He looks past todays massive $4 trillion system thats mired in paper and operates largely on outdated computer systems and isolated databases. Instead Pellegrini sees a time when the Internet will enable millions of U.S. consumers to access e-commerce sites to purchase health services, manage their appointments and data, and research health issues.

And for Walgreens and other online retailers, that time is already dawning. The U.S. healthcare system is undergoing comprehensive structural change. The Patient Protection and Affordable Care Act of 2010, or Obamacare, is transforming nearly every aspect of healthcare. Consumers are now making more of their own choices for health insurance, no longer limited to the options selected by their employers. And they are going online to make these choices and buy via e-commerce sites.

Government, commercial health insurance and self-insured employers, in tandem with their employee benefits service companies, are building, using, and expanding their e-commerce platforms. These platforms enable employees and consumers to research and buy insurance online. Patients and providers also are turning to the web to make health-related payments, research and monitor medical conditions, and schedule doctor appointments.

The shift to consumer-driven healthcare, often referred to as digital healthcare, is creating a new e-commerce opportunity for chain retailers, consumer brand manufacturers, niche web merchants and others. Big retail pharmacy chains such as Walgreens and CVS Caremark Corp. are taking their thousands of stores and walk-in clinics and combining those assets with their e-commerce and mobile commerce systems to create new digital healthcare delivery platforms.

Other retail chains also are investing in digital healthcare. For example, under a new category on Target.comConnected CareTarget Corp. has more than doubled the number of wearable and wireless devices available for purchase. The updated inventory includes a broader array of wireless blood pressure monitors and similar devices for home healthcare. The products also are available in 550 of Targets nearly 1,800 U.S. stores.

Mobile also is a big reason more retailers are using their expertise to expand into healthcare. Today the proliferation of consumers with smartphones and tablets connected to the web is a big factor driving the growth of digital healthcare. Consumers increasingly use mobile devices to consult with doctors via video rather than in an office. Patients are now using smartphones and tablets connected to secure and commerce-enabled websites, also called health information exchange networks or health data portals, to monitor and schedule immunizations, view electronic health records, work with a wellness coach online for weight loss and make copayments.

And this is just the tip of the digital healthcare needle, Pellegrini says. Walgreens is adding more features to its mobile app and digital healthcare platform and making it easier for consumers to use, he says. In May 2015 Walgreens began working with MDLive Inc., a Sunrise, Fla.-based mobile health app developer, to offer digital doctor visits at a fee of $49 per visit. It is now available to consumers in 25 states.

Another feature introduced in November 2015 enables the members of Walgreens loyalty program to use its mobile app to earn points for monitoring their blood pressure and blood glucose level. A Walgreens customer who uses a wearable monitoring device and the app to send and receive blood pressure readings and glucose measurements can earn 20 loyalty points per reading. Points can be redeemed for discounts and coupons for purchases on Walgreens.com or in approximately 8,200 Walgreens stores.

Increased use of the app and more customer perks, in turn, have helped Walgreens connect even more closely with mobile shoppers, Pellegrini says. Customers now use the Walgreens mobile app to refill a prescription every second, and mobile traffic currently accounts for nearly 40% of monthly visits to Walgreens.com.

These initiatives helped Walgreens grow mobile sales last year 10 times faster than store sales and four times faster than web sales. In 2015 Walgreens grew mobile sales 60% to an Internet Retailer-estimated $320.0 million compared with 14% growth for web sales and 6% growth for store sales. We can connect to all the parties that will make up the digital healthcare ecosystem, Pellegrini says. As a retailer with more than 100 years in the retail pharmacy business, we understand how to connect with healthcare consumers online and give them the products and services they want.

Walgreens began targeting the healthcare e-commerce business about five years ago around the same time it sharpened its focus on mobile commerce, Pellegrini says. But Walgreens isnt the only big chain retailer expanding into digital healthcare. Last November CVS Health Corp. rolled out a slew of new ways CVS customers can use mobile devices to refill prescriptions. Consumers wearing a web-connected Apple Watch can now scan paper prescription and insurance identification information using the CVS Apple Watch app and their smartphones to order prescription refills, receive pharmacist alerts on their mobile devices, such as a notification when their prescription is ready to be picked up, and to schedule reminders for taking medication.

For us, the benefits of big data and analytics arent just driving people back to our platforms: theyre about uncovering the most effective ways to help all people on their path to better health, says Brian Tilzer, CVS Healths chief digital officer. More than half of our digital prescription refills are from mobile.

