The market is moving as we predicted, and it feels good, especially if you’re a shareholder of Oak Street Health. In Predictions 2023: Healthcare, we predicted that retail health clinics will double their share of the primary care market. CVS’s announcement that it will acquire Medicare-focused primary care provider Oak Street Health is a move in that direction. This deal by the largest pharmacy and drugstore chain in the US places CVS among other retailers making similar moves: Walmart, Walgreens, and Amazon. We see the move to consolidate the market continuing.
With this latest acquisition, CVS is primed to outpace the competition by:
- Becoming an end-to-end healthcare provider. CVS is one step closer to becoming a holistic healthcare enterprise. Its diverse portfolio offers consumers health insurance (Aetna), urgent care (MinuteClinic), Rx delivery (CVS Caremark), home health services (Signify Health), and, now, preventive care through tech-enabled Oak Street Health.
- Pushing the pedal on value-based healthcare by targeting seniors. The growing elderly and chronically ill populations will push Medicare’s annual acute care costs to around $259.8 billion by 2030. Primary care is the only part of healthcare where increased supply is associated with better population health and more equitable outcomes. In the future of healthcare, value-based care will become the dominant reimbursement method. CVS is embracing this seismic shift with preemptive care, home-based services, the assumption of more downside risk, and increased cost transparency for its Medicare Advantage members.
- Stretching beyond primary care to tackle social isolation and enhance member benefits. Oak Street Health, by acting as a healthcare and community center in one, caters to the nearly one-fourth of seniors considered to be socially isolated. The company helps address common mental health problems by offering a place for seniors to socialize and enjoy healthy activities and events. Employing a whole-person approach will give CVS a suite of benefits and services that resonate with its Medicare Advantage members. With the acquisition of Oak Street Health, CVS hit the nail on the head.
- Improving healthcare access for underserved communities. Consumers choose a walk-in health clinic because it’s easy to get an appointment and it’s close to home. They also enjoy a level of transparency and ease when it comes to their experience — two things that traditional healthcare does not offer. Now, Oak Street Health gives CVS a chance to elevate the patient experience of its Medicare population.
In 2023, patients will choose retail health for their primary care needs. Retailers’ multiple store locations give them a leg up by offering immediate care options when, where, and how patients want and need them. CVS just moved a step closer to this reality and brought the market closer to our prediction.
If you want to learn more about retail health and the implications for traditional healthcare, schedule an inquiry with us. We would love to speak with you!