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Walgreens Beefs Up Health and Wellness Position

In a move clearly aimed to grab the leading position as a go-to healthcare retail and services brand, Walgreen Co. said it has created a new Health and Wellness division that will manage and grow its existing in-store clinic program, and also lead the company's move into the worksite health center business via the acquisition of two players in that space.

The objective, said the Deerfield, Ill.-based drug chain, is to provide consumers with greater access to quality, affordable, and convenient health care near their homes and at work, via Walgreens health centers and pharmacies at large-company worksites, as well as the continued rollout of its Take Care Health Clinics in Walgreens drugstores nationwide.

The strategy calls for Walgreens to acquire two operators of worksite health centers: I-trax, Inc., the Chadds Ford, Penn., parent company of CHD Meridian Healthcare, LLC; and privately-held Whole Health Management of Cleveland. If the deals go through, Walgreens will end up with more than 500 worksite and retail health centers in 40 states.

"These announcements mark an important strategic initiative for us," said Walgreens chairman and c.e.o. Jeffrey A. Rein of the strategy. "Walgreens Health and Wellness division will marry our store clinics and pharmacies with worksite health centers and pharmacies. Our offering will allow large employers and health plans to provide care to employees and plan members at their worksites, and to dependents and retirees through our Take Care Health Clinics at local Walgreens drugstores.

"Over the last 15 years, we've become more convenient for the customer with our 'Main and Main' drugstore locations," Rein continued. "Today, we're redefining 'Main and Main' to include the worksite, and bring us that much closer to customers."

Walgreens estimated the current potential market for worksite health centers and pharmacies includes more than 7,600 corporate campuses of 1,000 employees or more.

The Walgreens strategy illustrates a larger evolution of the drugstore market toward fuller-coverage healthcare offerings, according to Michael Rubenstein, executive director of convenient care supplier trade group Pathway Alliance.

"The concept of the corner drugstore has changed dramatically," Rubenstein told Progressive Grocer. "Pharmacies, supermarkets and independent drug stores are fast becoming consumer direct healthcare outlets. They have a clear commitment to wellness and prevention initiatives, healthcare pricing transparency, increased access, employer services -- including a broad menu of items around workers compensation -- and a heightened interest in medication therapy management services."

Rubenstein said the deal to combine CHD Meridian, Whole Health Management, and Walgreen is the strongest indication so far of where the consumer-direct healthcare movement is headed.

"Clearly, the commercial pharmacy/big box retailer is becoming a complete destination for all that is consumer-direct healthcare related initiatives," he said. "The future has us facing a single healthcare brand under each one of these umbrellas. If any of us are fortunate enough to work for an employer who employs 1000 or more employees, we are likely to see within the next three years a complete clinic or pharmacy down the hall from the photo copier."

Rein said the Health and Wellness division will address chronic diseases, which account for about 75 percent of today's health care spending. The division, he said, will "bring together a wide spectrum of health care providers and blend the latest electronic medical records, or EMR, technology with face-to-face care to improve outcomes. Our EMRs encourage continuity of care and play a key part in connecting patients to their medical home."

Hal F. Rosenbluth, senior strategy consultant for health care at Walgreens and co-founder and chairman of Take Care Health Systems, will be president of the new division, the company said.

Walgreens said it will acquire I-trax in a cash transaction of approximately $278 million, including the assumption of about $18.3 million in net debt. An affiliate of Walgreens will commence a tender offer within 10 business days for all outstanding common stock of I-trax at $5.40 per share.

Terms of the Whole Health Management's acquisition weren't disclosed, as Whole Health is a private company.

Both acquisitions are expected to close within 60 days, subject to regulatory approvals, said Walgreens.
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