Shoppers Drug Mart is rapidly expanding its network of for-profit health clinics. Critics worry it could put profit over patients

Once you get there, you’ll notice that what was once just a counter to drop off and pick up prescriptions has expanded: there’s an upscale waiting area with an inviting yellow couch, screens mounted on a wall behind it flashing reminders to book a vaccine appointment. There’s even a consultation room with an examination table.

Patients can book appointments online, on their phones or on one of the self-serve iPads. When seen, patients are assessed and treated by, not a doctor, but a pharmacist, for one of 13 minor ailments, including cold sores, urinary tract infections and hemorrhoids.

Loblaw chairman and president Galen Weston calls it “the pharmacy of the future,” and it’s likely coming to a Shoppers Drug Mart near you. In July, just months after the Ford government granted additional powers to Ontario pharmacists allowing them to diagnose and treat some conditions, the chain opened two pharmacy care clinics in Ontario, in Mississauga and in Burlington. There’s a third planned for Georgetown later this year, and Weston said the chain will invest in dozens more across the country this year.

Loblaw, the parent company of Shoppers Drug Mart, has expanded its presence in Canada’s health-care sector in recent years and seen its profits rise amid pandemic uncertainty and a public health-care system grappling with a labour shortage. It’s part of a broader trend that’s seeing the private sector play a larger role in Canadian health care, most recently in Ontario, after the passing of controversial health-care reforms aimed at easing wait-lists and pandemic backlogs by allowing more publicly funded surgeries and procedures in private clinics.

Loblaw says the new clinics will help fill the gaps in an overstretched health-care system and many experts agree. There’s a pharmacy in almost every neighbourhood, allowing quick and easy access to critical health care for the thousands of Ontarians who can’t find a doctor.

But there are risks too. Some health-care experts and advocates caution that such expansion might further erode the boundary between public and private health care, and they worry that private companies could put profits before patients.

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• Dec 31, 1969
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“This is a form of creeping privatization,” cautioned Danyaal Raza, a family physician and assistant professor at the University of Toronto’s department of family and community medicine. “(Shoppers) is expanding its footprint of investor-owned health care in a way that is aligning with expanded scope of practice for pharmacy.”

Raza agrees that the health-care system in Ontario is overburdened, but corporations have an inherent conflict: They need to provide quality health care, but they also have a duty to maximize profits for shareholders. And that latter mandate sometimes conflicts with the first.

“This is a very imperfect solution,” he said, that “allows companies like Loblaw to turn patients into a revenue opportunity.”

A winning business

Health care has long been a winning business for Shoppers. Loblaw has often attributed rising profits during the pandemic to strong sales of medicine and beauty products at its drugstore locations amid criticism that the retailer is profiting from food inflation.

Since the start of the pandemic, the supermarket giant has invested millions of dollars in telemedicine and has rolled out stand-alone primary care health clinics — which operate within the parameters of the Ontario public health-care system — in addition to the pharmacy care clinics.

The company is looking at expanding the new pharmacy care clinic layout to many of its more than 600 locations in the province, and could potentially introduce some aspects to some of its 220 Loblaws-branded pharmacies.

This year, Loblaw is looking at investing in 72 of these clinics, Weston said in the Loblaw’s quarterly earnings call with analysts in July. This is “another step toward the pharmacy of the future and our journey to improving Canadians access to primary care,” he said.

The company also announced its first six pharmacy primary care clinics in New Brunswick in July, following the recent rollout of 26 in Nova Scotia. There are also 17 clinics in Alberta, Loblaw said in an email.

In many ways, the clinics will simply be a new delivery channel for publicly funded health care. Just like in a doctor’s office, patients will be asked to present their health cards to pay, and OHIP, Ontario’s provincial health insurance plan, will cover the costs.

However, there are opportunities for profits as well.

The clinics will drive business for the in-house pharmacies, which can charge dispensing fees, and Shoppers has the option to charge fees for services such as administering certain injections. According to the Ontario College of Pharmacists, pharmacies can determine the amount they charge for prescription dispensing fees and “additional fees may be charged for other services.”

From a business perspective, the opportunity to diagnose illnesses and prescribe medication is a win-win situation for Shoppers and other pharmacy chains, said Lisa Hutcheson, a retail analyst and managing director at retail consultancy J.C. Williams Group.

Foot traffic in the stores will increase, she said, and customers will spend more on higher-priced food and household products at the locations while waiting for appointments, vaccines or prescriptions, paying a premium for that convenience.

“The longer a customer spends in the store, the more likely they are to pick up other items,” Hutcheson said. By getting customers in to get illness treated, the company will be able to capture the sale, she added.

Shoppers Drug Mart is just one of many pharmacy chains looking to profit on offering incremental health-care services to Canadians, but it’s one of the largest and has a more sophisticated strategy than most.

