Shortly after announcing its $8 billion purchase last week of home health care provider Signify Health, CVS Health CEO Karen Lynch proclaimed that the house call is undergoing a “renaissance.” That’s a huge bet on the revival of a care delivery model that not long ago many considered a relic.
But with technology changes and the growing flexibility of physicians and nurses to care for aging patients where they are most comfortable, CVS Health saw opportunity. And in the process, the retailer significantly expanded its care delivery reach.
4 Ways the Signify Health Purchase Expands CVS’ Reach
1 | More Physicians to Coordinate Care
With the Signify purchase, CVS Health will add 10,000 physicians and other clinicians to serve all 50 states. That’s in addition to the estimated 40,000 physicians and nurses CVS already employs through its 1,100 MinuteClinic locations and soon to be 1,500 HealthHUBs. This gives the pharmacy chain the ability to coordinate outpatient care for millions of Americans and fits with its vision to have physician-led health services.
2 | A Platform to Advance Value-Based Care
The purchase fits with CVS’ commitment to reduce care costs for insurers like Aetna, which CVS owns, and includes Signify Health’s Caravan subsidiary, which helps health systems and clinicians operate successfully in value-based care arrangements. Caravan states that it has helped its accountable care organization clients save more than $510 million since 2014.
3 | An Entrance to the Health Risk-Assessment Market
Suddenly, CVS Health becomes significantly more competitive with Medicare Advantage carriers UnitedHealth Group and Humana, which already have established strong footholds in the health risk-assessment market.
4 | A Deeper and More Direct Connection to Patients
Signify Health plans to be in 2.5 million homes this year and CVS Health will reap benefits by having more direct contact with consumers beyond routine care provided at its retail outlets.
‘What’s Next for CVS Health?’
With the ink barely dry on the Signify Health purchase agreement, many already are asking, “What’s next for CVS Health?” After all, the company had planned on making a major primary care merger or acquisition. That still appears to be on the table, although how soon such a move might occur is anyone’s guess.
The Signify deal also is important for other key outside players trying to transform health care. Amazon and UnitedHealth had also been pursuing the home health care company and now must turn their attention to other expansionary options.
Amazon is still in the process of completing its planned $3.9 billion purchase of One Medical and its chain of primary care centers around the country. That deal could be delayed after the Federal Trade Commission (FTC) began investigating the purchase. The FTC has requested more information from both Amazon and One Medical’s parent, 1Life Healthcare Inc.
It will be interesting to see what Amazon plans next in its efforts to reshape primary care after its recent closing of Amazon Care.
And while CVS Health has been short on specifics about how it plans to expand its primary care offerings, the company made clear last week that it is by no means giving up on this ambition. Shawn Guertin, chief financial officer, said investors shouldn’t read too deeply into its decision to pursue a home health care company rather than a primary care service provider. He said the company’s primary objective is to find the right asset, with the right scale, the right technology and the right team.