Walgreens said Thursday that it plans to close a “significant” number of its roughly 8,600 stores in the United States. About 25% of Walgreens’ stores aren’t profitable, and the chain will look to close stores that are right by one another or struggling to hold down theft, CEO Tim Wentworth said in an interview with the Wall Street Journal.
Walgreens and other retailers have been hit by shoplifting and resorted to locking up items or closing high-theft stores since the pandemic, but Walgreens’ problems are much deeper, including competition and failed growth strategies. Walgreens admitted last year it “cried too much” over the business impact of shoplifting.
People are also reading…
The latest closures are part of a larger downturn, not just for Walgreens, but for other drug store chains, too, after years of expansion. Walgreens said in 2019 it would close 200 stores and last year announced an additional 150 store closures.
“We are at a point where the current pharmacy model is not sustainable,” Wentworth said.
CVS, the largest US chain, closed 244 stores between 2018 and 2020. In 2021, it announced plans to close 900 stores. And Rite Aid filed for bankruptcy last year and will close up to 500 stores.
![Why Walgreens, CVS and Rite Aid are closing thousands of drug stores across America](https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/b/e0/be0c809f-1663-5473-bd24-7367b5e0e4f2/667f457b08500.image.jpg?resize=150%2C113 150w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/b/e0/be0c809f-1663-5473-bd24-7367b5e0e4f2/667f457b08500.image.jpg?resize=200%2C150 200w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/b/e0/be0c809f-1663-5473-bd24-7367b5e0e4f2/667f457b08500.image.jpg?resize=225%2C169 225w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/b/e0/be0c809f-1663-5473-bd24-7367b5e0e4f2/667f457b08500.image.jpg?resize=300%2C225 300w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/b/e0/be0c809f-1663-5473-bd24-7367b5e0e4f2/667f457b08500.image.jpg?resize=400%2C300 400w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/b/e0/be0c809f-1663-5473-bd24-7367b5e0e4f2/667f457b08500.image.jpg?resize=540%2C405 540w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/b/e0/be0c809f-1663-5473-bd24-7367b5e0e4f2/667f457b08500.image.jpg?resize=640%2C480 640w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/b/e0/be0c809f-1663-5473-bd24-7367b5e0e4f2/667f457b08500.image.jpg?resize=750%2C563 750w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/b/e0/be0c809f-1663-5473-bd24-7367b5e0e4f2/667f457b08500.image.jpg?resize=990%2C743 990w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/b/e0/be0c809f-1663-5473-bd24-7367b5e0e4f2/667f457b08500.image.jpg?resize=1035%2C777 1035w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/b/e0/be0c809f-1663-5473-bd24-7367b5e0e4f2/667f457b08500.image.jpg?resize=1200%2C900 1200w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/b/e0/be0c809f-1663-5473-bd24-7367b5e0e4f2/667f457b08500.image.jpg?resize=1333%2C1000 1333w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/b/e0/be0c809f-1663-5473-bd24-7367b5e0e4f2/667f457b08500.image.jpg?resize=1476%2C1107 1476w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/b/e0/be0c809f-1663-5473-bd24-7367b5e0e4f2/667f457b08500.image.jpg?resize=1662%2C1247 2008w)
Walgreens, CVS and Rite Aid are closing thousands of drug stores across America. Pictured is a Walgreens store in Queens, New York.
Shifting trends
Drug store chains are struggling because of falling reimbursement rates for prescription drugs, according to analysts who cover the industry.
The majority of drugstores’ sales comes from filling prescriptions. But their profits from that business have dropped in recent years because of lower reimbursement rates for prescription drugs and higher fees.
The prices customers pay for drugs and the payments pharmacies receive are largely determined by pharmacy benefit managers, known as PBMs, which negotiate rebates from drug manufacturers to insurers. PBMs have been cutting reimbursement rates to boost their own profits, said Elizabeth Anderson, an analyst at Evercore IRI.
The pharmacy industry has complained that PBMs have too much control over the industry and can squeeze pharmacies. PBMs argue that they help keep drug prices down by negotiating with drug makers.
“If reimbursement rates start to come down and drug stores can’t offset it with other growth, then it has a negative impact on their profitability,” she said.
At the same time, the rest of the store that’s supposed to pad the profit margins aren’t doing it so much anymore.
The front end of drug stores, where they sell snacks and household staples, have become less profitable, as shoppers buy more of these items online from Amazon and at big-box chains such as Walmart and Costco. Both have grown in recent years. Dollar General’s growth has also hurt drug store chains in rural areas.