In April, CVS launched its newest initiative, CVS Express, a program that enables customers to make in-app mobile purchases for items other than prescriptions and pick them up curbside in an hour. CVS also offers other online healthcare services including digital doctor visits through a relationship with TeleDoc Inc., a Dallas telehealth services company with a network of 3,100 board-certified physicians and behavioral health professionals, and its My Health Finder tool. CVS customers use My Health Finder to research personalized recommendations for preventive health and wellness programs and download individual programs.

More healthcare offerings are helping CVS to grow its mobile base, Tilzer says. The drugstore chains main CVS pharmacy app has been downloaded more than 12 million times, the retailer says. Diversifying further into digital healthcare also contributed to CVS’ growth in mobile sales and other aspects of mobile healthcare.

Mobile commerce for CVS last year grew 42% to an Internet Retailer-estimated $81.7 million. The growth rate far outpaces other channels, albeit from a much smaller base. For example, the retailers e-commerce sales grew 11% to $365.6 million and its store sales rose just 1.5%. Last year downloads of the main CVS app grew by 150%, CVS says. Further, more than 18.8 million customers have enrolled in the CVS secure text messaging program and CVS sends out 300 million prescription text message reminders annually.

“We are committed to changing the way healthcare is delivered,” Tilzer says. We have already started to see increased usage and adoption of our digital healthcare tools. In fact, one out of three CVS Pharmacy customers use at least one or more digital tool.

While big retail chains with online pharmacies are a natural fit for digital healthcare a wide range of companies with online retail and e-commerce expertise will also seize this opportunity, says Graegar Smith, a principal and healthcare research analyst with research and business management consulting firm Oliver Wyman Group. Healthcare is becoming more consumer-focused and retailers with web stores are experts at connecting with consumers online, Smith says. In healthcare consumers want the same convenience, deals and shopping experience they get shopping online and retailers know how to deliver that kind of experience.

Retailers have the e-commerce and mobile commerce systems, business expertise and an ability to adapt to constantly changing online buyer behavior, Smith says. All of these e-commerce tools and traits would serve web merchants well when expanding into digital healthcare. “Retailers with e-commerce expertise can teach the healthcare industry a thing or two,” Smith says. “Consumers want an Amazon-like experience in comparing and shopping for healthcare, and that’s a concept a lot of big insurance companies, hospitals and others today just don’t understand.”

Retailers arent the only business-to-consumer e-commerce companies looking to expand into healthcare. Big consumer brand manufacturers such as Under Armour Inc. and Apple Inc. are also eyeing new opportunity in serving health-conscious online consumers. In January, Under Armour rolled out UA Health Box, a suite of wearable devices that includes a wrist monitor that tracks data on sleep and daily physical activity, a heart rate monitor and a Wi-Fi-equipped scale to measure weight and body fat percentage.

The company also rolled out a new line of running shoes embedded with a tracking chip linked to a mobile app for continually monitoring the distance consumers travel on foot.

Along with new lines of wearable devices, Under Armour wants to be a major collector and distributor of health and wellness information under a new initiative the company calls Connected Fitness. Over the past two years Under Armour has invested more than $500 million in Connected Fitness, in part to acquire companies such as MyFitnessPal.com, a developer of popular websites and fitness apps that track diet and exercise. Connected Fitness is a digital transformation and therefore a business transformation for Under Armour, says CEO Kevin Plank. Before Connected Fitness, we only had retail transaction information for less than 10 million peoplethat’s stores and e-commerce combinedbut now we have daily activity level data from our community members, who logged nearly 8 billion foods and 2 billion activities last year alone.

Under Armour generated 2015 total sales of $3.96 billion but only $54.3 million from its Connected Fitness initiative, which includes its mobile app and health and database development business. But Plank is bullish on the digital project, although the company isn’t issuing any firm predictions on future revenue. Connected Fitness will propel our business forward, Plank says.

But it likely will take time for Under Armour to grow its digital healthcare business to match the sales of its line of apparel, accessories and footwear, which last year grew 27% to $3.82 billion.

In the meantime another consumer brand manufacturer that already does have a substantial and growing base in digital healthcare is Apple Inc. For the 2015 fiscal year ended Sept. 30 Apple grew total sales 28% to $233.71 billion. But even though its estimated sales of Apple devices and services to healthcare organizations remains only about 1% percentage of Apples total revenue, healthcare revenue could more than double annually inside the next few years and become one of Apples biggest vertical markets, says Horace Dediu, an analyst at Asymco, which is a mobile technology research and consulting firm that follows Apple. Apple is ideally suited for a big run at digital healthcare because their initiatives from the launch of the original Macintosh computer to iPhones, iPads and iTunes change consumer behavior and disrupt markets, he says.

