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Big retailers are still attempting to shape new clinical lines of business, betting that some of them will eventually become profitable. Attention has now turned to GLP-1s. Yet against this backdrop, healthcare’s market reality is still leading to scaled-back expansion plans, noticeable exits, and massive financial write-downs for some retailers. The market is rather hit-or-miss right now. For example, Amazon continues to open primary care clinics through health system partnerships (including about 200 sites, according to its website) in addition to its flat-fee telehealth services. On the other end of the spectrum, Walgreens is seeking to sell its majority stake in VillageMD after closing more than 150 clinics. Somewhere in the middle, CVS Health continues to stay the course with what’s left of its Oak Street Health and MinuteClinics but is facing new financial pressure within its payer mix. “On a macro level, retailers’ withdrawal from a market does strengthen urgent care’s moat, as it reinforces the value of a mid-acuity facility versus the limited services offered in retail clinics,” says Alan A. Ayers, MBA, MAcc, President of Urgent Care Consultants and Senior Editor of JUCM. “Exits also underscore the difficulty for retailers in terms of staffing and executing in a business that also has high start-up capital costs. It signals a death knell for a long-named competitive threat.”
Now what? It’s not surprising that retailers are pivoting to GLP-1 weight-loss programs as the next clinical-care opportunity. Amazon, Walmart, CVS, and Walgreens have recently launched targeted weight management programs that pair GLP-1 access with wraparound services such as nutrition and lifestyle support. By leveraging existing pharmacy and virtual care platforms, retailers might find this narrower line of business less cost-intensive and significantly easier to sustain than primary care clinics. “In the same vein that retail stores took the flu shot business, it will be difficult for a local urgent care to compete against the footprint, buying power, and especially marketing budgets of big retail,” Ayers says. “As GLP-1s become a ‘mass’ product, patients will not be looking to their urgent care to provide them. For a finite consumer market with willingness to pay, there is already a ton of competition from the billion-dollar ad spends of national telehealth companies for GLP-1 business.”