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Podcast Library > NextGen Advisors Podcasts > Walgreens to open up to 500 full service doctors offices, what impact could this have for ambulatory practices?

July 13, 2020

Walgreens to open up to 500 full service doctors offices, what impact could this have for ambulatory practices?

Walgreens and VillageMD announced  that Walgreens will be the first national pharmacy chain to offer full-service doctor offices. On this episode, NextGen Advisors discuss the potential impact this disruptive development may have on primary care, FQHCs, and patient-provider relationships. Tune in now to listen.

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Transcript

Graham Brown:

Hello, this is Graham Brown, principal and senior vice president with NextGen Healthcare advisors. I'd like to welcome you to this podcast series, featuring senior leaders from the NextGen advisors team. We use this series to address different topical subjects related to ambulatory care, exploring the successes and challenges that community providers experience from an operations' policy and strategy perspective. I'm joined again today by my colleagues, Dr. Marty Lustick and Dr. Betty Rabinowitz. Good morning to both of you.

Dr. Martin Lustick:

[crosstalk].

Graham Brown:

Just yesterday, Walgreens and VillageMD announced that Walgreens will be the first national pharmacy chain to offer full service doctor offices, co-located at its stores at large scale. This is following a successful trial that began last year. The clinics will uniquely integrate the pharmacist as a critical member of VillageMD's multidisciplinary team, and will be staffed by more than 3,600 primary care providers who will be recruited by VillageMD. The clinics will accept a wide range of health insurance options and offer comprehensive primary care across a broad range of physician services. Additionally, 24/7 care will be available via telehealth and at home visits. More than 50% will be located in health professional shortage areas and medically underserved areas as designated by the US Department of Health and Human Services. So be interested to get your initial thoughts on this hot off the press development. Betty, what do you think?

Dr. Betty Rabinowitz:

This was quite a significant announcement. I think the first time integrating full service primary care offices in retail pharmacies is a watershed event that raises a lot of interesting questions, has great potential, and I think some risks as well that I'm sure we'll touch on as we get through this conversation.

Graham Brown:

Marty, what were your initial thoughts in response to this announcement?

Dr. Martin Lustick:

Similarly, I think it's more than a shot across [inaudible] our current primary care practices. It is a major step into their space to try and fundamentally disrupt the way primary care is delivered throughout the country. 500 locations is basically communities across the country, obviously huge risks and challenges that they're going to face to implement this successfully, but it is a huge step.

Graham Brown:

So Marty, do you think that there's some specific impacts this is going to have on traditional primary care?

Dr. Martin Lustick:

If they're successful and they truly go where they say they're going to go in underserved areas, then the potential here is for them to fundamentally replace the community primary care physician, and for the people would go to Walgreens for their primary care and in many communities, it might be one of the only places to get it.

Graham Brown:

Betty, much is made about the relationship between a primary care physician and their patients, what's your perspective on whether this is going to have an impact on traditional primary care?

Dr. Betty Rabinowitz:

I agree with Marty's sense of it. As long as it was the previous retail models offered episodic single problem visits with patients with usually acute infectious respiratory illnesses or simple single diagnosis issues, the importance of the relationship that people had with their primary care physician was really in the forefront. It was difficult to compete with the strength of that relationship, the longevity of it, the longitudinal nature of it. But this sounds as if they are basically replacing that relationship with a new one that is located physically in a retail pharmacy, has a team-based approach with a pharmacist, nurses and other healthcare providers. So in certain ways it's equivalent to a primary care relationship and thus is really challenging to the traditional primary care practice advantages.

Dr. Martin Lustick:

The other side of this, I think is if you look at most urban areas, most urban areas at this point have some degree of organized delivery systems where primary care doctors have come together, either under health system or an integrated clinical network that they've developed or an IPA, and they are positioned if they do well to prevent the entry of a whole series of other primary care doctors. It would be, the more high functioning these IPAs and physician groups that exist in urban areas are today, the harder it will be for Walgreens to develop an alternative system that would replace it. And in the areas that are underserved, there are a whole different set of challenges in terms of what the reimbursement model is, whether Walgreens can make it cost-effective, they may have some of the same challenges with recruitment and retention of staff that current underserved areas have. So what do they say? There's many slipped with the cup in the lip. So there's long ways for them to go before they prove that they can do this well.

