Microsoft/Walgreens Deal Heats Up Digital Healthcare War

Microsoft/Walgreens Team for Digital Healthcare

Healthcare done digitally is attracting the attention and the dollars of tech giants, linking them with brick-and-mortar players in a push to meld tech and retail.

In the latest evidence of strategic alliances – notably targeting Amazon’s movement into healthcare – Microsoft said Tuesday morning (Jan. 15) that it had struck a seven-year agreement with Walgreens Boots Alliance.

Through that deal, Walgreens Boots Alliance will bring more than 380,000 of its employees to sign up for Microsoft 365 and will transition most of its company’s IT infrastructure to Microsoft (think Azure, naturally), as reported in The Verge and elsewhere.

The seven-year pact seeks to create “new transformational platforms in retail, pharmacy and business services.” There will be the creation of digital “health corners” to debut at about a dozen stores, where there will be a focus on healthcare services and devices, and on cutting down on emergency room visits and managing chronic conditions.

Though the terms may be a bit vague, the strategy – possibly in its early stages – seems to be crystallizing, as all manner of cloud computing is slated to help move healthcare data into actionable insight. Microsoft CEO Satya Nadella told CNBC on Tuesday (Jan. 15) that Microsoft will be "glue" for new partnerships, helping to develop the retail pharma’s ecosystem to deliver healthcare-related products and services.

Amazon, of course, has acquired PillPack, an online pharmacy, and has said it would work with Berkshire Hathaway and JPMorgan to improve healthcare costs and quality for employees. CNBC also quoted Walgreens Boots Alliance CEO Stefano Pessina as saying that Amazon’s interest in healthcare is not to be feared. "If they will come, they will create another ecosystem and people will live together," he said. "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."

Amazon has said that the aforementioned pacts with Berkshire and PillPack will be “free” from common business pursuits such as profits – which means, perhaps, that red ink matters less than a land grab.

The stage then is set for two of the biggest (and, by market cap and revenues, among the most valuable) companies in the world to battle in the cloud – as pills and prescriptions are ever more gaining presence through bits and bytes.

The fact remains that personal data is the path toward customized care. The battle is being waged, too, by other players – and by Walgreens through other pacts as well. Late last year, CVS closed on a $70 billion deal to buy the health insurer Aetna, and creates a new health insurance giant with a continuum of services. Also, Walgreens has a healthcare clinic deal in place with Humana.

Amazon, it seems, is helping to foster a laser focus on costs, aiming to bring seemingly disparate healthcare players together to bring services under one roof, so to speak. That’s a long-term trend, marked by an Amazon “effect” that is already taking shape, engendering both partnership and competition.



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