Primary Topic
This episode delves into how Loblaw, primarily known for its grocery chains, is expanding into the healthcare sector by setting up pharmacy care clinics across Canada.
Episode Summary
Main Takeaways
- Loblaw has strategically expanded into healthcare by acquiring Shoppers Drug Mart and establishing care clinics within their locations.
- The company aims to address the primary care shortage in Canada by providing accessible healthcare services through its widespread pharmacy network.
- Loblaw's integration of healthcare services has sparked discussions on the ethical implications and potential conflicts of interest in corporate-owned healthcare.
- The expansion into healthcare is seen as a move to diversify Loblaw's revenue streams and leverage its retail footprint for healthcare delivery.
- Criticism and legal challenges have emerged, questioning the practices and motivations behind Loblaw's healthcare ventures.
Episode Chapters
1. Introduction to the Topic
Exploration of Loblaw's historical progression from a grocery powerhouse to a potential leader in healthcare. Susan Krushinski Robertson: "Loblaw's vision for growth is a combination of health, wellness, and nutrition."
2. Expansion Strategy
Discussion on how Loblaw's acquisition of Shoppers Drug Mart marked a pivotal shift in its business model. Chris Hannay: "They're building a whole network here."
3. Healthcare at Shoppers
Insights into the operational aspects of the pharmacy care clinics and the services they offer. Susan Krushinski Robertson: "It's designed so that it's your neighborhood clinic."
4. Ethical Considerations
A look into the ethical debates and criticisms concerning the expansion of corporate-owned pharmacies into healthcare. Chris Hannay: "This raises questions about the role of corporations in healthcare."
Actionable Advice
- Explore local healthcare options including pharmacy care clinics for accessible services.
- Stay informed about the healthcare services available at local pharmacies.
- Consider the convenience of pharmacy clinics for non-emergency healthcare needs.
- Research the qualifications and services offered by pharmacists at these clinics.
- Stay engaged with healthcare developments to understand how corporate strategies affect consumer choices.
About This Episode
In 2023, more than 6.5 million people across Canada did not have a family doctor. Family doctor deserts are growing so vast that patients will stay with their doctors even after moving hours away. Some provinces have been increasing pharmacists’ capabilities – allowing them to prescribe for common ailments like pink eye. The hope is they can relieve some pressure on already stretched family doctors’ offices and increase accessibility for people without one.
After acquiring Shoppers Drug Mart in 2014, Loblaw has a hold on 25 per cent of the Canadian pharmacy market. Ten years later, they’re betting that the future of Canadian healthcare lies at the back of their stores. They’ve started building what they’re calling “pharmacy care clinics,” where pharmacists will be able to visit with patients in a clinic-like setting.
Chris Hannay is the Globe’s independent business reporter, and Susan Krashinsky Robertson is the Globe’s retail reporter. They’re on the show to talk about what Loblaw’s expansion into the healthcare space means for Canadians, and what healthcare providers think about the move.
People
Susan Krushinski Robertson, Chris Hannay
Companies
Loblaw, Shoppers Drug Mart
Books
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Guest Name(s):
-None-
Content Warnings:
None
Transcript
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Susan Krushinski Robertson
The Burlington shoppers it's a totally ordinary shoppers from the outside.
It's in a suburban neighborhood. It's part of a strip mall. It's right next to an indoor golf facility.
You would have no idea from the outside that there's supposed to be anything different about it.
Chris Hannay
Chris Hannay is the Globe's independent business reporter.
Susan Krushinski Robertson
There's the cosmetics. There's the grocery. There's the first aid. Everything that normal shoppers has when you finally walk down those roads at the end is where it looks different than other locations.
Susan Krushinski Robertson
And what you find in the back of the store there is something that looks almost like a waiting room area. You've got some cushioned seating for people to wait.
Chris Hannay
That's Susan Krushinski Robertson, the Globe's retail reporter.
