Dollar General aims for greater presence in health care

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In what could be a competitive blow for pharmacies, Dollar General has formed a committee to explore ways to expand its healthcare offering.

The discount store giant said yesterday it had established the Healthcare Advisory Panel, a group of healthcare industry subject matter experts who will serve as “thought partners” and strategists to help Dollar General to develop its strategy and best invest its resources in health and well-being.

Last July, Dollar General unveiled plans to expand its healthcare business to meet more customer needs and establish itself as a healthcare destination. The effort included an increased assortment of cough and cold, dental, nutritional, medical, health and feminine hygiene products in many Dollar General stores.

Additionally, Dollar General has hired Dr. Albert Wu of McKinsey & Co. for the newly created position of Vice President and Chief Medical Officer. In the role, Wu is responsible for building and strengthening relationships with healthcare product and service providers to “build a comprehensive network of affordable services for DG customers,” according to Dollar General. The retailer noted at the time that 75% of the U.S. population lives within five miles of a Dollar General store, providing unique access to rural and other communities often underserved in today’s healthcare ecosystem.

“Dollar General is thrilled to take these bold next steps in our healthcare journey and welcomes these talented and respected professionals to our new advisory board,” Wu said in a statement Thursday. “In the belief of furthering our mission of ‘Serving Others’, the panel will provide guidance and prioritization of efforts in the areas of health and wellbeing at DG. We pride ourselves on having a diversity of perspectives and of experiences represented on the panel, which helps us better understand our clients and provide meaningful solutions to complex healthcare issues.

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Dollar General also aims to establish itself as a health and wellness destination by rolling out fresh produce, now in more than 2,300 locations, in more stores.

The following experts join Wu on the healthcare advisory board, Dollar General said:

• Dr. Patrick Carroll, a leading physician with experience in retail health, managed care and integrated delivery networks. He is currently Chief Medical Officer of Vida Health and previously held Chief Medical Officer positions at Walgreens, Hims & Hers and Hartford Healthcare. His responsibilities included overseeing strategic initiatives, clinical and quality programs, and vendor group relationships.

• Dr. Katy Lanz, healthcare executive and entrepreneur with 20 years of experience designing, implementing and scaling care delivery models. She is now Director of Strategy and Products at Personal Care Medical Associates and a national board member of the National Hospice and Palliative Care Organization. She was previously clinical director at Aspire Health, which was acquired by Anthem in 2018.

• Dr. Von Nguyen, physician, population health expert and public health leader with experience in building successful collaborations between organizations to improve the health and well-being of populations. He is currently Clinical Lead for Public Health and Population at Google. Prior to that, Nguyen served as chief medical officer and senior vice president at Blue Cross and Blue Shield of North Carolina and held positions of increasing responsibility in policy and strategy at the Centers for Disease Control and Prevention.

• Dr. Yolanda Hill Wimberly, a visionary and leader who has made a name for herself on the national healthcare scene through her organizational skills and the development of responsive clinical organizations and educational programs. A board-certified physician in pediatrics and adolescent medicine, Wimberly is senior vice president and director of health equity at Grady Health Systems, responsible for leading Grady Health System’s strategic direction in health equity. She is also a professor of pediatrics at Morehouse School of Medicine.

Given Dollar General’s huge store footprint, convenient small format and low prices, the chain’s plans to accelerate its health products business and expand healthcare services pose a big competitive challenge. for pharmacies, according to Jefferies analysts Corey Tarlowe and Randal Konik.

“Management has repeatedly called out the drug channel as one of the biggest donors of DG shares. Importantly, DG is now offering an expanded healthcare offering in 1,800 stores starting in Q1, with plans to reach over 4,000 stores by the end of the year,” Tarlowe wrote. and Konik in a research note yesterday. “This expanded healthcare offering includes up to 30% more retail space and up to 400 more items than DG’s standard offering. Meanwhile, DG has a noticeable advantage with prices, 40% cheaper than pharmacies.

Currently, Dollar General, based in Goodlettsville, Tennessee, operates 18,356 stores in 47 states. For fiscal 2022, the retailer plans to open 1,110 new stores and complete 1,750 renovations and 120 moves.

“We expect approximately 800 of our new stores in 2022 to be in our largest 8,500 square foot store format as we respond to our customers’ desire for an even wider product selection,” said the Chief Operating Officer Jeff Owen on a conference call with analysts. on the first quarter results. “With approximately 1,200 square feet of additional retail space compared to a traditional store, these larger formats allow for more high-capacity coolers, an extended queue and a wider assortment of products, including NCI. [non-consumables initiative]our widest offering of health and beauty products and products in many stores. »

Owen – named earlier this month to succeed Todd Vasos as CEO – also told analysts that Dollar General had fresh produce in more than 2,300 stores at the end of the first quarter and plans to expand it to more. of 3,000 stores by the end of 2022.

“DG is about convenience and value, finding ways to help underserved rural communities. Along these lines, the company is continually looking to improve its offering, including adding other items to the box, such as products and NCIs,” Tarlowe and Konik wrote in their report. “We view DG’s continued expansion into health and wellness as a way to provide additional value to its customers as other big box discounters (Walmart, Costco, etc.) offer services such as optics and pharmacy. We believe DG’s continued development of its health and wellness offering will likely lead to additional market share gains from competitors and improved store productivity going forward.

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