Dive Brief:
- Walgreens is partnering with startup Pearl Health to help primary care physicians manage value-based care, in a bid to expand its reach with community-based providers.
- The partnership announced Tuesday marries Pearl’s provider enablement technology with Walgreens’ care delivery assets and pharmacy services in an attempt to make it easier for clinical teams to provide the personalized treatment necessary in value-based arrangements, according to the companies.
- Walgreens and Pearl will help doctors manage value-based care in traditional Medicare’s accountable care organization program, called ACO REACH, starting in 2024. The two plan to eventually expand to Medicare Advantage and potentially commercial payers and Medicaid down the line.
Dive Insight:
Walgreens is aiming to position itself as an attractive partner for providers that want to transition to value-based payment arrangements, as the pharmacy chain continues to double down on care delivery.
The company has built a network of physician assets through a number of acquisitions, including its majority stake in VillageMD and the value-based medical chain’s $9 billion acquisition of Summit Health late last year.
However, Walgreens wanted to find ways to drive additional lives and revenue into the company without having to acquire more assets, according to Steve Wogen, chief growth officer of U.S. Healthcare at Walgreens.
The company particularly wanted to expand its reach with community-based primary care physicians that don’t want to be acquired or might see VillageMD as a competitor, Wogen told Healthcare Dive. That led it to Pearl, a startup that provides software to provider groups to help them bear risk.
Walgreens says the technology-enabling partnership with Pearl provides an additional value-based delivery channel to allow Walgreens to reach more regions and patients, and provide a broader set of services to providers and health systems.
“Our approach was always to start with owned assets but eventually expand into enablement. We recognize that scaling an owned acquisition and an owned acquisition strategy is not the way to expand rapidly in primary care risk,” Wogen said.
Though the goal is to scale Walgreens’ reach, Wogen said Pearl — which operates in 29 states — was more attractive as a partner than a larger provider enablement company like Aledade or Privia Health because it has complementary technology but not a suite of clinical services. That’s where Walgreens will step in.
Pearl will provide the technology backbone and serve as a “digital care traffic controller” for Walgreens by identifying patients that could benefit from their programs, Wogen said. Walgreens can then take those insights and act on them on behalf of physician partners by providing services like prescription fulfillment, medication adherence, immunizations and diagnostic testing.
Walgreens will also partner with providers to help patients transition from the hospital to care at home using its post-acute and home care services provider CareCentrix.
The partnership launches in ACO REACH next year. After that, Walgreens has “fairly aggressive plans” to scale over time, moving into MA in 2025 and potentially other payers down the line, Wogen said.
ACO arrangements in Medicare can be quite lucrative, but companies that struggle to control the medical costs of their patient populations have had difficulty extracting profit.
Walgreens plans to drive success in ACO REACH by working with the right provider organizations looking to move to value-based care, backed up by Pearl’s predictive technology, Wogen said.
As for Pearl, partnering with Walgreens gives the startup a massive pharmacy partner as it looks to continue growth. Since its founding in 2020, Pearl has raised roughly $100 million in funding from investors including Andreessen Horowitz.
Wogen declined to share the financial terms, length or geographic reach of the partnership.
It’s Walgreens first significant move in the healthcare space since CEO Roz Brewer departed earlier this month amid investor uncertainty as the retail pharmacy giant pivots more heavily into healthcare delivery.
Walgreens has struggled financially this year amid lower demand for COVID-19 tests and vaccines, along with flagging front-store sales.
The company laid off 10% of its corporate workforce in May, one month before posting third-quarter earnings results that missed Wall Street expectations. Walgreens cut its 2023 outlook along with the results, causing its stock to plummet to its lowest point in more than a decade.
Correction: A previous version of this article misspelled Steve Wogen’s last name.
