of employing medical professionals—of whom there is a severe shortage in the U.S.—has soared in the wake of the pandemic, said Diya Iyer, a retail analyst at S&P Global Ratings. At the same time, the government has purposely dialed back on payments to Medicare, cutting into reimbursements.  

The recent closure of retail clinics by Walmart and Walgreens shows how retail health players are facing economic challenges. Analysts highlight the importance of scaling and integration in the healthcare business model, as demonstrated by CVS's success with Aetna and Signify. https://bit.ly/3V5iP7E Healthcare Finance News #payments #HealthPlans

Retail giants like Walmart and Walgreens are facing challenges in their healthcare ventures. While this may raise concerns about patient access, it also offers valuable lessons for healthcare leaders. Learn about the impact of retail healthcare and how health systems can navigate this evolving landscape from Kaufman Hall SVP Scott Christensen, as featured in Becker's Healthcare Hospital Review. #healthcare #retailhealthcare #healthcareleadership #healthcareindustry Read the Review: https://lnkd.in/gaZeA4vH Read the Blog Post: https://lnkd.in/gagf_BcF

The latest from AHA Market Scan: Walgreens, CVS and Walmart Scale Back on Health Care amid Financial Strain In 2024, retail health care faced significant disruption as industry giants like Walgreens, CVS and Walmart reevaluated their health care strategies in response to rising operational costs, reimbursement challenges and shifting market conditions. The difficulties encountered by these companies illustrate the complex nature of balancing health care delivery with traditional retail operations, requiring more than capital investments to remain sustainable. https://lnkd.in/gZdedUqn

Walgreens' US health president: Stop conflating retailers' healthcare businesses - Healthcare disruptors like Walmart, Optum, Walgreens' VillageMD, and Dollar General have faced a challenging year, with many scaling back or shuttering services due to financial and operational difficulties. - Specific reasons for these cutbacks include Walmart's struggle with a challenging reimbursement environment, Optum's telehealth business closure, Dollar General's termination of its mobile clinic pilot, and Walgreens' significant financial losses partly due to its investment in VillageMD. - Despite these setbacks, there remains a strong belief in the potential of retail healthcare, with stakeholders exploring different models to determine the most effective approach to meet consumer demand and achieve sustainable growth. In light of recent setbacks for major healthcare disruptors, how can stakeholders redefine and innovate retail healthcare models to ensure financial viability and meet the evolving demands of consumers? Is there a path? https://lnkd.in/d7CxdAmU

(Gift article) Walgreens and Walmart are just two prominent examples of a retrenchment among big players in healthcare. "In recent years, everyone from large retailers to private-equity firms to insurers have been jockeying to acquire doctor chains. The market top came sometime between mid-2022 and early 2023. Within a span of eight months, Amazon.com said it was spending $3.9 billion to buy the primary-care chain One Medical; a Walgreens unit struck a $9 billion deal to expand its medical practices; and CVS Health agreed to spend a whopping $10.6 billion on the primary-care chain Oak Street Health. At the time, it seemed inevitable that the doctor’s office was increasingly going to be a big-box service—something you do on your way to the snack aisle.  "It hasn’t worked out that way.  “To put it bluntly, primary care is hard,” said Stephanie Davis, an analyst at Barclays. The problem for Walmart, said Craig Garthwaite, a strategy professor at Northwestern University, is that in medicine you can’t really build economies of scale by driving the costs of such things as purchasing and advertising down to charge lower prices and gain market share. In a doctor’s office, your big-ticket costs are the people: A family physician might make something like $250,000, while a nurse practitioner is paid around $150,000.  “None of that is scalable,” he said. “Each one of those doctors can only work eight to 10 hours a day. So you can’t run the business the same way.” "These investments were always going to be difficult, but they also suffered from bad timing. In recent years, the cost of employing medical professionals—of whom there is a severe shortage in the U.S.—has soared in the wake of the pandemic, said Diya Iyer, a retail analyst at S&P Global Ratings. At the same time, the government has purposely dialed back on payments to Medicare, cutting into reimbursements. "