Walgreens is handing over operations of its 56 in-store health clinics in the Chicago area to Advocate Health Care, the largest hospital network in the state.
It’s the second time Walgreens Boots Alliance has offloaded some of its clinics to a health system. In August, the Deerfield-based drugstore chain announced it had reached an agreement to turn over 25 clinics in Washington and Oregon to Providence Health & Services of Reston, Wash.
“Going forward we envision our clinic portfolio to be a hybrid” of self-managed and outsourced locations,” Dr. Pat Carroll, chief medical officer of Walgreens’ retail clinics, said in an interview.
The Chicago-area clinics employ about 110 nurse practitioners and will continue to operate in much the same manner when Advocate takes over, Carroll said. Walgreens employees can apply to continue to work in the clinics, Dr. Lee Sacks, Advocate chief medical officer and executive vice president, said in a separate interview.
Neither company would disclose financial details of the partnership or how long it will last, but Advocate confirmed it is leasing the in-store space from Walgreens.
Advocate will take over Walgreens’ clinics in eight counties, with plans to add a few more, including on the Southeast Side of Chicago, Sacks said. The clinics will be branded as Advocate Clinic at Walgreens in May. Advocate is installing its billing and electronic medical records systems in the clinics so doctors and patients are connected across the health system.
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For Downers Grove-based Advocate, which has 12 hospitals, the deal allows the system to capture a whole new crop of patients and expand its branding power.
Walgreens doesn’t disclose the number of patients who visit its Chicago-area clinic a year. But a recent Accenture study estimates that 2,800 retail health clinics in the U.S. receive more than 10.8 million visits each year, which translates to nearly 4,000 patients per location. Based on those figures, more than 215,000 people visit Walgreens’ Chicago-area clinics annually.
“About half of the patients who come in don’t have a relationship with a physician,” Sacks said. “It’s an opportunity to expose those patients to Advocate and hopefully earn their trust so they look to Advocate for future care.”
This is the latest expansion announced by Advocate. The company is battling the Federal Trade Commission in federal court to be able to merge with NorthShore University HealthSystem, a deal that would create a 16-hospital network. This fall, Advocate and Blue Cross & Blue Shield of Illinois, the largest insurer in the state, created an exclusive insurance plan called BlueCare Direct. The Walgreens clinics Advocate will run will be in-network for the health plan, Sacks said.
Within the Walgreens clinics, Advocate’s goal is to lower costs, improve care and provide more convenient locations for patients. People would be less likely to slip through the cracks as much if their care is coordinated between Advocate employees who will staff the clinics and doctors within the health system. Patients would spend less on a sore throat or cough if they visited a clinic instead of the ER.
For Walgreens, the company no longer will face the pressure of making a profit at their health clinics. That’s a key point because Walgreens, which finished its merger with the European retailer Alliance Boots a year ago and in October announced plans to acquire rival Rite-Aid,has a lot on its plate. New management has undertaken a strict cost-cutting regimen, is revamping its inventory and needs to boost front-of-store, non-pharmacy sales in order to make up for declining margins on prescription drugs.
Walgreens won’t outsource all of its clinics operations nationwide, Carroll said. The company will continue to run more than 350 locations around the country and will consider further partnerships as opportunities arise.