Susan Krushinski Robertson
You've got a desk where what they call a care coordinator is waiting to greet people. And they have consultation rooms like you might see in any clinic you walk into. And so it's really designed so that even though there is still that pharmacy counter that you're so used to seeing at the back of a drugstore, that next to it, what shoppers is hoping you'll see this as is essentially your neighborhood clinic for all your sort of basic needs that aren't super high level or needing an expert of a doctor.
Chris Hannay
Loblaw, the company that owns Shoppers Drug Mart, is betting that the future of your healthcare lies in the back of your local shoppers.
They've built 82 of these pharmacy care clinics across Canada, and Loblaw says there are plans for more. So Susan and Chris are here to talk about how Loblaw is expanding its reach further into the healthcare space, what physicians and pharmacists think, and what it could mean for how some Canadians access primary health care.
I'm Manica Ramon Willms, and this is the decibel from the Globe and Mail.
Susan, Chris, thank you so much for being here.
Susan Krushinski Robertson
Thanks for having us.
Chris Hannay
Thanks for having us, Susan. Loblaw is mostly known for its grocery chains, but they've also been in the health care business now for actually about a decade. So can you just remind us how Loblaw first got into healthcare?
Susan Krushinski Robertson
Yeah, for sure. So Loblaw got into healthcare exactly a decade ago. We're checking in on this strategy just ten years in. Back in 2014, Loblaw made this huge $12.4 billion deal to really reshape their retail empire by buying shoppers drug Mart, which at the time was a separate company. And at the time, it was interesting because Galen Weston, the chairman of Loblaw and obviously its controlling shareholder, he talked about how their vision really for the next phase of Loblaws growth was to be a vision for a combination of health and wellness and nutrition. Loblaw had had pharmacies before, largely inside of its grocery stores, but this deal really catapulted them into being the largest pharmacy owner in Canada, in addition to being our largest grocer. So before the deal, they had a roughly 5% share of the pharmacy market in Canada, and afterwards, they owned 25% of the pharmacy market in Canada. So it gives you just a sense of the scale that this deal gave them. And since then, they've only invested more in the health side of the business.
Chris Hannay
Can we address why Loblaw wants to expand into healthcare? Chris? Like, what is the play here? Why do they want to do this?
Susan Krushinski Robertson
They see an opportunity to grow the business.
Right now, Canadians are struggling with access to primary care.
The stats that are often thrown around right now are that one in five Canadians don't have access to a family doctor or about 6.5 million people. And so there's a great need there for primary care. And shoppers sense is that there is an opportunity for them to provide that.
Chris Hannay
Care, provide that care, and, of course, make money from that.
Susan Krushinski Robertson
Then they are a business.
Chris Hannay
Yeah.
Susan Krushinski Robertson
And it's worth noting, too, that even before this expansion of health services, that pharmacists can provide, that shoppers was a very profitable business. And every quarter, when Loblaw reports its earnings, it calls out the drugstore side of its business for being a high profit business, not just in the health services and pharmacy side, but also in the front of the store. You know, those cosmetics that you buy, those, the toothpaste, you know, the toiletries, all of that is a very profitable business compared to the grocery side of the business, which operates on quite slim margins, at least as far as the executives tell it. And so you can also see that even at the time of the acquisition, before this thing started to grow as much as it is growing now and expanding, this is a very important profit driver for the company.
Chris Hannay
And there are so many shoppers locations like, it's really. It's ubiquitous across much of the country.
Susan Krushinski Robertson
Yeah, that's right. So between the pharmacies that are located inside of Loblaw's own grocery stores and the shoppers drug mart chain, there are about 1800 pharmacies across the Loblaw network, and that's across the country.
And their executives say that roughly 85% of Canadians live within a ten minute drive of a shoppers or another Loblaw owned pharmacy. And they're not even stopping there. They still want to continue to build more shoppers locations. So even with that amount of coverage across the country, they have ambitions to grow.
Chris Hannay
Well, let's talk about their plans then, to continue to build the healthcare side of things here. So, Susan, shoppers is obviously a huge part of Loblaw's investments in healthcare, but they've actually acquired other companies as well, too, right? So how else have they been expanding this portfolio?