While Apple doesnt break out many healthcare metrics, the ones it does discloseand the ones various research firms trackindicate that Apple has big plans for healthcare. For example, healthcare and mobile technology research firm Indegene in a 2015 survey of medical professionals notes that 59% of doctors and medical practices are integrating tablets as part of their daily operations, with the iPad as the most popular choice. 68% of physicians also use an iPhone on the job compared to 31% who use an Android device, Aptilon says.

Apple also has the edge in the number of health and wellness apps developed for mobile devices. Of the approximately 165,100 apps available for download in the Apple App Store and for Android devices from Google Play, 90,05555%are apps for iPhones and iPads compared with 75,045 apps, or 45%, available for Android and other non-Apple devices. The broad adoption of its wireless devices, wearables and apps put Apple among the main companies building a web infrastructure that will make digital and consumer healthcare mainstream, Dediu says.

Apple knows how to respond to consumers, and they are looking to connect the dots in consumer-driven healthcare, Dediu says. Apple sees further expansion into healthcare as one of their biggest strategic priorities.

As the U.S. healthcare system transitions to a more consumer-driven business model, healthcare organizations including insurance companies, medical providers and others will spend heavily on new computer hardware, software and services to build up their web and e-commerce infrastructure. Spending on multiple forms of digital healthcare technology could top $32 billion annually within five years, according to investment banking firm Goldman Sachs. Goldman projects annual spending on digital healthcare technology by 2021 will reach $11 billion on web-based telehealth, $15 billion on web-enabled remote patient monitoring and $6 billion on web-based behavioral modification tools and programs. Connecture Inc., a healthcare e-commerce platform developer, projects that insurance companies and others will spend as much as $6 billion annually on e-commerce technology to build more robust healthcare exchanges that will handle bigger transaction volumes.

Though digital healthcare is unfolding at a rapid pace, the U.S. healthcare system wont transform overnight, says Kaveh Safavi, Accenture senior managing director for global healthcare business. Rather, the rollout of digital healthcare will first happen in certain segments. For example, the development of e-commerce is already widespread in health insurance where Obamacare mandates for individual coverage are accelerating the use of insurance exchanges by consumers and insurers, Safavi says.

The first wave of consumer and digital healthcare also is underway in the fitness and wellness management market. Healthcare technology research firm Tractica LLC forecasts global shipments of health-related wearables, such as fitness trackers, smart watches with health applications and web-enabled wearable patches, pain management devices and other wrist devices and monitors, will grow to as many as 97.6 million units shipped by 2021 from an estimated 1 million units in 2015. The global market for wearable devices in healthcare also will generate substantial annual sales reaching an estimated $17.8 billion in 2021 from an estimated $105.3 million in 2015, Tractica says.

Among health systems, hospitals and doctors, digital healthcare is occurring first with patients using self-service web portals that enable them to communicate with healthcare professionals, view medical records, schedule appointments, fill or refill prescriptions and perform other tasks. The healthcare system is vastly complex and segmented. And while consumer and digital healthcare will become more mainstream, not every segment will go entirely digital overnight and perhaps not at all, Safavi says. Segments like oncology arent likely to change over soon but healthcare insurance, walk-in clinics, fitness management, pharmacy and other segments with lots of consumer interaction will embrace digital healthcare very quickly over the next several years.

Given the complexity and close federal and state regulation of healthcare, some of the biggest names in online retailing such as Amazon.com Inc. and Walmart.com, the e-commerce arm of Wal-Mart Stores Inc., have yet to openly commit to launching digital healthcare initiatives. Amazon does have a base in healthcare primarily through Amazon Web Services, its cloud computing division, and in the hundreds and even thousands of over-the-counter health and wellness products sold on its site and app. Nearly 40 diverse healthcare organizations including Healthcare.gov, the federal health insurance exchange run by the Center for Medicare and Medicaid Services, are using Amazon Web Services to host back-end systems for insurance carrier data, risk assessment data, and other parts of HealthCare.gov. Wal-Mart also has a base in healthcare via Walmart.com, which operates a substantial online pharmacy. Wal-Mart works with DirectHealth.com LLC, an insurance agency with web connections to 1,700 plans offered by 12 health insurers. Wal-Mart provides space in 2,700 stores for DirectHealth customer service representatives to sign up shoppers seeking health insurance.

Amazon and Walmart.com certainly have the resources to move deeper into healthcare, but may be waiting to see how digital healthcare developsand in which segmentsbefore making a bigger commitment, says Scot Wingo, a long-time e-commerce observer and executive chairman of marketplace management services company ChannelAdvisor Corp. “I would not be surprised if Amazon and some other big retailers aren’t at least keeping eye on the market and have a team looking at what might be a strategic fit for them,” he says. “Amazon in particular has a long history of carefully watching, waiting and researching, and then launching a business or making an acquisition in a new market when they see an opportunity.”