“The front end is suffering like other retailers,” Anderson said.
Walgreens, CVS and other drug stores have moved into primary care to try to lure in shoppers, adding doctors’ offices to hundreds of stores. Walgreens took a $5.2 billion stake in VillageMD, a primary care network, in 2021.
But VIllageMD has not been profitable for Walgreens, and Walgreens has tried to cut costs. It has been closing VillageMD locations and said Thursday it will divest from the company.
Helping the company, hurting the consumer
Walgreens’ coming closures might help the company’s bottom line, but are likely to hurt access to health care.
When pharmacies close, some patients have to travel farther to get the medications they need. Researchers find pharmacy closures lead to health risks such as older adults failing to take medication.
The loss of a retail pharmacy can leave a void, especially for lower-income households.
Roughly one out of every eight pharmacies closed between 2009 and 2015, which disproportionately affected independent pharmacies and low-income neighborhoods, according to a study published in the Journal of the American Medical Association.
The study found that pharmacies at greatest risk for closures are those with a large customer base on public insurance, which have lower reimbursement rates than private plans, as well as independent pharmacies.
How much do prices for health services vary within a city?
How much do prices for health services vary within a city?
![How much do prices for health services vary within a city?](https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/e/c3/ec3a7d54-8eab-5db4-8b60-927f36e97979/661d6f33822dc.image.png?resize=150%2C107 150w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/e/c3/ec3a7d54-8eab-5db4-8b60-927f36e97979/661d6f33822dc.image.png?resize=200%2C143 200w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/e/c3/ec3a7d54-8eab-5db4-8b60-927f36e97979/661d6f33822dc.image.png?resize=225%2C160 225w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/e/c3/ec3a7d54-8eab-5db4-8b60-927f36e97979/661d6f33822dc.image.png?resize=300%2C214 300w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/e/c3/ec3a7d54-8eab-5db4-8b60-927f36e97979/661d6f33822dc.image.png?resize=400%2C285 400w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/e/c3/ec3a7d54-8eab-5db4-8b60-927f36e97979/661d6f33822dc.image.png?resize=540%2C385 540w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/e/c3/ec3a7d54-8eab-5db4-8b60-927f36e97979/661d6f33822dc.image.png?resize=640%2C456 640w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/e/c3/ec3a7d54-8eab-5db4-8b60-927f36e97979/661d6f33822dc.image.png?resize=750%2C535 750w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/e/c3/ec3a7d54-8eab-5db4-8b60-927f36e97979/661d6f33822dc.image.png?resize=990%2C706 990w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/e/c3/ec3a7d54-8eab-5db4-8b60-927f36e97979/661d6f33822dc.image.png?resize=1010%2C720 1035w)
Health care prices are notoriously opaque in America. A 2022 InstaMed survey reported that 71% of consumers found their medical bills confusing, while 76% received an unexpected charge.
Congress introduced a number of reforms in recent years designed to help people figure out how much various medical services actually cost. As of Jan. 1, 2021, hospitals must publish how much they charge for various services online, in formats that are easy for both consumers and machines to read.
This data, compiled by the Centers for Medicare and Medicaid Services, reveals prices can vary immensely from provider to provider. Care Better created its own database, based in part on CMS data, to make sense of these numbers.
Care Better data shows prices can vary drastically from doctor to doctor for the same services even within a single city, which is a compelling reason to shop around before committing. For the sake of simplicity, this data analysis focuses on new patients visiting doctors at their offices, on visits that lasted between 30 and 44 minutes. The analysis includes data through August 2023, for the 25 largest cities in America.
Internal medicine practitioners were the most common type of specialist seen by patients. On average, internal medicine doctors at the 25th percentile of costs charged around $107 for a typical office visit, while doctors at the 75th percentile of costs charged around $130. Based on this data, setting aside factors such as a doctor's popularity, or how high their reviews are, a consumer can easily save over 20% on doctor visits just by shopping around within the same city.
