Skip to main content

Analysis

McLaren Health Care Sees New Walgreens Clinics as Its Front Door

By Steven Porter  
   October 22, 2018

Leaders for the Michigan-based health systems are in the process of selecting the number and locations of their new retail clinics.

McLaren Health Care, based in Grand Blanc, Michigan, inked a deal last week with Walgreens to hand over 14 of its pharmacy locations to the national chain and open a still-undetermined number of McLaren retail clinics inside Walgreens stores.

Intertwining their operations gives Walgreens an opportunity to expand its partnerships with prominent local and regional health systems as its competitors vie for market dominance through mergers and acquisitions, and it gives McLaren a chance to deepen ties to the communities it serves.

This possible deepening of ties with consumers is forefront in the minds of McLaren's leaders as they begin the process of selecting the number and locations of retail clinics to be opened in the near term, says Barton P. Buxton, EdD, president and CEO of the McLaren Health Management Group.

"If we do what we call a 'global gateway' offering, we want to make sure we can care for that patient to whatever end they need care," Buxton tells HealthLeaders. "So making sure that we have our locations in such a place that they match the clinical offerings is important."

"My sense—and it's just that, it's my sense—as we look at this, I'm thinking we're probably going to start out with about 10-15 at first," Buxton adds.

Since the healthcare market is constantly shifting, it's tough to predict how many retail clinics McLaren will open over the longer term, but Buxton says the plan is to see how the market responds, fine-tune the strategy accordingly, and likely roll out more clinics in Walgreens stores over the coming years—perhaps adding as many as 30-60 more sites within the next decade.

Filling Primary Care Gap
 

When the deal was first announced, McLaren President and CEO Philip Incarnati said the underlying strategy was part of an effort to better connect with younger patients.

These retail clinics could offer an ideal setting in which to provide lower-acuity care to these consumers, since more than 60% of those who filled prescriptions at Walgreens stores did not have a relationship with a primary care doctor, Buxton says, citing information from Walgreens. That means these patients were not managing their own health through a traditional model.

"They were managing it more through an urgent care model," Buxton says. "That was very provocative to us because ultimately, as those populations get older, they have no connections to traditional health systems."

Related: CVS-Aetna Deal Tests Who Has The Right Data

Aside from funneling clinic patients into higher-acuity care settings when needed, the investment in these retail clinics provides McLaren with a touchpoint that could advance its other business objectives.

"We're not just an integrated health system that has 14 hospitals. We have a very large component of our business that is an insurance business as well," Buxton says. "We deliver our insurance product in two different states."

Pharmacy Tradeoff, Broader Strategy
 

McLaren will surrender all 14 of its existing pharmacies to Walgreens, which will own and operate some and simply file-transfer the others, Buxton says.

Rather than characterize this arrangement as McLaren "giving up" its pharmacies to gain clinic sites, Buxton describes the swap as "strategically synergistic," with Walgreens better-equipped than McLaren to maximize the pharmacies' potential.

"When you run those as a component part of a business, versus that's what you do [exclusively], there's a challenge in really competing in the retail space," Buxton says. "Their platform, their footprint is much bigger than ours. Their capacity is bigger than ours."

Even the niche areas in which McLaren pharmacies have served patients should improve under Walgreens control, Buxton says.

Related: McLaren Health Care Targets Younger Patients With Walgreens Clinics

In much the same way that health systems must grow accustomed to providing care through telemedicine in response to rising consumer demand, organizations like McLaren cannot afford to ignore retail clinics as strictly somebody else's business, Buxton says.

"I think that retail is becoming part of the health system offering," he says.

There are several ways, of course, to incorporate retail clinics into a health system. You don't have to hitch your wagon to Walgreens to have an effective strategy. McLaren's leadership, in fact, seriously considered whether it would be better to pass up the partnership opportunity and compete directly with Walgreens instead, Buxton says.

"We looked at the players in the market. We looked at doing it ourselves," he says. "There's a concept of 'build it or buy it,' and in this situation, we decided the best way to go for us was to partner with somebody that already was well-positioned in the retail space and somebody who did something that wasn't exactly what we did but was still in healthcare."

Walgreens was deemed to be not only the best possible partner in the state of Michigan but also, Buxton says, a good partner to have for McLaren's potential development outside the state.

Steven Porter is editor at HealthLeaders.


KEY TAKEAWAYS

McLaren aims to connect with younger patients and those who lack ties to primary care physicians.

Beyond building a bigger funnel to its higher-acuity care services, McLaren sees potential growth for its insurance arm as well.


Get the latest on healthcare leadership in your inbox.