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Walgreens’ strategic transformation - EY - Global

Progressions 2012

Walgreens’ strategic transformation

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The nation's largest drugstore chain decided to extend its business model deeply into the provider space, fundamentally reinventing itself.
  Alexandra Jung
  Walgreens Health Services,
(Former) Senior Vice President

Several years ago, Walgreens was faced with a strategic decision around whether to go to market as a pharmacy benefits manager (PBM) or to divest this portion of its business. The goal was to go to market as a health care provider. Instead of going the PBM route, Walgreens chose a bolder, patient-centric, outcomes-focused strategy. The nation's largest drugstore chain decided to extend its business model deeply into the provider space, fundamentally reinventing itself by focusing on establishing partnerships to improve health care delivery and patient outcomes.

A bold new model

To transform Walgreens' business model, the leadership team devised a three-part strategy, beginning with several targeted pilots and eventually scaled the strategy across entire markets.

This plan included:

  1. Transforming the community pharmacy. The footprint of Walgreens' traditional stores was split between retail and pharmacy/health care services. In the new store model, the company devoted more space to health care. An all-new health and wellness wing was introduced. This includes a remodeled pharmacy and integrates several innovative features: Walgreens Take Care Clinics, where customers can walk in and receive professional health care; a multipurpose room, where patients can receive health screenings and immunizations in a private area; and a room for community-based health events, from wellness events to biometric health fairs.
  2. Upgrading information technology (IT). To enable this transformation, Walgreens made a differential investment in IT. The company launched a multi-year IT upgrade that provides a seamless view of patients, wherever they are being serviced in the Walgreens network. New patient-facing portals empower customers to schedule appointments, access information about health conditions and share health contacts. Wireless technology opened the door for employing Health Guides and equipping them to communicate with customers wherever they are in the store.
  3. Putting pharmacists to their best use. To reposition itself as a health care company, Walgreens focused on fully leveraging the clinical and intellectual capital of pharmacists, bringing them out from behind the counter to have more conversations with patients — not only about prescriptions, but about health care overall. Additional development was provided by credentialing pharmacists in disease management and providing them with additional skills in patient consultation.

Building community connections

A key aspect of this strategy is building relationships with community health care providers. Walgreens partnered with Northwestern Memorial Hospital in Chicago to collaborate in the care of a pilot group of patients. Patients agreed to select a primary care physician that would navigate care and to comply with their medication therapy by participating in monthly counseling sessions with a Walgreens pharmacist.

Through the use of technology, physicians have real-time access to medication adherence, and pharmacists have information about physician encounters. When patients come to the store to pick up their prescriptions, pharmacists can advise them on behalf of physicians. The goal is not to compete with traditional health care providers but to be an extension of their services. Both organizations have reported an increase in medication adherence since the program began.

Physicians are also leveraging nurse practitioners in Walgreens' Take Care Clinics for after-hours and weekend support, a measure designed to reduce patient visits to the emergency room.

Responding to change

Walgreens' attempts to disrupt its own business model recognize how health care is changing. The company is putting its assets to their best use, by unleashing the value in the clinical intellectual capital of pharmacists. At a time when health care is focused on health outcomes and value, Walgreens is moving up the value chain and partnering with others to move more deeply into improving patient outcomes and the health care delivery experience.

When we interviewed Alexandra Jung for this piece, she was Senior Vice President at Walgreens Health Services. She has since joined Ernst & Young LLP as a Principal.

This article was featured in our report Progressions 2012 - the third place: health care everywhere.

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Progressions 2012: health care everywhere
Progressions 2012: health care everywhere
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