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Cigna (CI) to Gain From Integrated Benefits & Lower Costs

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Cigna Corporation (CI - Free Report) remains well-poised to benefit from providing medical, pharmacy and behavioral offerings merged into an integrated platform. The healthcare provider has been striving hard to offer integrated benefits for over 30 years, which has not only resulted in improved health outcomes for Cigna’s clients but also has reduced healthcare costs to certain extent.

The COVID-19 pandemic has resulted in severe health woes globally, and the United States has been no exception to this trend. The pandemic necessitated the need for medical services at lower costs for people who were already grappling with other COVID-induced financial insecurities. Cigna’s efforts to reduce healthcare costs through integrated benefit offerings seem to be time opportune as the nation has been has been resorting to substantial healthcare spending for quite some time now. It is further substantiated by Centers for Medicare & Medicaid Services’ (CMS) forecast of national health spending rising at 5.4% average annual rate over the 2019-2028 period.

While most employers offering coverage to Cigna’s customers prefer integrated benefits, the company’s holistic approach with due consideration of customer behaviors, preferences, conditions and medications helps it to take care of both physical and mental wellness of their customers. It keeps on collaborating with established healthcare providers, hospitals, and health systems for bolstering its treatment network. The company has been resorting to telehealth services for providing the much-needed services.

Other healthcare providers, namely Teladoc Health Inc. (TDOC - Free Report) , Magellan Health, Inc. (MGLN - Free Report) and Humana Inc. (HUM - Free Report) have also developed telehealth services.

Coming back, Cigna boasts of a strong pharmacy network, wherein its Medicare plans have access to around 64,000 network pharmacies spread across the United States. In fact, Express Scripts merged with Cigna in 2018, which improved the latter’s home delivery pharmacy services with the addition of Express Scripts Pharmacy — the nation’s leading home delivery pharmacies. Apart from home deliveries, the company has also been providing 90-day prescription refills in a bid to minimize pharmacy visits.

With focus on meeting growing need for resolving mental health issues triggered by the pandemic, Cigna has been inclining toward rolling out enhanced behavioral benefit offerings. Case in point, the company introduced Talkspace to its behavioral provider network in May 2020.

Notably, shares of Cigna have gained 23.6% in the past six months compared with the industry’s rally of 17.4%. Notably, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The significance of integrated benefits over standalone medical and pharmacy coverage has been further substantiated by a recent study conducted by Cigna among its clients. Per the study, these offerings not only reduce costs but also promote higher customer engagement. With access to integrated benefits, the same study reflects annual average savings of $227 per Cigna customer and the same increase to $4,741 for each customer with improved health outcomes. The recent study states that the company’s integrated customers also show increased concerns about their health conditions, which results in lesser emergency room visits for them.

As a matter of fact, the company’s intensified focus on growing its healthcare portfolio through a plethora of measures and divesting non-core businesses is likely to position Cigna well for long-term growth.

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