Retail giants reshaping primary-care focus

Walgreens $1 billion in-store physician model may improve patient outcomes

A series of partnerships and developments sweeping through the convenient care sector this past year is causing major drugstore retailers CVS-Aetna, Walgreens and Walmart – along with payers Blue Cross Blue Shield and Humana – to battle for control over patients’ healthcare decisions. These patients are important to help brick-and-mortar businesses stay financially sound as retail transactions increasingly shift online.

In the latest moves, Walmart plans to become an integrated payer-provider, and Walgreens is opening as many as 700 full-service primary-care stores over the next five years in partnership with VillageMD, a primary-care staffing company specializing in value-based care. Walgreens’ $1 billion rollout comes about a year after a five-clinic trial launched in Houston. That trial has driven high patient satisfaction scores with increased medication adherence and improved patient outcomes – all crucial elements to succeeding in a value-based reimbursement environment.

Walmart’s decision to launch an insurance subsidiary is a natural outgrowth of the retailer’s specialty pharmacy business, which manages therapies for some of the costliest diseases, and falls in line with the retail giant’s plans for more healthcare supercenters. Walmart has rolled out four such clinics in Georgia, including one on the outskirts of Atlanta, and one clinic in the company’s home state of Arkansas. The supercenters serve as massive one-stop shops for urgent care, dental care, behavioral health and primary care, and Walmart has the purchasing leverage to provide care at a lower cost than its competitors.

Walgreens’ VillageMD partnership comes as CVS-Aetna pushes for larger stores called HealthHUBs, which have dedicated services and support for chronic disease management (like sleep apnea and diabetes, with the goal to expand to higher acuity conditions like kidney disease), plus on-site respiratory therapists and dieticians. CVS-Aetna is on track to roll out 1,500 HealthHUBs by the end of 2021.

Walgreens’ new venture differs from CVS HealthHUBs in one main area: physicians. Historically, Walgreens Healthcare Clinics and CVS MinuteClinics staffed nurse practitioners who collaborated with primary-care physicians at affiliated IDNs. Gradually, the Walgreens and CVS models began to diverge: CVS focused solely on IDN affiliates, while Walgreens began unloading entire operations, including ownership, onto willing IDNs (like Vanderbilt Health in Nashville and Advocate Health Care in Chicago). At the end of 2019, Walgreens announced it would shutter all Walgreens-owned clinics (leaving about 400 IDN-owned clinics), likely in response to CVS’ momentum with HealthHUBs. With those clinics now gone, Walgreens has shifted its focus away from advanced practitioners and toward physicians, who are the critical component of the patient-centered medical home model.



Physician integration provides retail stores an added level of control over patient care delivery, a factor that can be leveraged during payer negotiations. The better the retailer is at negotiating sustainable reimbursements, the more likely it is that the in-store clinic model will thrive, with the goal of generating foot traffic and returning customers. Drug stores are also messaging a mission to serve patient-centered interests of their customers, and Walmart, for one, has announced plans to become a whole “healthcare” company, as opposed to its “retail healthcare” competitors.

Walgreens’ in-store physician model has the potential to foster improved patient outcomes for the following reasons:

Care Continuity: The traditional retail clinic model requires patients to exit the clinic and drive to a separate location for diagnosis or treatment of more complex medical conditions by a physician. That process leaves more room for avoidance of, and non-adherence to, clinical recommendations. A staffed physician model means patients can receive care on the spot for a wider range of conditions, often accompanied by prescriptions and instructions for follow-up care – including referrals to affiliated IDNs.

Medication management: The new model positions pharmacists as key parts of the physician-led care management team. Through this coordination, patients can receive personalized guidance on drug interactions and medication adherence.

Chronic disease management: Retail clinics emphasize chronic disease management. On-site physicians, however, may be better equipped than advanced practice providers to handle more complex chronic diseases and comorbidities, which are more prevalent in the Medicare population. Getting a handle on chronic disease management holds implications for partnering with Medicare Advantage carriers on low-cost plans.

While Walgreens rolls out this initiative, CVS HealthHUBs are positioned to benefit from an integrated payer component that incentivizes Aetna members to use HealthHUBs through lower copays and coupons. This vertical integration facilitates the utilization of claims data to analyze patient metrics and allow for the deployment of patient-specific care protocols to help reduce Aetna’s overall costs.

CVS is still in the early stages of its HealthHUB model, but watch for the healthcare giant to potentially increase population health management, including digital analytics and at-home, remote monitoring—especially for conditions like high blood pressure and diabetes. CVS piloted a home dialysis clinical trial in 2019 that included remote monitoring for kidney care.  Mental and behavioral health care are the next major focus (Goldman Sachs Global Healthcare Conference, June 10, 2020). Eventually, CVS may consider on-site physicians, perhaps in medically underserved communities.



Payer-owned clinics – outside of CVS/Aetna HealthHUBs – are also gaining momentum. Houston has been a sort of proving ground for the kind of payer/provider blurring that is trending across America. The Texas market, besides being the incubator for CVS’s HealthHUBs, was the fifth location (after Kansas, Missouri, North Carolina and South Carolina) chosen for Humana’s senior-focused primary-care centers and the new home of a 10-center collaboration between Blue Cross and Blue Shield of Texas and Sanitas Medical Centers. Sanitas, a multinational healthcare company and joint venture between Keralty and Florida Blue’s parent Guidewell, also inked a collaboration with Tennessee’s Blue plan in 2020.

These payer-owned clinics operate similarly to Walmart’s clinics as one-stop shops for diagnostics, urgent care, and primary care. Humana’s clinics focus on the Medicare Advantage population through an emphasis on social services and behavioral health, on-site community centers, and patient-centered care collaboration, including dedicated time between the patients and physician. These insurers are likely to ramp up their clinic operations as Walgreens and CVS-Aetna grow theirs.


Moving forward

Evolution toward a wider scope of practice in the retail pharmacy space is being driven by multiple factors, including the nationwide shift toward fee-for-value and consumer trends that favor online shopping. These trends increase the need for collaboration and innovation in patient care delivery. Walmart, Walgreens, and CVS-Aetna have emerged as key players investing in this model and are positioning themselves to exert greater influence over care management.

Michelle La Vone Richardson is a Senior Analyst at DRG and a subject matter expert in the convenient care industry.