Insurers, Retailers Rethink Clinics After ‘Exuberant’ Spending Spree
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May 10, 2024
Some insurers and retailers are backing away from their investments in provider verticals, especially retail health brands. Cigna's stake in VillageMD, a joint venture with Walgreens Boots Alliance Inc., has lost money, and VillageMD will soon close many locations instead of pursuing aggressive growth. Walmart Inc. also said it will close its health care venture.
In recent years, diversified insurers have seen clinics in which they own a stake as a place where they can control cost of care and, ideally, improve member satisfaction by reducing the friction required to access basic care services — in addition to growing revenue in a segment that isn’t capped by medical loss ratio (MLR) rules. But that premise hasn’t always amounted to much more than a compelling story in practice.
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