Susan Krushinski Robertson
Loblaw's wider healthcare business has been growing through acquisitions, some small and some large. So just a handful of those, you know. In 2020, the company invested about $75 million for a minority stake in a telemedicine company called Maple.
In 2022, in a much larger deal, Loblaw bought Lifemark Health Group for $845 million. And that gave them a network of more than 300 clinics across the country, which handle all kinds of sort of extended health services, if you will, things like massage therapy, occupational therapy, mental health services, physiotherapy. And in the year before Loblaw acquired Lifemark, the company had won a very large contract with the federal government to provide care to veterans. So that gave them a very large presence in that market as well.
There are other acquisitions as well. So back in 2016, Loblaw spent about 170 million to acquire a company that makes electronic medical recordkeeping software that's used for doctors. And so that just gives you a sense of some of the investments that they've made to grow their presence in the healthcare space.
Chris Hannay
Yeah, it seems like there's a whole network here now that they've developed. And of course, the Westin family. I want to talk about them, too, Susan, because they are the controlling shareholders of blah blah. Can we look at their other investments and activities? Does that tell us anything about their broader goals here when it comes to the healthcare business?
Susan Krushinski Robertson
Yeah, absolutely. And so laws controlling shareholders, the Westin family. They have a private holding company called Whittington Investments. And that company has a venture capital unit which invests in startups that are promising. And the head of that venture capital unit told me that roughly half of its portfolio is actually in healthcare businesses. You know, they've invested in a company that uses AI technology to transcribe conversations between healthcare providers and patients in order to automatically populate health records and take some labor away from doctors in terms of the sort of stenographic part of their job, if you will. They've also invested in a startup that is working on approvals for devices that do on site blood testing. So that company is called Truvian. They're based in California, and they've built these, basically these boxes the size of about, think of a large desktop printer.
They use those devices to test vials of blood on site. So in a doctor's office or say, a pharmacy, theoretically, as opposed to having to send that blood away to a lab. So Whittington has invested in that company, and indeed, very recently, they announced that they had struck up a commercial partnership with shoppers drug Mart as well. So frequently, Whittington will bring interesting startups to Loblaw that might be able to solve problems for its retail businesses. And in return, Loblaw provides those startups with feedback and insights from just a massive retailer who has an enormous reach. And that's very valuable to these companies as they're getting going. There are a few examples of that. Truvian was one. Another one is a digital company called League, which Whittington invested in and which built the PC health app for shoppers.
Chris Hannay
Say they have a health app now is, too.
Susan Krushinski Robertson
Yes, that's right. And it also goes on the grocery side of the business as well. So Whittington invested in a company called Gattic, which operates self driving trucks that help with what they call the middle mile of delivery, shuttling products throughout loblaw supply chain. And they started a test of that just a couple of years ago. So there's a lot of collaboration, I would say, between those two companies. Yeah.
Chris Hannay
So what you're describing here, Susan, is really there's a whole kind of ecosystem here of things that they're getting into. But I think we should come back to the pharmacy care clinic model, because even though all of these things are happening and they're important to think about, I think this is something that Canadians are really going to be interacting with directly. So, Chris, let's talk about this model here, because this model is really happening because of the way that the job of pharmacists is changing in Canada today. So can you tell me about that? How have we changed the role that pharmacists have now?
Susan Krushinski Robertson
Yeah, there's a big supply and demand problem in the healthcare system right now.
Need healthcare. And with our aging population, that need is only going up. And at the same time, there's just not the supply of physicians and healthcare professionals to really take care of all those needs. And so one of the biggest debates right now in the healthcare system is how to meet those needs. And so with pharmacists, where that's coming in is the idea that because they work with medication a lot in different jurisdictions, they're experimenting with allowing them to prescribe those medications or maybe give those medications in ways that they haven't previously, like more routine vaccines, more shots, more infusions.