Prices vary a lot by specialty
![Prices vary a lot by specialty](https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/7/0f/70f96bd0-9b84-5083-a89f-89320806130b/661d6f4425790.image.png?resize=150%2C154 150w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/7/0f/70f96bd0-9b84-5083-a89f-89320806130b/661d6f4425790.image.png?resize=200%2C205 200w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/7/0f/70f96bd0-9b84-5083-a89f-89320806130b/661d6f4425790.image.png?resize=225%2C231 225w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/7/0f/70f96bd0-9b84-5083-a89f-89320806130b/661d6f4425790.image.png?resize=300%2C308 300w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/7/0f/70f96bd0-9b84-5083-a89f-89320806130b/661d6f4425790.image.png?resize=400%2C411 400w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/7/0f/70f96bd0-9b84-5083-a89f-89320806130b/661d6f4425790.image.png?resize=540%2C555 540w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/7/0f/70f96bd0-9b84-5083-a89f-89320806130b/661d6f4425790.image.png?resize=640%2C657 640w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/7/0f/70f96bd0-9b84-5083-a89f-89320806130b/661d6f4425790.image.png?resize=750%2C770 750w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/7/0f/70f96bd0-9b84-5083-a89f-89320806130b/661d6f4425790.image.png?resize=990%2C1017 990w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/7/0f/70f96bd0-9b84-5083-a89f-89320806130b/661d6f4425790.image.png?resize=1035%2C1063 1035w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/7/0f/70f96bd0-9b84-5083-a89f-89320806130b/661d6f4425790.image.png?resize=1080%2C1109 1200w)
Prices can vary a great deal within other specialties, too. Looking just at data from New York City, family medicine practitioners had the largest spread when it came to cost. Costlier family specialists (at the 75th percentile of prices) charged about $142 per office visit, while lower-cost family specialists (at the 25th percentile) charged about $109.
There was hardly any difference in what emergency medical practitioners charged: Doctors at the 75th percentile of priciness charged an average of $120, just about $11 more than their peers at the 25th percentile.
Data on health care prices will likely get better over time. Though price transparency regulations have improve, so far not all hospitals have complied. On Dec. 11, 2023, the House of Representatives passed the Lower Costs, More Transparency Act, which gives the government more power to enforce transparency laws, while also requiring a broader range of health care providers, such as imaging service providers, to publish their prices. Health care pricing will still be complicated, but it is welcome news for price-conscious patients.
Story editing by Shannon Luders-Manuel. Copy editing by Kristen Wegrzyn.
This story originally appeared on Care Better and was produced and distributed in partnership with Stacker Studio.
Prices vary more in some cities than in others
![Prices vary more in some cities than in others](https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/9/05/90590a13-ebe0-5004-86d5-42992c2f36ef/661d722da9846.image.png?resize=150%2C183 150w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/9/05/90590a13-ebe0-5004-86d5-42992c2f36ef/661d722da9846.image.png?resize=200%2C244 200w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/9/05/90590a13-ebe0-5004-86d5-42992c2f36ef/661d722da9846.image.png?resize=225%2C275 225w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/9/05/90590a13-ebe0-5004-86d5-42992c2f36ef/661d722da9846.image.png?resize=300%2C366 300w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/9/05/90590a13-ebe0-5004-86d5-42992c2f36ef/661d722da9846.image.png?resize=400%2C488 400w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/9/05/90590a13-ebe0-5004-86d5-42992c2f36ef/661d722da9846.image.png?resize=540%2C659 540w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/9/05/90590a13-ebe0-5004-86d5-42992c2f36ef/661d722da9846.image.png?resize=640%2C781 640w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/9/05/90590a13-ebe0-5004-86d5-42992c2f36ef/661d722da9846.image.png?resize=750%2C915 750w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/9/05/90590a13-ebe0-5004-86d5-42992c2f36ef/661d722da9846.image.png?resize=990%2C1208 990w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/9/05/90590a13-ebe0-5004-86d5-42992c2f36ef/661d722da9846.image.png?resize=1035%2C1263 1035w, https://bloximages.chicago2.vip.townnews.com/journalstar.com/content/tncms/assets/v3/editorial/9/05/90590a13-ebe0-5004-86d5-42992c2f36ef/661d722da9846.image.png?resize=1080%2C1318 1200w)
Looking again at internal medicine specialists, the price gap between more expensive doctors and more affordable ones was especially big in Denver. Internal medicine specialists in the Mile High City at the 75th percentile of cost charged around $123 for a 30- to 44-minute office visit, while their counterparts at the 25th percentile of cost only charged around $94. Nashville and Dallas had similarly large price gaps.
In contrast, San Francisco had the most competitive market. Internal medicine doctors at the 75th percentile of cost charged an estimated $117 for a typical office visit, while their less expensive colleagues charged about $115. In contrast to Nashville and Dallas, shopping around for doctors in the City by the Bay would seem to make little difference to patients' pocketbooks.