During the company’s quarterly earnings call on Oct. 15, Walgreens Boots Alliance CEO Rosalind Brewer described her family’s struggle to find and coordinate services for her mother, near the end of her life.
With the launch of a new business segment called Walgreens Health, the retail and pharmacy giant aims to address those problems, including through a greater focus on post-acute and home care services, Brewer explained.
“Imagine a day when we can offer services across the care continuum, including finding the right doctor, scheduling appointments, managing chronic conditions, obtaining insurance records, viewing health records, accessing wellness services, setting up health devices, providing nutritional and preventative information, and much more,” she said.
To achieve these goals, Walgreens just made some notable investments, including:
- A $5.2 billion investment in existing partner VillageMD, to drive the creation of primary care clinics in Walgreens locations
- A $330 million investment in CareCentrix, which offers a variety of services to enable at-home care
Just as they should be tracking other major retailers such as Best Buy, Walmart and Amazon — all of which are making health care plays focused on the aging population — senior living providers need to consider the implications that Walgreens Health could have for their residents and operational models, including:
- Creative ways to work with Walgreens to supplement care and feed referral streams
- What the Walgreens Health strategy says about the future direction of health care and aging services, and how senior living providers should be innovating
The vision for Walgreens Health
Brewer and other company leaders outlined multifaceted plans for Walgreens Health, but the VillageMD and CareCentrix deals are among the first tangible moves toward creating this new business segment — and I believe both deals suggest how Walgreens Health could interface with senior living communities.
VillageMD is part of the new breed of primary care providers — such as Oak Street Health and Cano Health — that leverage value-based payment relationships, a strong technology backbone and convenient locations to offer more coordinated services to their patient populations.
Currently, VillageMD operates more than 230 practices across 15 markets, of which 52 practices are co-located with Walgreens stores.
The latest investment boosts Walgreens ownership of VillageMD to 63%, and the two companies have set a goal of 1,000 VillageMD/Walgreens locations by 2027.
The partnership is intended to provide people with more convenient access to integrated primary care and pharmacy services. In addition to physicians and pharmacists, the VillageMD model includes nurses, lab techs, behavioral health specialists and other clinicians, as well as telehealth and at-home care services.
The initiative has been expanding after a successful start, with results including high patient satisfaction scores, improved medication adherence and improved health outcomes, according to Walgreens.
The model is particularly beneficial for older adults and other patients with chronic conditions; a key value proposition behind all these next-gen primary care practices like VillageMD is that they can work with Medicare Advantage and other value-based payment models to improve outcomes and drive down costs related to resource-intensive populations.
Of course, senior living communities are home to large numbers of people with chronic conditions, and groups such as Oak Street and Cano see a major opportunity in partnering more closely with senior living providers.
“We’re hearing a lot of enthusiasm and strong, strong, strong interest from these primary care entities in being able to access senior living residents and partner with senior living organizations,” ATI Advisory CEO Anne Tumlinson recently told me.
VillageMD’s growing relationship with Walgreens could create fruitful opportunities for senior living partnerships, particularly given that Walgreens holds a minority interest in long-term care pharmacy giant PharMerica.
It’s easy to envision active adult or independent living residents receiving coordinated, routine care at a Walgreens close to their community, in a model similar to what Clover Management and Welltower are pursuing with Geisinger Health’s senior-focused 65 Forward centers. And perhaps assisted living residents could also be part of the VillageMD ecosystem, and sometimes visit Walgreens clinics while also receiving telehealth and home care.
CareCentrix manages care for 19 million members through 7,400 provider locations, with capabilities in care transitions, home nursing, durable medical equipment, home infusion, palliative care and other areas to enable people to receive more care in their homes, including for post-acute needs.
The company touts:
- 20% reduction in total cost of care for members
- 11% reduction in emergency department usage for members
- 23% reduction in skilled nursing costs
“The home is the last undeveloped frontier in American health care and critical to reversing spiraling costs and middling health outcomes,” said John Driscoll, CEO of CareCentrix, in an announcement about the Walgreens investment.
Walgreens clearly agrees that people are destined to receive more health care in their homes, and that this can be facilitated by community-based organizations like themselves taking an ever-larger role in the delivery of care and services.
Senior living providers might view the continued rise of home care as a threatening trend that will keep people out of communal living environments. But I think that the industry should embrace the fact that senior living communities are people’s homes, and devote time and energy into hammering that message home — not only to consumers but to organizations like Walgreens and CareCentrix.
These businesses are already realizing that their models can work with even greater efficiency in senior living settings where older adults are all living in close proximity to each other, and receiving the benefits of socialization, nutrition and wellness programs.
Senior living providers should be able to benefit if they can create care ecosystems with partner organizations such as CareCentrix; touting such partnerships could help senior living communities attract more residents and extend length of stay, while alleviating certain staffing burdens.
But as I’ve written in the past, senior living enterprises also face an increasingly urgent need to define their value proposition, as Walgreens and other powerful brands seek to provide everything from care and care management to health records and aging-in-place technology.
As senior living providers seek to diversify their service lines into some of these areas, they should keep in mind that they almost surely will be competing against these corporate giants.
At the same time, senior living companies need to create unique and effective operational models and capture the data to show the positive results that they achieve — otherwise, giants of the tech, retail and insurance industries will be in a position to provide an increasing amount of the operational muscle powering senior living communities and extract an ever larger share of the financial upside.
The path toward innovation
Facing this imperative to innovate, I believe that senior living providers would do well to consider the strategies that corporate giants like Walgreens are pursuing, in response to the trends that they have determined will shape the future of care and services for older adults.
Indeed, I am struck by the similarities between the Walgreens strategy and the moves being made or contemplated by innovators in the senior living sector.
As explained by Brewer, some key principles behind the Walgreens Health strategy are:
- Insight-driven personalization of services
- A “hyper-localized” approach, because “the best health care is deeply rooted in local communities”
- A commitment to “reduce costs and drive better outcomes through collaborative care models” with value-based payers and provider partners
These are also foundational principles of a vision for the future of senior living that Juniper Communities CEO Lynne Katzmann recently articulated.
Juniper is pursuing these goals in a variety of ways, such as: personalized services based on rich data sets, including through genomic analysis of resident DNA; a new approach to programming and engagement based on partnerships with local organizations; and a value-based framework supported by Juniper’s involvement in and ownership of Medicare Advantage plans through the Perennial Consortium.
Other senior living providers are also forming and executing on strategies that involve one or more of these principles. For instance, several senior living companies are trying to solve the longstanding problem of how to remain “hyper-local” while also achieving efficiencies of scale. Discovery Senior Living’s effort to create more autonomous sub-brands is one example. And Discovery is also pursuing personalization through its “experiential living” model.
Juniper and Discovery are not the only senior living companies driving these types of innovations. Industry giant Brookdale Senior Living (NYSE: BKD) is another example, with its “win locally” mantra and the potential for collaborative care through its home health joint venture with HCA Healthcare.
I expect that these types of innovations will become standard operating practice in the years ahead, and senior living providers that are already moving in these directions will benefit by attracting more residents and achieving better alignment with more partners.
Ultimately — if they execute well — these organizations will have the financial strength, rich data and relationships across the continuum to control their own destiny. Providers that are refusing to innovate will be in a far worse position, as will those that are simply moving too slowly. That’s because the pandemic proved that even a massive ship like Walgreens can turn quickly when needed, and now the leaders of these mega-companies are pushing for speed.
“Historically, we would have had the tendency to move a little slowly. We’ve proven that our pace can change and can be rapid,” Brewer said. “And much of this infrastructure, momentum, and mindset will be preserved in our new operating model.”