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Walgreens enters virtual care on the heels of Costco and Walmart, pointing to retailers’ upper hand in offering omnichannel patient access and experience.

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October 18, 2023 – Walgreens, one of the largest pharmacy store chains in the United States, made headlines late last week when it announced plans to enter the virtual care arena. The news spotlights retailers’ advantages in virtual care, even amid a downturn in patient demand.

At the HLTH conference in Las Vegas, Walgreens unveiled its virtual healthcare solution, slated to launch in late October. The solution will provide on-demand care for common healthcare needs through video and chat-based capabilities and prescription services.

The news comes within weeks of Costco and Walmart announcing their virtual care offerings, setting the stage for increased competition in an already crowded digital health market. Not only that, but consumer preference has changed since the peak of the COVID-19 pandemic, further intensifying the competition.

A recent report by market research firm Trilliant Health showed that though telehealth visit volume remains higher than pre-pandemic levels, it dropped significantly from 76.6 million visits in the second quarter of 2020 to 41.5 million visits in the fourth quarter of 2022. This represents a 45.8 percent decline.

“There are more telehealth suppliers competing for a small share of virtual care consumers, or limited demand, which suggests heightened competition,” Sanjula Jain, PhD, senior vice president of market strategy and chief research officer at Trilliant Health, told mHealthIntelligence. “The consistent decline reflects how the expanded availability of virtual care options has not shifted widespread consumer preference.”

Still, non-traditional stakeholders, like technology companies, retailers, and pharmacy chains, are continuing to chase the prophesized gold at the end of the virtual care rainbow. According to experts who spoke with mHealthIntelligence, retailers have a competitive edge in this space where other stakeholders have stumbled.

NON-TRADITIONAL PLAYERS ARE STAKING CLAIMS IN THE VIRTUAL CARE MARKET
As demand for virtual care slows, telehealth use will likely be relegated to niche applications and consumer segments, according to Jain. For instance, most non-traditional healthcare stakeholders view telehealth as a means to expand care for lower acuity conditions, behavioral healthcare, and chronic condition management.

This is true of Walgreens Virtual Healthcare solution, which connects patients to care for common health conditions, including respiratory illness, allergies, urinary tract infections, and acne. Users can connect with clinicians via chat or video using their own devices. After the consultation, they can access prescriptions at Walgreens stores or through the Walgreens prescription delivery service.

Most chat-enabled virtual visits will cost $33 out-of-pocket, and video visits will vary from $36 to $75. Insurance is currently not accepted for Walgreens Virtual Healthcare visits.

Similarly, Costco is providing members access to virtual primary care at $29, health check-ups with a standard laboratory panel and a virtual follow-up with a provider at $72, virtual mental health therapy at $79, and 10 percent off other services, including in-person appointments. The virtual care services are being offered through a partnership with Sesame, a marketplace platform that connects healthcare consumers with providers nationwide across various specialties.

Last week, Walmart also announced plans to launch a no-copay virtual primary care service for employees and their families. The service includes access to preventive care, chronic care management, and mental health support through digital tools.

“The list of conditions that can be treated via these service models are pretty consistent in that they are low acuity/low complexity and can be safely treated and managed virtually and/or asynchronously,” said Eve Cunningham, MD, chief of virtual care and digital health at Providence health system. “Patients and consumers desire these access points for convenience and ease of access.”

Though there are similar features, virtual care approaches among non-traditional healthcare entrants differ in the scope of services, business models, and ownership models, noted Chris Lew, consulting engagement manager at Rock Health Advisory.

According to Lew, CVS and Walmart’s virtual care offerings are the most mature, covering a wide range of services, including care for common conditions, primary care, behavioral healthcare, and some chronic condition management services. Costco’s virtual care program also covers a relatively broad scope of services.

Meanwhile, newer market offerings from Walgreens and Amazon Clinic are focused on treating common conditions as well as providing access to medication refills.

The difference between retailers’ virtual care business models can be seen in CVS and Walmart’s plans to target virtual care as a benefit through health plans and employers, while others are operating cash-pay models, Lew said.

Additionally, Costco and Amazon are providing their virtual care offerings through third-party companies, including Sesame, Wheel, and SteadyMD, while CVS and Walgreens appear to be operating their offerings on their own.

Ultimately, however, all virtual care providers are facing the same primary challenge of encouraging adoption. Some experts believe that retailers may have an advantage on this front.

CAN RETAILERS OFFER VIRTUAL CARE BENEFITS THAT OTHERS CANNOT?
The market is evolving past the first generation of virtual care, that is, virtual visits with minimal in-person care integration, Lew stated.

Today, the virtual-first care experience must include an omnichannel experience that integrates virtual and in-person care for healthcare consumers. This is where retailers can flex their long-standing brick-and-mortar presence in communities.

“Retailers uniquely bring a physical scale and community presence that are hugely valuable for delivering an omnichannel experience,” Lew said. “For example, a consumer may want to see his primary care provider in person at a VillageMD [clinic] but have discreet virtual visits to receive treatment for ED [eating disorders] and get his medications both by delivery and in person depending on the day or need. The recent moves retailers have made to bolster their virtual capabilities enable consumers like this to get all their needs met under one ‘roof’ in a highly integrated way.”

In fact, the lack of a physical presence may end up hurting virtual-only healthcare providers like Hims & Hers and Lemonaid Health, he added.

Stephen Buck, healthcare entrepreneur and pharmaceutical supply chain expert, echoed Lew, noting that retail pharmacies can leverage virtual care to integrate diagnoses, medication prescribing, drug dispensing, pricing, and treatment delivery into one visit. This helps reduce delays in care access as all services are provided within one organization.