Walgreens' exit from health clinic business should serve as a warning to rivals

Walgreens' decision to close its wholly-owned health clinics could serve as a warning to other retailers looking to start their own clinics, according to The Motley Fool

Walgreens said Oct. 28 that it plans to close the 157 in-store health clinics it owns itself to cut costs but keep its clinics run by third-party healthcare companies. Any future in-store clinics it may open will also be run by third parties. 

The decision may be a warning for retailers such as Walmart and Rite Aid that opening self-owned healthcare clinics is not a guarantee of profits, according to The Motley Fool

Putting clinics in retail locations was meant to improve access for patients and save them money, but a study conducted by Health Affairs in 2016 showed that per-person annual spending on care actually went up, on average, by $14. 

Walmart may have more customers than Walgreens, but consumers are more likely to seek healthcare from Walgreens, according to The Motley Fool. Yet, Walgreens' model still didn't increase profits. This may indicate health clinics need to take a lot more scale to be viable, such as the 1,500 clinics CVS Health plans to open. 

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