CVS, Walgreens make hard pushes into walk-in clinic business; compete with hospitals, physicians

CVS and Walgreens (WAG) are making hard pushes into the clinic business in ways that might take pressure off hospitals’ emergency departments and compete with both hospitals and medical group practices, according to interviews with the companies’ executives published in Investor’s Business Daily’s March 31 edition. The CVS interview is here. And the Walgreens interview is here. Paid subscriptions are required.

Walgreens is concentrating on

contract managing clinics for some 200 large employers that have the facilities on their campuses. CVS is focusing on walk in clinics in their stores, because it is trying to establish long-term relationships with consumers early in their lives rather than when they are older and more likely to have chronic illnesses. Neither company would disclose the financial results of their new ventures, saying they aren’t material, yet.

But the analysts at Morningstar.com are paying attention: Mitchell P. Corwin recently wrote about CVS: “CVS Caremark is aggressively increasing its in-store health-care clinics and is ahead of its peers in offering more services in its stores. The increasing amount of in-store services will help differentiate drugstores.” In his latest, March 24 report, Corwin doesn’t mention Walgreens’ employer clinics, which it has gained through two recent acquisitions, and and he only gives a couple of words to WAG’s in-store clinics.

In addition to being new growth opportunities for the leading drug store chains, the clinics represent new competition for the emergency departments and walk in clinics at hospitals and for physicians who write prescriptions sold in the chains’ stores. Basically, they will provide primary care services that can be handled by nurse practitioners who will refer cases they can’t handle to hospitals and physicians. Both expect to gain pharmacy market share from other drug store chains and in-hospital pharmacies as well as mail order pharmcies. Both operate pharmacy benefit management companies as well as stores.

The unknowns are the impact of these operations on insurers’ medical claims costs, hospitals’ ER visits, admissions and pharmacy sales and on primary care medical groups. Investors will focus on the impact of the clinics on CVS and WAG, but they also should watch what insurers, hospital chains, nursing home chains, home health care operators and pharmacy benefit management companies say about the CVS and WAG ventures during their conference calls with securities analysts.

Charts for AET, CI, HUM, UNH, WLP, CVS, WAG, UHS and THC are here.  And charts for LDG, RAD, ESRX, MHS, HMA and LPNT are here.

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