Big-box healthcare is crumbling under economic pressure. Major retailers like Walmart, CVS, and Walgreens are pulling back from key healthcare services, leaving millions of customers scrambling for alternatives. This isn’t just a business pivot—it’s a signal of deeper market flaws.
According to The Sun, US, mounting costs, low reimbursement rates, and shifting consumer demands have forced these retail giants to close clinics, cut services, and shutter hundreds of stores in 2024, reshaping the healthcare landscape.
Let’s start with Walmart’s retreat. Last year, the retail behemoth announced the closure of all 51 health clinics across five states, alongside scrapping virtual care services. Launched in 2019 to serve underserved communities, Walmart Health couldn’t crack the profitability code amid tough reimbursement structures.
Instead of doubling down, Walmart pivoted last year by partnering with CenterWell to convert 23 former clinic locations into senior-focused primary care centers by mid-2024. It’s a smaller, more targeted bet, but it shows even giants can’t force-fit healthcare into retail without bleeding cash.
CVS, meanwhile, is grappling with its financial mess. Rising costs in its Aetna health benefits business have crushed margins, prompting multiple earnings outlook cuts last year and layoffs of nearly 3,000 workers. The company is slashing expenses by $2 billion, a brutal but necessary move.
As part of this purge, CVS axed some Coram infusion services and either closed or sold hundreds of pharmacy locations. It’s also pulling Aetna-branded plans from ACA exchanges starting in 2026, impacting a million enrollees across 17 states. This is a stark retreat from healthcare ambitions.
CVS’s three-year plan, which kicked off in November 2021, aimed to close 900 stores, with 851 already shuttered by August 2024. That’s nearly 10% of its footprint gone, costing $1 billion in Q4 2021 alone, driven by changing consumer habits. Some locations are morphing into HealthHub formats with a more primary care focus.
On a brighter note, CVS rolled out a transparent pricing model called CVS CostVantage, tying pharmacy costs to drug acquisition, a markup, and a dispensing fee. It’s a rare win for clarity in a murky industry.
Walgreens isn’t faring much better. After sinking over $6 billion into VillageMD in 2021 for a majority stake, it’s now backpedaling, closing 160 clinics in 2024 due to financial strain. It’s also planning to shutter 1,200 stores over three years—14% of its total.
These closures span 33 states, hitting communities from California to Wisconsin hard. Yet, Walgreens is pushing virtual care, reaching patients in 30 states by October 2024—a nod to telemedicine’s rise amid consumer demand for convenience. Contrast this with Amazon, which is charging full steam into healthcare. Its 2023 acquisition of One Medical and partnership with Cleveland Clinic, plus offerings like Amazon Pharmacy, show tech-driven solutions gaining ground while traditional retailers falter.
Elsewhere, Rite Aid’s collapse adds to the chaos, with 1,000 closures after its second bankruptcy filing in two years. The term “pharmacy deserts” is gaining traction as access shrinks, though CVS dodged closing 23 stores in one state due to a paused law.
What does this mean for you? These closures and service cuts highlight how free-market pressures—rising costs, lousy reimbursement models, and staffing woes—can gut even the biggest players. Government meddling in healthcare pricing doesn’t help, often distorting incentives for companies to innovate.
If you’re near a closing store or losing a clinic, start scouting alternatives like telemedicine or local independents now. For investors, this shake-up screams caution—retail healthcare stocks may look cheap, but volatility looms. Consider diversified healthcare ETFs to hedge bets while watching Amazon’s next moves.
Ultimately, this is a wake-up call. Retailers overreached, assuming healthcare could fit neatly into their profit models, but markets don’t bend that easily. Frugality and strategic pivots are the only paths forward—for them and us.