But if some big web merchants are taking their time looking over the healthcare e-commerce business, the shift to more consumer-driven healthcare also is opening up new opportunities for niche online retailers such as such as FSAStore.com, which sells 4,000 healthcare-related products that consumers can purchase using their pretax flexible spending account or Health Savings Account dollars. Health Savings Accounts, or HSAs, are individual savings accounts that allow consumers to set aside tax-free dollars to purchase medical products and services. Another niche web retailer steadily moving out in healthcare e-commerce is Healthwarehouse.com, an online pharmacy targeting consumers with high copays and health insurance deductibles looking for the lowest-priced generic prescription drugs.

Both FSAStore.com and Healthwarehouse.com are looking to be the top niche web merchant in a specialty category opening up because of the shift to consumers directly controlling their healthcare choices.

Since launching in 2010 as the result of a Columbia Business School project, FSAStore.com has grown at a compound annual growth rate of more than 100% and in 2015 grew online sales 65%. While he won’t release actual results, FSAStore.com CEO Jeremy Miller says the company has grown dramatically over time in part because of revenue-sharing deals the retailer has with the flexible spending account managers at more than 200 major employers, including payroll services and human resources management company ADP LLC.

Under the arrangements, flexible spending account managers incorporate FSAStore.com into the companys employee benefits programs and, in return, the company receives an undisclosed percentage of the money employees spend on the site. Each year Americans spend nearly $15 billion using their flexible spending account to purchase healthcare products and services and we are the first and biggest online retailer to really focus on this market, Miller says.

In the past year FSAStore.com has worked to expand its marketing program with the launch of a customer loyalty program that rewards shoppers with points that can be applied for discounts on future transactions in return for making site referrals, sharing content on social media, providing reviews and updating their FSA deadline information for their customer profile.

FSAStore.com in July also opened a new web storeHSAStore.comto offer shoppers with health spending accounts an inventory of nearly 4,000 HSA-approved items, one-to-two-day order processing and free shipping on orders of $50 or more. Unlike an FSA, an HSA is only for consumers in high-deductible health plans to contribute pre-tax dollars through automatic payroll deduction to pay for qualified medical expenses, such as deductibles, co-pays and medical products. “As other areas of healthcare are becoming more complex, our goal is to simplify and make it easy for people to pay for the healthcare products and services they need,” Miller says.

For Healthwarehouse.com CEO Lalit Dhadphale the company’s niche as an online pharmacy is to concentrate only on online shoppers who are spending their own money and not seeking reimbursement for insurance companies to purchase low-priced generic prescription drugs. “Once the patent on a branded drug has expired, we can typically sell its generic equivalent for less than the purchaser’s insurance copayment,” Dhadphale says. Our target is consumers who are paying out-of-pocket for their medications, and those numbers have increased significantly since insurance copays are rising and high-deductible plans are becoming more prevalent due to the Affordable Care Act.”

Healthwarehouse.com has been in business for nine years and has spent heavily in the past few years to build its niche e-commerce business. A public company, Healthwarehouse.com ended 2015 with a net loss of about $627,000, compared with a net loss of $1.8 million in 2014. Sales grew year over year 16.4% to $7.1 million from $6.1 million. But Healthwarehouse.com also has spent the past six years working to get certified and licensed to sell prescription drugs in all 50 states. “We have obtained state licenses and certifications to separate ourselves from the numerous uncertified ‘rogue’ pharmacies that exist online,” Dhadphale says. “We have verified Internet pharmacy practice accreditation from the National Association of Board of Pharmacy. That’s a big deal because Google, Yahoo and Bing now all require this as a prerequisite to advertise on their sites.”

Building a niche healthcare e-commerce business has been a long process, Dhadphale says. But now Healthwarehouse.com is primed for growth in a healthcare category that could generate as much as $80 billion in generic prescription drug sales this year, up from $45 billion in 2011, says Healthwarehouse.com. The company also is counting on its base as a web-only merchant to compete against bigger rivals such as Walgreens and CVS. “We distribute medications to the consumer from a single warehouse, as opposed to retail locations, which we believe eliminates unnecessary costs,” Dhadphale says. “By going directly to the consumer via the Internet, we reduce our marketing expense and increase convenience for consumers.”

From Pellegrini’s standpoint, Walgreens expects to play a significant role in the future of consumer-driven healthcare and expects there to be lots of competition as the market develops. But as an early entrant Walgreens is prepared to provide a wide range of digital health services. After several years, Pellegrini says, our focus on digital healthcare has come down to: Make it simple, make it rewarding and make it effective..