Walgreens, Microsoft Form Partnership to Transform Healthcare

The software giant and the retail pharmacy chain signed a multiyear agreement, pledge to improve health outcomes and lower costs using digital and retail expertise.  

Walgreens Boots Alliance Inc. and Microsoft Corp. have formed a seven-year partnership that they claim will create a patient-centered healthcare delivery system that improves outcomes and lowers costs.

In a joint announcement Tuesday, the two companies said they would partner to develop new care delivery models by combining the power of Microsoft's Azure cloud and artificial intelligence platform with Walgreens' customer reach, convenient locations, outpatient clinics and industry expertise.

"Improving health outcomes while lowering the cost of care is a complex challenge that requires broad collaboration and strong partnership between the health care and tech industries," said Microsoft CEO Satya Nadella.

The two companies committed to a multiyear research and development investment to build healthcare solutions, improve health outcomes and lower the cost of care. This investment will include funding, subject-matter experts, technology and tools.

The companies will also establish innovation centers in key markets, and this year Walgreens will pilot a dozen store-in-store "digital health corners" to sell healthcare-related hardware and devices.

"Our strategic partnership with Microsoft demonstrates our strong commitment to creating integrated, next-generation, digitally enabled healthcare delivery solutions for our customers, transforming our stores into modern neighborhood health destinations and expanding customer offerings," Walgreens CEO Stefano Pessina said.

"WBA will work with Microsoft to harness the information that exists between payers and healthcare providers to leverage, in the interest of patients and with their consent, our extraordinary network of accessible and convenient locations to deliver new innovations, greater value and better health outcomes in health care systems across the world," Pessina said.

Pessina said that Amazon's interest in entering the healthcare market was not an incentive for the Walgreens-Microsoft alliance.  

"If they will come, they will create another ecosystem and people will live together," Pessina told CNBC. "We have never believed that someone could monopolize the market. We believe that if you do the right things you can drive even if you have hard competitors."

The two companies said they were brought together by the joint recognition of a need and an opportunity to fully integrate healthcare delivery to make it cheaper and more efficient "through data-driven insights."

The collaborative will focus on four key areas:

1. Connecting Walgreens stores and health information systems to people wherever they are through their digital devices to access healthcare services such as virtual care. The partnership will leverage the data gleaned from this service and insights gained from AI that could encourage medication adherence, and reduce emergency department visits and hospital readmissions.
    
2. Personalizing healthcare from preventative self-care to chronic disease management. Walgreens will provide lifestyle management tips for nutrition and wellness using digital devices and apps, and in-store expert advice.
    
3. Building a network of participating organizations to better connect consumers, providers, drug makers and payers.
    
4. Transitioning Walgreens IT platform to Microsoft Azure. The partnership will also provide Microsoft 365 to Walgreen's more than 380,000 employees across the world, to improve productivity, collaboration and customer engagement.