The bidding war for Signify Health concluded on Monday with CVS emerging as the victor. In a field of keen competition, the drugstore titan outbid Amazon and United Health Group to buy Signify Health in an approximately $8 billion deal, cementing its foothold in the home care market. The acquisition comes on the heels of Walgreens’ announcement that it completed a $330 million majority stake investment in the post-acute and home care company, CareCentrix. The message is ubiquitous: Retail companies want a piece of the home care market’s $320.6 billion pie. A move to home care beckons retail to push the throttle on health equity and value-based care. But first, retail will need to win patient loyalty and trust.

Home Care Is Retail’s Pot Of Gold At The End Of The Rainbow

The headlines are hardly unfamiliar as staffing shortages, supply chain hang-ups, and preventable hospital visits plague the healthcare industry and contribute to the $4.1 trillion annual healthcare spend. These persistent and pervasive challenges are exacerbated by an aging population and unmet primary care needs. Primary care in the US is broken. It is a crippled ecosystem that fails to act as a prophylaxis for chronic disease, address nonsevere health issues in a timely manner, and treat patients holistically. Today, 27% of Americans wait more than a month to see a healthcare specialist, and barriers to accessing care within hospital walls prevent many Americans from receiving care when urgent. Home care can break down hurdles to care and help lift the burden on the system, and major retail titans like Amazon, CVS, and Walgreens are eager to be part of this solution. They won’t, however, be able to tackle these obstacles alone. A major focus for health insurers, according to their Q2 earnings calls this year, is expanding into home care and building out home care offerings, and traditional healthcare providers are throwing their hat into the mix as well by adopting acute home care models.

Plans For Signify And CareCentrix Signal Retail Health’s Top Initiatives

The planned acquisition of Signify Health by CVS and an investment in CareCentrix by Walgreens highlight two retail companies looking to stake their claim in healthcare and move away from their retail roots. For CVS, Signify offers analytics and technology to help a network of 10,000 doctors provide in-home health care to an estimated 2.5 million patients across the US, which is particularly attractive to CVS as it looks to expand its growth in value-based care. Similarly, CareCentrix provides home-based care in addition to connecting patients to providers and sites of post-discharge care, which Walgreens finds valuable in addressing the needs of patients with complex and chronic conditions who are transitioning out of the hospital. CareCentrix currently manages 19 million members through roughly 7,400 provider locations. A closer look at both companies indicates a glaring trend. Retail companies are strategically investing in home care with an aim to:

  • Drive down the annual healthcare spend through expansion of value-based care. CVS and Walgreens are executing a preemptive strategy in support of the industry’s shift into value-based care. Leveraging technology and data, CVS and Walgreens are driving proactive, preventive care that helps patients take a larger role in their healthcare and outcomes, driving down avoidable hospital visits and eventually lowering the overall cost to the healthcare system. CareCentrix’s technology capabilities enable highly personalized care plans to help people transition to the right site of care, prioritizing care in the home. This approach supports both quality and value of care by reducing hospital readmissions and improving patient satisfaction and outcomes. Signify’s home care model provides direct access for clinicians to care for patients in the home, where they want it most. This direct access could also help reduce patients’ long-term healthcare costs by making it easier for clinicians to intervene early or help manage chronic conditions.
  • Improve health equity by providing more accessible care to the elderly and chronically ill populations. Starting in 2030, the elderly will comprise 21% of the population. The US Census Bureau projects that by 2060, nearly one in four US citizens will be 65 years and older, the number of 85-plus citizens will triple, and the country will add half a million centenarians. Retail clinics struggle to attract the most populous segment of nonconsumers: those of lower socioeconomic status who have a greater reliance on emergency department for all levels of their medical care. Many elderly and chronically ill patients cannot physically make it to an in-person care site. Home care removes traditional barriers to care like travel. In their respective moves, CVS and Walgreens are equipping their enterprise with the right tools and expertise to stretch beyond physical retail clinics and provide care to populations that may not be able to utilize all of their services.
  • Use data and data analytics to bridge the gap between diagnosis and treatment. Today’s patient journeys are fragmented and data is siloed. Handoffs between different providers and non-interoperable technology systems lead to friction-filled patient experiences, medical errors, and delays in care. On average, Americans see 18.7 different providers in their lifetime — 28.4 if they are over 65. The key to reinventing healthcare is interoperable data and using patient data to understand patient journeys and deliver information and resources in the moment of need. CareCentrix and Signify specialize in data analytics. Signify uses technology and analytics to coordinate follow-up care and social services, and CareCentrix connects patients to appropriate providers and sites of care post-discharge, utilizing a predictive analytics platform, HomeFirst Analytics. Both companies use data analytics to streamline the transition between diagnosis and treatment. After the clinician gives their diagnosis, CVS and Walgreens can leverage their respective retail pharmacies and acquired home care capabilities to seamlessly coordinate care.

CVS and Walgreens are preparing to reinvent the patient experience and drive down healthcare costs, but time will tell if they are able to secure patient loyalty and bring these lofty goals to fruition. Undoubtedly, we will see other healthcare ecosystem players follow in their footsteps — and do so in earnest, to remain competitive. Forrester’s healthcare team will be assessing this evolving market dynamic with two upcoming reports on acute home care. Schedule a call with us to dive deeper into retail health disruption, the expansion of home care, and what it means for your organization.

Senior Analyst Shannon Germain contributed to this blog.