SAN FRANCISCO — During a fireside chat at the annual J.P. Morgan Healthcare Conference here earlier this month, Walgreens Boots Alliance (WBA) co-chief operating officer Alex Gourlay spoke to the number of partnerships the company has brought to the marketplace as well as the future of health care.
WBA has always viewed vertical integration positively, according to Gourlay, assuming all the pieces are in place. “If I have to bring more efficiency to the marketplace, the economic conditions for a deal have to be correct,” he says. “We’ve got to have the synergies that cover the ongoing costs, so we’ve got to believe that we can generate a better return for the shareholders with that deal, and we still don’t think for us these conditions are right.”
Gourlay sees WBA’s partnership strategy as working very well at this point, as the company has forged a number of key early relationships. Pointing out the community health care hub concept, which, according to Gourlay, is the core of the company’s strategy in which it brings health care into the community, WBA has cemented a number of important partnerships, such as the deal with Humana in Kansas City. “That has been well received,” he says. “We’re learning that the patients and the customers in these communities enjoy having a pharmacy and GPs and other health care professionals together. And the evidence is that they’re using the services, and the evidence is that over time we can take better care to people and communities, which of course is what we’re trying to do in this partnership overall.”
Another important partnership for WBA is the one with LabCorp, in which there are 26 locations today, with 600 planned over the next four years. The concept from a Walgreens point of view in the U.S., is to have the pharmacy and the pharmacist at the heart of these partnerships and the services they offer.
LabCorp, an “obvious choice,” according to Gourlay, is a service used by people who are using pharmacy and therefore creates a new platform.
The goal is to have 600 LabCorp hubs inside of Walgreens within four years, with the ambition to have even more over time. The idea, Gourlay says, is to bring together pharmacists, with the customer engagement skills of a brand like Walgreens, alongside diagnostic and testing skills of LabCorp and, of course, clinical trials possibly as well in one place.
Establishing these various partnerships and the services they provide also presents some give and take in that to make these new initiatives work WBA has to give up square footage in the store to make room for the services. WBA’s chief financial officer, James Kehoe, who also took part in the conference, says the company takes each initiative and partnership and the impact on margins from those relationships one at a time.
“The one fundamental thing underlying all of this is it’s got to make sense for both parties and it’s got to make sense in the context of overall reducing health care costs in the U.S.,” Kehoe says, “because that fundamentally makes us a better partner for every constituent in the ecosystem.”