How Cigna’s VillageMD Investment Will Translate

Feb. 3, 2023
Chairman and CEO David Cordani talks to analysts about Evernorth’s partnership with the fast-growing clinic chain.

When VillageMD executives announced in November that they planned to buy Summit Health-CityMD to create a clinic venture spanning 26 markets and housing more than 4,000 providers, it was no surprise that Walgreens Boots Alliance Inc., Village MD’s majority shareholder, was backing the deal to the tune of $3.5 billion. What did raise an eyebrow or two was that Cigna Corp. also was committing $2.5 billion via its Evernorth division.

Cigna Chairman and CEO David Cordani has in the past said the Connecticut-based company is focused primarily on partnerships and not as interested in owning a large group of providers, as rival UnitedHealth Group Inc. has done with Optum. On a Feb. 3 conference call discussing Cigna’s fourth-quarter earnings, several analysts asked Cordani to explain how Evernorth’s Village investment fits into his broader plans. Here are some of his comments.

On how his thinking about owning providers has evolved:

As we've discussed before, there are parts of the healthcare delivery or service fulfillment equation that we seek to own and we're very clear relative to that. Examples include virtual, behavioral, specialty pharmaceutical fulfillment and select aspects of home care; we deem them to be unique, highly differentiated and an ability to leverage over multiple geographies in an efficient way.

Our notion of partnering continues through, we'll call it core value-based care, where today, about 75 percent of our MA customers have a value-based care relationship. About 50 percent of our exchange customers have a value-based care relationship. And about 40 percent of our commercial employer business has a value-based care relationship.

On piggy-backing on Village’s national growth plans:

We see it as an addressable market to bring additional services to help to extend their reach, their care coordination, curation of high-performing specialty networks and overall continuity of care, including digital aspects of the care equation. So the Village relationship, we see as an extension of partnering. We see [Village’s] payer-agnostic orientation […] as a positive because Evernorth serves a broad portfolio of clients, including most of the large health plans in America today in some way, shape or form. And we see the ability to grow collectively and collaboratively with Village as a positive.

On how Village and Cigna Healthcare will work together and how Evernorth might shape Village’s strategy:

That relationship […] is around helping to broaden the reach and then target with precision around subspecialty and then coordinate services in an even more precise way off of their already highly-performing value proposition. Now that will be a benefit to Cigna Healthcare but also other health plans and, broadly speaking, Village's patient panel over time.

Now, specific to Cigna Healthcare, this relationship presents the opportunity to design certain benefit alternatives or unique product alternatives in collaboration with Village because of our closer relationship. That will evolve over time and those conversations are manifesting themselves already. And the positive there is that that's building off of an already positive relationship.

On Evernorth bringing virtual health or PBM services to Village and opportunities to sell Village to self-funded Cigna ASO clients:

It's not to push a product. It's a work in partnership to avail additional capabilities off their already strong performing platforms to further improve affordability or clinical quality. So let's take an example: Take the opportunity to curate, in an individual market or submarket for larger markets, the highest-performing oncology providers for certain tumor types or certain diagnoses. Our longitudinal data sets enable that in a very differentiated way, [are] able to bring a bit more precision.

The net result of that is, therefore, for a Village patient, a higher probability of getting the best possible evidence-based care and coordinated care and therefore, best overall value. Village benefits from that. The patient obviously benefits from that. And what we've designed, the Evernorth enablement, benefits from that.

Point two is […] distribution. We could bring more access in volume flow through the high-performing opportunities that exist here. There's no doubt around that and we will seek to do so. And then third, […] we will absolutely help to enable these capabilities back […] to our large, well-performing portfolio of ASO clients by bringing yet even more precision of care coordination for their benefit.

But in this case, we have through the Evernorth services and through the collaboration with Village, the ability to be rewarded in addition to the value we would be creating for their benefit. So there's multiple building blocks here, which is why we're quite excited.

At the end of the day, […] it all comes down to how do we harness more data, how do we harness more clinical coordination to bring even greater clinical quality and overall affordability, one patient at a time with a platform that is performing well […] and then creating extenders and some care coordination that comes along with it. And through Evernorth, we have both the service mechanism and then the sharing mechanism built that will work in conjunction with Village.

Sponsored Recommendations

Elevating Clinical Performance and Financial Outcomes with Virtual Care Management

Transform healthcare delivery with Virtual Care Management (VCM) solutions, enabling proactive, continuous patient engagement to close care gaps, improve outcomes, and boost operational...

Examining AI Adoption + ROI in Healthcare Payments

Maximize healthcare payments with AI - today + tomorrow

Addressing Revenue Leakage in Hospitals

Learn how ReadySet Surgical helps hospitals stop the loss of earned money because of billing inefficiencies, processing and coding of surgical instruments. And helps reduce surgical...

Care Access Made Easy: A Guide to Digital Self Service

Embracing digital transformation in healthcare is crucial, and there is no one-size-fits-all strategy. Consider adopting a crawl, walk, run approach to digital projects, enabling...