Dr. Betty Rabinowitz:

So interestingly, if you think of the traditional relationships in a community being served by multi-specialty groups with emphasis on primary care or hospital health system based primary care networks, they have this sometimes unholy relationship with the tertiary care centers and the specialty network that serves that community, which is now being broken, basically completely with a player from outside that network, which might be able to bring a level of freedom from any links, any boundaries around referrals and specialty care which will allow creating a more cost-effective adult. So that will offer another layer of pressure on the existing fabric of primary care in a given community by this new venture.

Dr. Martin Lustick:

Well, I think the other thing is going to push primary care to continue down the path that the pandemic has already pushed them, that to provide virtual care, to enhance patient engagement, to have expanded hours, alternate ways for patients to access both in real time and asynchronously with their providers, all those attributes are going to be really critical to primary care practices that don't want to become part of Walgreens.

Graham Brown:

Let's talk a little bit about the medically underserved areas and how they're targeting to have more than 50% of these locations, address both professional shortage, as well as where there just are not enough healthcare services available for the population. That's a market that federally qualified health centers have provided a lot of support and care to over time, a little bit different from traditional primary care in terms of their model and the kind of comprehensive services that they can offer in an FQHC setting. Do you think there's a different impact on FQHCs? Do they have a different position in the market than just traditional primary care does, Marty?

Dr. Martin Lustick:

Yes, I do. I was actually surprised to see that that's their intended strategy. Because as we know, FQHCs have a pretty strict set of rules that they have to practice under the scope of services is fairly prescribed by the government. And the way they're reimbursed is separate for most of the occasions from the standard practices in the industry and commercial payments. So how Walgreens and VillageMD would position themselves unless they're planning to be able to come FQHCs themselves, which is a whole other issue for them, they don't appear based on what's publicly available to currently have the infrastructure in place to do that.

Dr. Betty Rabinowitz:

So, it's an interesting question in the context of the roles of uninsured patients swelling post COVID or in the midst of this pandemic because of unfortunately, the decrease in employer-based insurance. I wonder if the idea is to provide cost-effective, inexpensive primary care that doesn't depend on governments or state subsidy through the Medicaid reimbursement system. How they pull that off at scale isn't completely clear, but it's very difficult to imagine that they will be able to recreate the complexity of the offering of a CHC in a retail space with a requirement for dental, for behavioral health for... That's an interesting observation. Now, obviously areas of shortage are still such, and there are gaps in coverage of CHCs and FQHCs in large swaths of the rural America and some of the urban areas. So there's plenty of white space for them to fill in that regard.

Graham Brown:

So interestingly, they may indeed be complementary to certain aspects and provide maybe a realm of services that supplement what FQHCs or community health centers are able to provide instead of replacing them. It'll be interesting to see how that care model develops in those markets. So broadly there's been this increased influence of retail pharmacy within the delivery system environment. Last decade, we've seen really a lot of growth in this area. And as you were noting before Betty, it's been traditionally episodic and hasn't represented a patient-doctor relationship with real continuity of care. Be interested to think a little bit about, do you think our future is going to be dominated by retail-based pharmacy primary care, and what are the implications potentially for continuity of care? Betty.

Dr. Betty Rabinowitz:

If the model becomes a "traditional primary care model" and the only difference is that it is provided geographically or physically in a retail space, that in itself, I don't think will create a... It's obviously a problem for traditional and existing primary care networks, but from a patient perspective, if we take the patient focus, it probably will be equivalent, or better, or completely acceptable. The question in my mind is what the impact of the retail ownership retail space association with the pharmacy will do in terms of prescription incentives in choice of prescriptions, choice of care that will be driven by a for-profit retail network approach. So that remains to be seen. The role of the pharmacist is a key member of the care team has long been advocated, has been difficult to implement in traditional primary care because of the cost and the scarcity of that resource to have true ambulatory community pharmacists working in integrated primary care networks is very difficult to achieve. So I'm very curious to see how this works for Walgreens, because it's a terrific model. Many of the problems that patients face, issues around cost and quality pertain to medication management in primary care. So potentially this is a model that will be successful and worth emulating in other primary care settings. It will be really worth observing in that regard.