Chris Hannay
These are changes that are happening at the provincial level across the country and different provinces, essentially making these changes.
Susan Krushinski Robertson
Yes. So Alberta is the most permissive and they were the earliest in this. They started making changes in 2007, and they are. Pharmacists in Alberta can prescribe any schedule one drug, which is a huge number of drugs, whereas in a province like Ontario, Ontario still tends to be one of the more restrictive ones. So there were some changes last year. First they had 13, and then now they're up to 19, what they call minor ailments, which are things like pink eye or acne that are supposed to be very easy to diagnose.
If your kid gets pink eye and you can take them to the local pharmacist, that means one less trip that you'd have to take to the family doctor. One less thing for the family doctor to deal with.
Chris Hannay
And if a lot of people don't have family doctors, this is an alternative then.
Susan Krushinski Robertson
Exactly.
Chris Hannay
We'll be right back.
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Chris Hannay
So, Chris, this is interesting to understand the role of pharmacists then, and how it changes in different provinces across the country.
I wonder, how are healthcare providers responding to the idea of these pharmacy care clinics in these shoppers? Like, I'm wondering about how pharmacists think about it and also how doctors think about it.
Susan Krushinski Robertson
Yeah, I think a lot of pharmacists feel that these changes are good, that they really justify the expertise that they have, the education that they have, the experience.
There has been some pushback from some physicians across the country. Physicians do spend longer in school and have more training.
And so there have been some physicians who have said that they don't think pharmacists have the training to properly understand some of the conditions that they're prescribing for.
There's actually an interesting letter recently. The Ontario College of Pharmacists, which is the regulator for pharmacists in Ontario, had a board meeting recently in which they disclosed that they had sort of sent an official letter to the College of Physicians telling them that too many doctors on social media were making derogatory statements about pharmacists, and that some physicians were saying that they weren't going to process paperwork from pharmacists. So you get a sense that there's a bit of a.
As pharmacists are maybe getting into the turf of physicians, some physicians are a little unhappy about that.
Chris Hannay
Okay. And to be clear, of course, these are broad changes that are happening. Like we're talking at the provincial level in terms of the role of pharmacists. If we have more corporate ownership of pharmacies, does that create any problems with how things are changing here?
Susan Krushinski Robertson
Yeah, that has led to some concerns recently, and there are a couple of issues that have arisen this year. One of them is the issue of what's known as Medscheck, the Medscheck program, which is a program in Ontario where pharmacists can basically sit down with one of their customers, or their patients, as they would call them, and go over all of their medications, especially for older people or people with certain illnesses who might be on a battery of medications. It's a very valuable service where a pharmacist can sit down, review all the medications someone is on, go over how they're feeling, whether this is working for them, also looking at compliance. So taking your medications on time and correctly, which is actually a pretty big issue, making sure people are doing that. So a pharmacist can go through all of these issues and even make suggestions on how to cut down on, for example, the number of drugs someone is taking. And they can bill the Ontario government for this service all very well and good. But what has arisen are reports among some pharmacists of corporate pressures to perform these kinds of services when they aren't strictly necessary in order to get that billing happening.
We should mention that this is a complaint that's come not only from shoppers, drug mart pharmacists, but also from other corporate owned pharmacy chains. The Ontario College of Pharmacists actually recently did a survey of more than 4000 pharmacy professionals on the subject of corporate pressures, including, but not limited to, meds check pressures. And they found that there was a majority of pharmacists who reported experiencing those corporate pressures. And other chains such as Rexall and Walmart also saw high for their pharmacy professionals reporting those pressures.
Susan Krushinski Robertson
The contrast is quite stark in the survey, too. The pharmacists who work for some of the large corporate owned chains, more than 80% of them reported feeling pressure to do some of this unnecessary billing, whereas pharmacists who worked for independent pharmacies, only about 18% of them said that they had these concerns.
Chris Hannay
Drastic difference. Okay.
