Walgreens just lately has undergone important management modifications whereas going through monetary challenges on a number of fronts. The pharmacy chain operator final month was changed on the Dow Jones Industrial Average by Amazon and halved its dividend two months earlier to preserve money because it tries to develop its enterprise.

In the roughly 4 months since new CEO Tim Wentworth took over, analysts have been attempting to find out how the corporate will alter its long-term imaginative and prescient — notably since a few of its enormous investments to develop its well being care enterprise have but to ship the meant outcomes.

For anybody anticipating a significant rebranding of the corporate or a basically new path in its well being care operations, Wentworth basically had two phrases to say about it throughout an interview on the current TD Cowen Health Care Conference: “Forget it.”

Instead, Wentworth mentioned he and the board will meet in April to conduct a strategic evaluate of Walgreens’ retail, pharmacy and well being care enterprise portfolio and to develop a highway map for the long run. By year-end we must always have a clearer image on how Walgreens will evolve, however Wentworth gave some hints about potential areas of change.

4 Takeaways on Walgreens’ Future Health Care Direction

1 | Relationship-building by means of the pharmacy will obtain better consideration.

Walgreens’ expertise in administering vaccinations to scores of shoppers satisfied Wentworth that pharmacist belief may be leveraged additional in different methods on behalf of payers to drive engagement and create worth.

Takeaway

When the corporate introduced its $1 billion cost-cutting initiative final fall, Walgreens said that lots of the cuts in 2024 would come from retail pharmacy operations. It stays to be seen how this matches alongside the objective of increasing the position of pharmacists in leveraging trusting relationships with prospects.

2 | Retail shops will stay central to Walgreens’ technique.

Even because it continues to shut a few of its 8,600 stores to scale back prices, Walgreens will probably be centered on getting its footprint proper, Wentworth mentioned. The emphasis will probably be on what the group ought to appear to be in 5 years after which reverse-engineer how the footprint wants to alter.

Takeaway

Determining which areas will ship incremental well being companies and which will probably be extra centered on neighborhood pharmacy companies will probably be essential on this course of. In talks with its board, Wentworth mentioned the corporate must be clear about its technique for the entrance (retail) and the again of the shops (pharmacy and well being care).

3 | Getting board alignment on well being care belongings will probably be essential.

As a part of its evaluate with the board, firm leaders will look at Walgreens’ well being care belongings, together with: main care supplier VillageMD; CareCentrix, a post-acute and residential care supplier; Summit Health/CityMD, a supplier of main, specialty and pressing care; and Shields Health, a specialty pharmacy. The firm’s scientific trials division and achievement facilities additionally will probably be scrutinized. This dialogue will assist form technique on how one can optimize efficiency within the markets these firms serve.

Takeaway

While Walgreens stays dedicated to those companies and has a powerful perception of their worth, the size of some operations will change and a few might find yourself being moved to completely different areas of the corporate. Last fall, VillageMD introduced plans to shut underperforming areas in 5 markets, together with all 58 in Illinois and Florida, as half of a bigger cost-cutting initiative. And reviews that Shields Health could also be offered are unfaithful, Wentworth mentioned. Instead, Walgreens will concentrate on optimizing worth from the corporate.

4 | New pharmacy fashions will probably be explored.

Earlier this 12 months, Wentworth mentioned the corporate will look at new pharmacy fashions as cost-plus drug pricing seems to be gaining momentum. He believes the market, together with CVS’ new pharmacy profit administration (PBM) reimbursement mannequin, is responding to what payers need.

Takeaway

Wentworth is inspired by a current willingness amongst PBMs to alter the dialog round not simply cost-plus drug pricing fashions, but in addition to different companies that firms like Walgreens can present to create worth for PBMs and payers and that may be bundled. The examples of offering vaccinations, checks and different companies display that retailers can present these companies and receives a commission a good charge with out “cross-subsidization that distorts the economics for us or the marketplace,” he mentioned.

Learn More

For a deeper dive into how firms like Walgreens, Amazon, CVS Health and others plan to rework well being care this 12 months, learn Market Scan’s 2024 Health Care Disruption Outlook.