The company embarked on its multi-streamed trajectory “many, many years ago,” said Shoppers president Jeff Leger in a previous interview with the Star. Shoppers now owns and operates several operations related to health care, including Wellwise, which sells assisted-living devices, and QHR, an electronic medical records company. It also has a minority stake in telemedicine provider Maple.

With a strong pharmacy system in place, multiple health-care operations, clinics and professionals in the company’s network, Shoppers sought to integrate all those pieces.

Leger called it a “connected health-care strategy.”

As Shoppers pulls in more customers, it gains more data on consumer shopping habits through its PC Optimum loyalty program, which many customers have been using for years.

The Optimum program builds “deeper relationships” with those customers, said Leger. In other words, the company gains insight into what their customers want, and the loyalty program ensures those customers get everything they need from Loblaws and Shoppers.

“This keeps the customer engaged, and then on the flip side, with every purchase you’re making (the company) is able to understand how far the customer radius (extends),” Hutcheson said.

An imperfect solution

Almost everyone consulted by the Star agreed that the health-care system in Ontario is bursting at the seams and any move to relieve the pressure will help. That’s one of the main arguments for introducing the clinics, according to Shoppers president Leger.

“This is a way to improve access to health care, which is something that is near and dear to the health minister, and to the premier,” Leger said in an earlier interview.

“Given the challenges that many Canadians face with timely access to care and the volume of non-urgent services that are provided in emergency rooms, we believe there is significant demand for a more accessible and cost-effective solution to help patients in the communities,” Loblaw reiterated in an email when contacted for this story.

But some health-care experts warn the increased involvement of the private sector, especially large companies like Loblaw, might not be the best solution for patients.

“The fact that we’ve got corporations stepping into this space to fill in the gaps is a sign of the challenges in the health system and the lack of access to primary care,” said former Canadian health minister Jane Philpott, who is now dean of the faculty of health sciences at Queen’s University.

“This is a stopgap solution when we actually need a much more substantive solution, and that needs to come from government as opposed to from corporations,” she said. “What we need is serious investment from all orders of government.”

Canada has long had a health-care system that allows some for-profit care, but core services are protected by the 1984 Canada Health Act, which is meant to “facilitate reasonable access to health services without financial or other barriers.”

This means, if you’re covered by OHIP, all medically necessary hospital and physician services — including cataract surgeries, colonoscopies and MRIs — must be provided without extra user charges, whether in a public hospital or private clinic.

However, Raza pointed out that the act allows significant leeway for privatization within Canada’s health-care system. For example, physician clinics operate as private businesses and provinces are permitted to contract out hospital procedures to private companies. In fact, the Ontario budget contains $72 million over this year and next to make surgeries available at clinics outside of hospitals, including private ones.

“If a particular government in a particular province want to take public dollars and direct it toward investor-owned for-profit care, there’s nothing in any legislation including the Canada Health Act that can stop them from doing that,” Raza said. “This is why it’s really important that we pay attention to policy decisions because they have meaningful impacts on health-care outcomes.”

Corporate involvement in health care, like the Shoppers pharmacy clinics, could be the thin edge of a wedge leading to more private health care, said economist Armine Yalnizyan, who is also a contributing columnist for the Star.

“When the public system starts to fail because it is chronically underfunded and staff leave to get better pay on the private side of the street, you open the door for markets to fill in the gaps,” Yalnizyan said.

And if privatization continues creep in, it will erode and compromise the quality of health care, said Raza.

“It shouldn’t surprise anyone that return on profit takes primacy over delivering quality health care,” Raza said, adding that some forms of privatization have been linked to a rise in avoidable deaths.

For example, an increase in for-profit outsourcing in the U.K.’s National Health Service corresponded to more than 550 incremental avoidable deaths between 2014 and 2019, according to a study by the Lancet Public Health Journal.

“Private-sector outsourcing corresponded with significantly increased rates of treatable mortality, potentially as a result of a decline in the quality of health-care services,” the study said.

On the other hand, pharmacists can be a great asset to the primary health team, said Noah Ivers, a family physician and associate professor in the department of family medicine at the University of Toronto.

“Most Canadians can access their pharmacies better than they can access their family doctor, and that’s just the way that things have shaken out, unfortunately,” Ivers said.

Both Ivers and Philpott agree there is a role for private business in Canada’s health-care system. After all, “almost all family doctor offices are for profit and I don’t think that’s evil,” Ivers said.

At the moment, the public sector — which includes provincial and territorial governments — pays for 75 per cent of the total health expenditures across the country, while 25 per cent comes from the private sector, according to the Canadian Institute for Health Information.

However, for Ivers and some other physicians, the concern remains that allowing for-profit companies to operate in the public health-care framework will continue to normalize privatization, the prioritization of profits over patients, and increasing costs for medical services.

“If the responsibility is to the shareholders, will the company deliver services that are what is needed and best for the population?” Ivers said. “Or will they deliver a subset of services where profit can be generated — and who’s going to oversee that?”