Walgreens chief: We want to own ‘well’
DEERFIELD, Ill. The healthcare landscape is changing. There’s a new value-driven consumer who has emerged and, in light of this, retail pharmacy giant Walgreens is in the midst of an evolution into “a retail health and daily living store” and is on a mission to “own well.” That was a key message that an optimistic Greg Wasson, Walgreens president and CEO, had for Wall Street during the company’s Analyst Day conference on Thursday in Chicago.
“As patients gain more access to healthcare information and they become more responsible for making their own healthcare decisions, patients are indeed becoming more shoppers of health care,” Wasson said. “And, frankly, that trend is good for us.”
The trend puts the company — which has more than 70,000 providers and serves 6 million patients each day — squarely at the intersection of the retail and healthcare industries. And if you ask Wasson, that’s a great place to be. “We are really evolving to ‘a retail health and daily living store.’ Our vision is to become ‘My Walgreens’ to everyone in America,” Wasson said. One may consider this a lofty goal, but Wasson was quick to remind analysts that two-thirds of all Americans live within 3 mi. of a Walgreens location.
In addition to the important work the company is doing to position itself as the “new healthcare provider,” leveraging its 8,000 points of care and the health professionals in them — including 26,000 certified immunizing pharmacists, a major focus for the company as it seeks to redefine the role of the community pharmacists in the national delivery of health care — Walgreens is equally focused on transforming its stores to be more than just another drug store on the corner. Hence, the emphasis on “daily living store.”
That transformation began with the rollout of the company’s Customer Centric Retailing, or CCR, store format — now in 2,200 of its stores — and has continued with the expansion of its urban prototype and the newly announced focus on fresh foods. “We have tremendous opportunity in the front-end of our stores,” Wasson said.
Wasson kicked off the all-day conference, which also included comments from several other senior executives who highlighted milestones and growth plans for Walgreens. As millions of Americans gain coverage under healthcare reform and further stress an already overburdened healthcare system, Walgreens — which operates more than 7,600 retail stores, nearly 730 worksite and retail-based health clinics and more than 100 medical campus pharmacies — clearly is working to strengthen its foothold along the frontlines of health reform with a focus on prevention and management of chronic disease.
“We now have 30 million more Americans who are going to gain coverage, and that is certainly going to challenge the system; we have an aging population ... 1-in-3 Americans in the next 10 years will turn 65; we have a higher incidence of chronic and complex diseases as people age; and, to top that off, we have a shortage of primary care physicians, so there are threats and opportunities in health care,” Wasson said. “The threats are the fact that all of us in health care have to have a relentless focus on cost reduction, and I can assure you that we do. The opportunities, though, that arise are more focused on the prevention and management of chronic disease, and that’s where we are headed.”
What this means is that patients will see a continued expansion of scope of services to ensure that the company’s providers are viewed as a critical link in the screening and prevention of chronic conditions. “What we have and what we are building is an integrated network of healthcare providers, and that is built on the foundation of our 26,000 retail pharmacists, who we like to refer to as the new healthcare provider,” Wasson said.
Wasson also provided an update on the company’s three core strategies: Leveraging its store network, enhancing the customer experience, and reducing costs and boosting productivity. Among the milestones mentioned:
- Walgreens slowed the pace of new store openings from 9% growth in 2008 to 4.2% in 2010. Going forward, the company expected growth of between 2.5% and 3% in fiscal 2011;
- Over the last two years, the company has acquired more drug stores than any other time in the company’s history. As a result, Walgreens now is No. 1 or No. 2 in 226 markets;
- Since launching its Customer Centric Retailing initiative in 2008, the company will have converted more than 2,000 stores to the format by the end of 2010 and plans to finish the rollout of 5,500 stores by the end of 2011; and
- Walgreens is expanding its infusion pharmacy services as evidenced by the September announcement to acquire substantially all of the assets of Omnicare’s home infusion business.
“We are going to skate to where that puck will be, and that’s more prevention and management of chronic disease,” Wasson said. “And we want to own the strategic category of ‘well.’”