Retail health continues to redraw healthcare landscape with big moves from CVS, Walmart
Amazon isn’t the only big player trying to shake up the traditional healthcare landscape with innovative partnerships in retail health. Over Labor Day weekend, two other notable names in the industry launched new efforts to expand their reach in a rapidly changing, value-based marketplace.
First, CVS beat out a number of rumored competitors to buy Signify Health, a home health company specializing in data-driven health risk assessments. The $6 billion acquisition will bring a network of nearly 10,000 clinicians and 2.5 million patients into the CVS fold, allowing for enhanced engagement with individuals needing coordinated care.
The purchase makes sense for CVS, which completed its $69 billion acquisition of Aetna in 2018. With the nation’s third-largest insurer in hand, CVS has a strong financial incentive to increase visibility into rising risks and get upstream of the social determinants of health that often contribute to poor outcomes for the elderly and chronically ill.
Signify Health will also contribute its strong presence in the accountable care organization (ACO) environment, which it gained after buying Caravan Health in March. According to the CVS press release, Signify Health’s ACOs generated more than $138 million in gross savings in 2021. The Aetna side of the business will likely see benefits from absorbing a cadre of established, successful ACOs serving nearly 700,000 members.
Retail health building alliances, and advantages
Walmart, too, is securing allies for its ongoing march into value-based care. The superstore-turned-health-center has announced the launch of a 10-year partnership with UnitedHealth Group, starting with access to analytics insights and continuing with a co-branded Medicare Advantage plan designed to attract senior shoppers.
The partnership is not very surprising, considering UnitedHealth and CVS have been traveling parallel tracks as they scoop up partners to create vertically integrated mega-providers.
Both UnitedHealth and CVS now manage major health plans, robust pharmacy services, and advanced analytics capabilities – and now the two companies are adding home health to their portfolios. In March, UnitedHealth’s Optum division initiated the process of acquiring home health provider LHC Group for just under $5.5 billion, no doubt with similar patient-centered goals in mind.
UnitedHealth’s link with Walmart will bring advantages to both parties involved in the deal. For Walmart, the alliance is a smart move to keep up with CVS, a rival in pharmacy services and the growing retail health space. Walmart will gain breadth, scale, and an entry point into the valuable Medicare Advantage market without laying out billions on direct acquisitions.
Meanwhile, UnitedHealth gets access to the extensive brick-and-mortar presence that CVS already enjoys, as well as a dedicated pool of shoppers – many in rural areas – looking to simplify their healthcare experiences.
The machinations may be dizzying, but stakeholders in the traditional care environment will need to keep their heads when contemplating how to deal with increasingly powerful competitors able to lay out cash to scoop up any new service they need.
This type of consolidation is an ongoing trend across the industry, despite the fact that data consistently shows both vertical and horizontal consolidation drive up prices for consumers without necessarily improving outcomes for patients.
Combatting these effects on both costs and experiences will require smaller entities to make smart decisions about partnering with complementary services – much like the large players are doing, but on a more modest scale. Community-based organizations, mental and behavioral health providers, and technology solutions providers should be the initial targets of these efforts.
Providers should consider bulking up their digital infrastructure, including patient engagement technologies to simplify administrative interactions, remote care services to offer speedy access to clinical and mental healthcare, and provider-facing toolkits to reduce cognitive burdens and make it easier to develop meaningful, informed relationships with patients.
Shrewd repositioning will help independent practices and moderately sized health systems capitalize on the fact that many consumers still want high-quality, local, personalized care without having to align with a mega-corporation’s closed ecosystem.
The freedom of choice and the ability to shop for services based on price and quality remain extremely important to a large number of patients – as do the attention and empathy they receive from clinicians who know and understand their personal health journey.
As the big guys get even bigger, personalized care will become an important competitive differentiator for those on the other end of the spectrum. Eventually, the pendulum is likely to swing back against a constantly rotating series of one-and-done retail health care providers, particularly as an aging population seeks comfort and continuity in their care.
Finding the balance between digitally enabled convenience and human-centered experiences will be crucial for those that hope to survive in a world of giants, especially since the pace of massive mergers and acquisitions shows no signs of slowing down any time soon.
Jennifer Bresnick is a journalist and freelance content creator with a decade of experience in the health IT industry. Her work has focused on leveraging innovative technology tools to create value, improve health equity, and achieve the promises of the learning health system.