CVS Health yesterday said that it will acquire Oak Street Health for about $10.6 billion, and move that, the Wall Street Journal writes, "would widen CVS’s healthcare offerings, adding about 600 physicians and nurse practitioners and Oak Street’s network of 169 senior-focused clinics to the Covid-19 vaccinations, strep tests and other medical services that CVS provides through its pharmacies.
"It would also further the consolidation of firms that manage health benefits, pay for medical care and provide the treatment."
More from the Journal analysis:
"CVS has used acquisitions to become one of the biggest healthcare companies in the U.S. In addition to its roughly 10,000 pharmacies, CVS, based in Woonsocket, R.I., is the parent of large health-insurer Aetna and CVS Caremark, one of the biggest managers of drug benefits in the U.S.
"Last fall, it announced a deal to acquire home-care provider Signify Health Inc. for about $8 billion.
"CVS Chief Executive Karen Lynch has said adding primary-care doctors was a company priority. Acquiring physicians would help it to more closely manage and guide the care of patients, as well as bring down costs, she said. CVS also wants to push further into forms of healthcare payment that are supposed to reward value, rather than reimbursing for every service."
The Journal story notes that "CVS executives, demonstrating in a call with analysts how the units would work together to expand the business, said a home-care patient could receive a checkup from a Signify doctor, who determines that person needs more care and then direct them either to an Oak Street practice or to a CVS in-store clinic.
"Under the setup, the executives said, patients would also have options to go to other, non-CVS clinics, while CVS services, doctors and others would be available to patients using insurers other than CVS’s Aetna … Chicago-based Oak Street focuses on taking care of Medicare patients. Its acquisition would enable CVS to tie treatment of the patients with the company’s Medicare Advantage plans, though Oak Street would continue to work with other insurers as well."
- KC's View:
The coverage makes the point that CVS wants to grow the Oak Street footprint, maybe adding as many as 40 clinics a year yo get to 300 by 2026. This isn't just about meeting internal; goals for ROI on the investment, but also about keeping pace with the likes of Walgreens and Walmart, each of which have similar aspirations for a health care presence.
But I remain skeptical, largely because the CVS stores I visit and sometimes patronize seem like they would be perfectly at home in the late 20th century, not in the second third of the 21st century. And recent experiences suggest to me that - at least partly owing to staffing shortages - the customer service is getting slower and sloppier. For me, CVS has become the third option for prescription fulfillment … I only want to go there if I need to. Trusting CVS for any level of healthcare strikes me as a long reach.