Susan Krushinski Robertson
A huge difference. Yeah. And this has actually come to the fore as well. In April, some current and former shoppers, pharmacists filed a class action lawsuit against the company alleging unethical corporate practices that include that kind of pressure on pharmacists to bill public health insurance for what they say are unnecessary services.
And Loblaw has obviously said those allegations are baseless. And we should mention the lawsuit hasn't been tested in court, but those concerns have been raised.
Chris Hannay
Yeah. So, yeah, this is important to touch on. I guess. I wonder, are there other issues or problems that we've seen come out of this model?
Susan Krushinski Robertson
One of the other things that's been in the news quite a bit this year is the issue of preferred pharmacy networks. And again, we come back to shoppers because being the biggest being owned by Loblaw, which is a company that gets a lot of attention. When they signed on to one of these network deals with Canada's largest insurer, Manulife, it suddenly made a lot of people aware of these networks who weren't aware of them before. And what these deals are is they can be exclusive deals between a pharmacy and an insurer to basically say, send all of the members of your insurance plan my way to fill their prescriptions. And so the deal between manulife and shoppers was for a number of specialty medications. These tend to be the most expensive medications, and they treat a number of conditions, including certain types of arthritis, Crohn's disease, even cancer meds. And the deal specified that Manulife plan members would go to shoppers drug Mart to get these prescriptions. Manulife had had a preferred pharmacy network already in place with Bayshore. But this exclusive deal, when it came to public knowledge, really caused a backlash, and Manulife actually ended up walking it back.
Chris Hannay
This would have meant that someone could not go to an independent pharmacy to get their medication or to another.
They had to go to shoppers then to get their medication. Would have been this deal?
Susan Krushinski Robertson
Yes. If they wanted to have the insurance cover their drugs, they would have had to go to a shopper. Otherwise they would have to pay out of pocket tens, if not hundreds of thousands of dollars a year.
Chris Hannay
Wow. Okay. So this is what people got upset about, and I guess why they ended up not going through with this, then?
Susan Krushinski Robertson
Yes. And again, these networks have existed and do exist in other configurations. It was simply this deal between two such large players that really attracted a lot of attention. And since then, the issue of these preferred pharmacy networks has really come to the fore, such that there are pharmacy associations across the country who are now coming out with statements against them saying that they believe that the impact on patients choice is negative and that people really have the right to choose their healthcare provider and should always have that right. And so this is a huge topic of conversation right now, and in many ways, you could say that the shoppers deal really helped to spur a lot of that conversation.
Chris Hannay
We touched a little bit on this earlier, Chris, but we've obviously talked about some of the issues with this model. But as you mentioned, like, people need healthcare in this country, and we're in dire shortage of family doctors and primary care. So is there a valid space here that this corporation could provide healthcare for people who need it?
Susan Krushinski Robertson
Yeah, absolutely. People need health care, and they need it however they can get it. You know, I think the big issue is just trust. That's been a. An issue that Loblaw has really struggled with on the grocery side and on the healthcare side. People just have to, I think, learn about all this and decide for themselves about whether they want to go to them for their health care.
Chris Hannay
You mentioned trust, Chris. So just in our last few minutes here, I think we should talk about trust, because we've been discussing loblaws a lot this year. They've gotten criticism for grocery prices. There was even an informal boycott of loblaws this spring that a lot of people were doing. How does this move into healthcare fit into the bigger issue of loblaws? Image problem.
Susan Krushinski Robertson
This has been just a punishing couple of years, right? You think about the pain of inflation and the way that it has affected Canadians household budgets, our spending power, and the place where that hurts the most is at the grocery store, because with all of this inflation, you can try to manage your budget. You can put off that purchase of that new couch or that barbecue for your backyard, but you really cannot avoid having to buy food for your family.
Chris Hannay
Yeah.
Susan Krushinski Robertson
And when groceries are so much more expensive than they were just a few years ago, it's a constant reminder to people of the way that they're being punished by inflation.
