In competition for the loyalty and wallets of consumers, mega-retailers Amazon, CVS Health and others have been rapidly expanding their health care portfolios lately. Much of the companies’ focus has been on advancing their primary care reach and in-home care services while bulking up their physician networks.
The recent news that CVS Health plans to bid for Signify Health, a value-based care analytics company that helps payers, employers and providers with in-home care, is the latest case in point. If successful, the deal would help CVS Health fulfill its growth strategy as a provider.
Nevertheless, there’s a long way to go given that multiple suitors have their eye on Signify Health. But even if CVS Health doesn’t end up with Signify Health, the company made clear in a recent earnings call that it will pursue deals that meet its strategic goals in primary care and home health.
4 Ways a Signify Health Acquisition Could Help CVS
1 | Deliver a more robust provider network.
After acquiring the accountable care organization Caravan Health in February, Signify Health’s network now includes 200-plus health systems, 100 Federally Qualified Health Centers and more than 10,000 primary care practices, according to an Insider Intelligence report. With the Caravan Health acquisition, Signify Health says it now supports about $10 billion in medical spending.
2 | Provide a centerpiece for CVS’ primary care strategy.
Unlike Walmart, which primarily hires nurses to staff its retail clinics, CVS wants its new primary care clinics to be mainly physician-led. CVS Health’s primary care strategy is similar to that of Walgreens, which bought retail clinic partner VillageMD for $5.2 billion to locate clinics adjacent to its retail pharmacy stores.
3 | Expand in-home health services.
Signify Health provides more than 1.9 million in-home health assessments per year and connects with patients via short message services, email and telephone reminders between visits. In July, the company said it would be leaving the Centers for Medicare & Medicaid Services’ Bundled Payments for Care Improvement Advanced Model to focus on its home and community services segment — aligning with CVS Health’s aims.
4 | Connect with underserved consumers.
With roughly 9,900 stores throughout the U.S. and Puerto Rico, including those located in underserved areas, CVS has a significant opportunity to provide primary care in those communities.
Convenient Access to Care Will Be King
The fact that the CVS Health news comes just weeks after Amazon said it will buy the primary care organization One Medical for nearly $4 billion is significant. Competition is heating up among new providers to transform delivery, with consumer-centric, tech-supported efforts to make every step in the patient experience more convenient.
Some see Amazon’s One Medical purchase as a precursor to an eventual health care service subscription offering. “Whether Amazon directly adds health care to Prime or has an additional fee, or whether they work with employers to somehow weave in benefits for Prime subscribers, it seems inevitable that Amazon will leverage the subscription model,” notes Dan Clarin, managing director of Kaufman Hall’s strategic and financial planning practice, in a recent roundtable discussion among the consulting firm’s leaders.
CVS, meanwhile, is working with telehealth company Amwell to roll out the retailer’s new virtual primary care service. The platform will give consumers and eligible Aetna and CVS Caremark members access to primary care, on-demand care, chronic-condition management and mental health services.
Finally, CVS and Amazon see their roles as more than disrupting or transforming care delivery. They are out to change traditional health insurance — Amazon through its Amazon Care program and CVS through its Aetna subsidiary. What might the landscape look like going forward?
The business model for Optum, VillageMD, CVS, ChenMed and now Amazon Care and One Medical is a network-restriction play, the Kaufman Hall team notes. Matthew Bates, managing director of enterprise service line lead, adds, “The entire business model of each of these companies is to route patients to the optimal place to get care and get as many expensive ancillary services as possible out of the mix. The business model of traditional fee-for-service health care is to feed the beast. The business model of the disruptors, especially those contracting directly with employers, is to starve the beast.”
“Watchful waiting is really important because only Amazon knows what’s going to happen now. What we are all watching and concerned about is what impact this could have on the way health care is delivered in the United States,” says Ken Kaufman, managing director and chair of Kaufman Hall.