Microsoft, Walgreens team up to develop new healthcare delivery models

There's a new team in the race to bring innovation into the consumer healthcare space.

Walgreens Boots Alliance Inc. (WBA) and Microsoft Corp. announced on Tuesday that they will team up to develop new healthcare delivery models, including technology and retail innovations to disrupt the healthcare delivery space.

The partnership will combine Microsoft Azure—which is Microsoft's cloud and AI platform—with Walgreens' outpatient healthcare and retail footprint, officials said. Both companies have committed to a multiyear research and development investment to build new healthcare solutions aimed at improving outcomes and lowering the cost of care.

It's the second partnership announced between Walgreens and a Silicon Valley tech giant in less than a month. In December, Walgreens and Verily, Alphabet Inc.’s life sciences research arm, announced plans to help patients with chronic conditions.

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Investments to be made by Walgreens and Microsoft include funding, subject matter experts, technology and tools and will also explore the potential to establish joint innovation centers in key markets. In 2019, Walgreens will pilot up to 12 store-in-store "digital health corners" to sell certain 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,” said Stefano Pessina, executive vice chairman and chief executive officer of Walgreens, in a statement. “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 healthcare systems across the world.”

Among the first projects they expect to tackle is connecting Walgreens stores' health information to consumers through their digital devices. It will also allow them to harvest insights based on data science and artificial intelligence. They will also focus on more personalized healthcare experiences by pursuing lifestyle management solutions in areas such as nutrition and wellness via customers’ delivery method of choice, including digital devices and digital applications or in-store expert advice.

RELATED: Walgreens partnership would give Humana more leverage in shifting market

In October, Walgreens announced a partnership with LabCorp to open at least 600 testing centers inside Walgreens retail locations over the next four years. It has also reportedly been eyeing a potential deal to trade equity stakes with Humana over the last several months (although there have also been reports of potential vertical integration between Humana and Walmart as well).

As part of the partnership, Walgreens and Microsoft also intend to develop a suite of chronic disease management and patient engagement applications and a portfolio of connected Internet of Things (IoT) devices for nonacute chronic care management, delivered by Microsoft’s cloud, AI and IoT technologies. They also expect to build an ecosystem of participating organizations to connect consumers, providers, pharmaceutical manufacturers and payers.  

Under the arrangement, Microsoft becomes Walgreens' cloud provider and the pharmacy chain will migrate the majority of the company’s IT infrastructure onto Microsoft Azure. The company also plans to roll out Microsoft 365 to more than 380,000 employees and stores globally.