CVS Health is rolling out a new store structure in several markets that combines Oak Street Health clinics alongside the traditional retail pharmacy. About 2 dozen locations are open or set to open by the end of the year in New York City, Dallas-Fort Worth, Houston, Chicago, and Columbus, Ohio, according to Forbes. CVS acquired Oak Street Health and its 200 clinics—which are largely focused on the Medicare Advantage market—for $10.6 billion in 2023. The Medicare Advantage business has historically driven growth, but emerging market exits by major payers may slow the enrollment trend for 2025.
Risk or innovation? The Oak Street Health expansion comes during a mass exodus of store-clinic operations, not the least of which includes Walgreens and Walmart . Also, not so long ago, CVS shuttered many of its existing MinuteClinics. Even so, CVS is planning to open an additional 25 stand-alone Oak Street Health clinics in the coming months. “This bullish case on Oak Street contradicts a big reason previously cited for Walgreens’ failure with VillageMD, which is that Medicare Advantage is a scale business. The successful Medicare Advantage providers like ChenMed attain high volumes in single locations with large dual-eligible populations,” says Alan Ayers, MBA, MAcc, president of Experity Consulting and Senior Editor of JUCM.