Originally published by Forbes on August 31, 2022
Walgreens Boots Alliance has completed its majority stake investment in post acute and home care company CareCentrix as rivals look to bolster their own operations to provide care in the home.
Walgreens said CareCentrix “coordinates care to the home for health plans, patients and providers” and will be a key part of the Walgreens Health strategy unveiled by chief executive Roz Brewer last year. The $330 million CareCentrix investment is for an initial 55% stake with an option to raise the stake in the future, Walgreens said.
“We created Walgreens Health to reimagine local healthcare and wellbeing for all,” Brewer said in a Wednesday announcement. “This partnership advances our ability to address the needs of people across care settings immediately following hospital discharge. Our collaboration with CareCentrix is one of the many ways we are expanding on our pharmacy and patient expertise to surround individuals with care when and how they need it.”
The CareCentrix investment by Walgreens comes as rivals including CVS Health, Amazon and the Optum medical care provider business of UnitedHealth Group are reportedly interested in buying Signify Health, another home-health services provider. The Wall Street Journal earlier this month reported the auction for Signify Health “could value it at more than $8 billion” with bids due “around Labor Day.”
In this case of Walgreens, CVS Health, Amazon and Walmart, retailers are intensifying their efforts to add more primary care and in-home medical services.
Since Brewer became chief executive officer of Walgreens Boots Alliance last year, the iconic drugstore chain has invested another $5.2 billion in VillageMD to escalate the expansion of doctor-staffed clinics across the U.S. under a new “Walgreens Health” business. Brewer said the rollout out of hundreds of physician-staffed clinics attached to Walgreens drugstores as well as additional investments in post-acute and home care will “keep people from returning to the system of healthcare.”
Walgreens said CareCentrix manages care for 19 million people through approximately 7,400 provider locations. “By partnering with health plans and health systems, CareCentrix has reduced total cost of care for members by 20 percent, including a greater than 11 percent reduction in emergency department usage and a 23 percent reduction in skilled nursing costs,” the companies said.
Walgreens said CareCentrix delivered pro forma sales of $1.5 billion in Walgreens fiscal 2021.
“The most challenging part of the healthcare journey is the last mile – extending healthcare delivery into people’s homes,” said John Driscoll, chief executive at CareCentrix, which will continue to operate as an independent company under its current executives. “Together with Walgreens Health, CareCentrix is able to combine Walgreens trusted community presence with our powerful technology-enabled care to better address patients’ unique health needs in their homes.”