Loblaw is the biggest grocer in Canada, so it's natural that they're coming in for more scrutiny on this issue. And it has to be said, there's been a few own goals, too here. Right. We've seen Loblaw slip up on things like they made a move to pull back on some of the discounts they provide for food nearing its expiry date. They were going to take that down from 50% off to 30% off.
Chris Hannay
Oh, right. Yeah. That was a bit of a change that people were up in arms about.
Susan Krushinski Robertson
Yeah. And they walked that back after the feedback they received. But again, sort of an unnecessary hit to the reputation there. The feedback over the shoppers manulife deal was similarly something that they, that Manulife walked back, but that was another hit. And, of course, recently we saw Loblaw and its parent company, George Weston, agree to a pretty big settlement, a $500 million settlement in a class action lawsuit over a bread price fixing scheme. And this isn't new information. Loblaw and Weston were the ones who blew the whistle on this scheme to the competition Bureau back in 2015, and they alerted the public about their involvement in 2017. So people already knew about this. But we can't overstate how that settlement brought this back into the news, reminded people of the existence of that scandal. And again, it just is one more way that people's trust in the entire sector has been shaken. And so when you think about it, Loblaw here is trying to really expand its role in a really sensitive part of people's lives, in their health care. And they have been in this business for a decade now. Right. They've owned shoppers for a long time. Shoppers, in many ways, is a very trusted brand in Canada. But people are aware that Loblaw owns shoppers. And so as it tries to take a bigger role in quite a sensitive part of people's lives, in their healthcare, that image problem and that image challenge that Loblaw is really trying hard to rehabilitate is probably going to have an effect there as well.
Chris Hannay
Just lastly, let's talk about the plans here that Loblaw has for the future.
When can we expect to see, I guess, these new clinics roll out? How quickly, how many can we also expect?
Susan Krushinski Robertson
Yeah. So currently the plan, as I mentioned at the top of our conversation, they've got 82 of these pharmacy care clinics, around 82 at this moment, and they're hoping to open 250 by the end of next year. Now, that's, we should say, a drop in the bucket of the number of pharmacies that Loblaw has. Again, they have 1800 pharmacies across the country, so 250 locations, it's a small percentage, but basically how they're thinking about this is this is what they want their pharmacies to look like in the future. And I think we can take a lot from actually the story of a location in Lethbridge, Alberta. So Jeff Leger, the president of Shoppers Drug Mart, told us that there was an empty space in a real canadian superstore in Lethbridge. A doctor's office had been there previously. Some doctors have offices inside of Loblaw stores. It's a whole other business. But this space had been sitting empty. And so they opened one of these pharmacy care clinics, and within a very short period of time, he told us they were seeing 40 to 50 patients every single day. That was how much of a need existed in that market that was instantly filled. And so I think the way that the people at the top of loblaws think about this strategy is also there's a lot of lethbridges out there. There's a lot of communities where people don't have adequate access to medical professionals, and they could help fill some of that gap. And I think that test in Lethbridge showed them a lot about the promise of these clinics.
So even though we're talking about a small percentage, by the end of next year, in their full spate of locations that are going to look like these care clinics, you can expect, most likely for Loblaw, as we move into the future, to be investing even more heavily in this model of store.
Chris Hannay
Susan, Chris, thank you so much for being here today.
Susan Krushinski Robertson
Thank you.
Susan Krushinski Robertson
Thank you.
Chris Hannay
That's it for today. I'm manica Ramon Wells. Our producers are Madeline White, Rachel Levy McLaughlin, and Michal Stein. David Crosby edits the show. Adrian Chung is our senior producer, and Matt Fraynor is our managing editor.
Thanks so much for listening, and I'll talk to you tomorrow.
Ashley
At Ashley. You'll find colorful furniture that brings your home to life. Ashley makes it easier than ever to express your personal style with an array of looks in fun trending hues to choose from. From earth tones to vibrant colors to calming blues and greens, Ashley has pieces for every room in the house. In the season's most sought after shades. A more colorful life starts at Ashley Shop in store online today Ashley for the love of home.