Walgreens is switching up its approach to in-store clinics, closing the clinics it operates and keeping those run by other health systems.
The news was announced during the company’s recent quarterly earnings call with investors this week and was covered by The Wall Street Journal. Walgreens owns and operates approximately 160 walk-in clinics and will keep another 217 that are operated by local healthcare providers. Co-chief operating officer Alex Gourlay called the Walgreens-owned clinics “loss making.” The company––as well as its competitor CVS Health, which operates 1,000 in-store clinics––has “at best” broken even operating in-store clinics, the WSJ reported.
The strategic change is part of an effort from Walgreens Boots Alliance to cut costs and outsource medical services in stores. In fact, the company wants to cut more than $1.8 billion in annual costs by 2022.
Walgreens is transitioning seven of its in-store clinics in Cincinnati to TriHealth, a not-for-profit health system with six hospitals and 130 sites of care, the company announced Oct. 28. It is also adding Jenny Craig as a partner to bring health and weight loss management services to 100 locations nationwide in January 2020.
While it plans to close its in-store clinics, Walgreens plans to open smaller stores in big cities to keep costs down. For the financial quarter closing out 2019, Walgreens reported a profit of $677 million, compared to $1.51 billion last year. The company will close the financial year “roughly flat year-on-year,” according to CEO and executive vice chairman Stefano Pessina.