Dr. Martin Lustick:

So, a couple comments about that. One, I think there's two big advantages that the pharmacies have that could lead to their success. One is they have huge capital resources to invest in this. I think they said in the announcement yesterday that Walgreens is putting up a billion dollars to help VillageMD get these clinics up and running. And the other is, is that they are largely starting from scratch. Betty was talking about integrating a pharmacist into the care. They clearly have a team-based model that they're trying to put in place. I think those of us who have been in primary care and been in healthcare a long time believe that team-based models are the future of healthcare. And to be able to build this from scratch is actually probably easier than trying to transform a practice that's been in a traditional model for years. So I think they have those advantages. On the side of the risk that Betty was talking about, I think all you have to do is shift your focus to see the Aetna, to see how risky this could potentially be, where you have a health plan attached to a pharmacy, where potentially they build products that they sell insurance, where that's where you have to go for your care and they own the delivery system, and they're defining the network for the patients. And That level of power concentrated in one place historically in healthcare has been a really dangerous thing and it makes me really nervous about what that might lead to.

Graham Brown:

So if we think about the patient using this type of service, what do you think... To me, there's potentially some advantages when you were speaking before about medication adherence, for example, Betty. And that that is indeed one of the major challenges and source of poor outcomes in care, is lack of compliance with a medication regimen, lack of access sometimes, or knowledge about how pharmaceuticals and different treatments fit in with the care plan. So there is some potential benefit for greater adherence here and better outcomes associated with that because of the integrated pharmacist model. And because truly the site of care is going to have those pills and those prescriptions right there and readily available, and I imagine is going to be part of the workflow to ensure that the primary care team members are making that connection into pharmacy. Do you perceive any risks or downsides though for patients in terms of this model?

Dr. Betty Rabinowitz:

Probably the ones that have already alluded to around the underpinning and the basic motivations of the venture and enterprise. Just think of it, primary care offices now have such a challenge recruiting primary care physicians. I can see a future in which traditional primary care offices that are funded differently and supported differently are facing existential challenges because of the inability to replace a silver hair, the aging population of physicians, where there is now an elegance interesting to find out how physicians are being reimbursed, an incentive in this model. But I can see an interesting pool of new grads and residents if this model is successful and physician-centered in its setup that will create even bigger difficulty for existing primary care and create unfair competition in some regard for those physicians retiring to be replaced and drive further the shift of patients from traditional primary care into this model. Again, if it's successful, and patient-centered, and quality-driven, and with great outcomes, this might be the future sure of primary care. One can't hold on to the past, the past has not always been perfect. So I certainly, as a primary care physician, will watch this model evolve with great interest.

Dr. Martin Lustick:

So, the other risk I think, in this is because it's so unknown, from my perspective as a primary care doctor, a major part of being a primary care doctor is having relationships over time with your patients. And it's both for the practicing physician and for the patients, it's a big part of primary care. And as you move primary care into corporate America, will people take these jobs and say, "I'm working at Walgreens this year?" And then will the docs stay in the same practice over time, or will this be just an easy way to enter a community and then they'll spin off and do something else? If there's high turnover among the providers that could undermine one of the fundamental values of primary care, which is to have a long-term trusting relationship with a medical professional who can help you navigate through your healthcare journey throughout your life. It's not clear to me that this model is going to provide that.

Graham Brown:

It'll be interesting to see whether, to your point, it becomes a stepping stone of entry to practice for new graduates out of medical school, or whether, to Betty's question before, if the employment model, if the incentives, if how physicians are being paid under this model really does promote retention and stickiness with Walgreens and VillageMD for them to continue in this path as a career choice that may also inform its sustainability in the long. Well, thank you for joining us today on this podcast. I'd like to thank Dr. Betty Rabinowitz and Dr. Marty Lustick for sharing their insight and perspective on this interesting topic. If you've enjoyed today's conversation, please consider subscribing to our podcast. This is Graham Brown with NextGen Healthcare. Thank you and have a great day.