Lupin 2023

CVS takes another step to revamp health care

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CVS Health’s long anticipated push into primary care represents yet another milestone for the company, which in little more than three decades has transformed itself from a regional drug chain into one of the nation’s leading multifaceted health care providers, as well as a potential turning point in the way many patients access treatment.

The pending acquisition of Oak Street Health, for some $10.6 billion, will give CVS Health a solid foothold in the value-based primary care sector. With a network of 169 medical centers in 21 states, staffed by 600 primary care providers, Oak Street Health focuses on addressing the health care needs of adults covered by Medicare. Its multi­player model is facilitated by Canopy, a proprietary technology platform that helps determine the type and level of care that each patient requires.

CVS Health president and chief executive officer Karen Lynch is bullish about the scalability of the Oak Street Health model and its effectiveness in helping alleviate disparities in care. “As part of CVS Health, we believe Oak Street’s value-based care model will have a far greater impact on patients,” she said during a recent conference call with financial analysts. “Our unparalleled consumer touchpoints will expand Oak Street’s reach and will allow them to engage with more consumers, more frequently and more ­conveniently.”

For his part, Oak Street Health cofounder and CEO Mike Pykosz, who will remain in that role following the merger, cited the possibilities that the combination of the two companies will open up: “By joining CVS Health’s ecosystem, we will accelerate our journey to improve patient outcomes and experiences while allowing us to continue to both invest in our innovative care model and invest in what we believe is the best human health care. The expansive consumer touchpoints of CVS Health, virtually and in the community, including the trusted CVS pharmacists, will broaden and deepen our connections with the patients under our care.”

In keeping with the strategy that Lynch outlined at CVS Health’s investor day in December 2021, the company continues to rapidly expand its formidable array of resources, which include the eponymous pharmacy chain, MinuteClinic, the Caremark PBM and Aetna health insurance. Last September, the company agreed to pay $8 billion for Signify Health, which specializes in health risk assessments, value-based care and provider enablement. The acquisition will bring CVS Health a network of more than 10,000 clinicians across all 50 states, a nationwide value-based provider network, and proprietary analytics and technology platforms.

The Signify Health model leverages a network of clinicians physicians, nurse practitioners and physician assistants for home-based visits (some 2.5 million, both face to face and virtually, in 2022) to identify a patient’s clinical and social needs. It then connects them to appropriate follow-up care and community-based resources.

“Their clinicians and providers will have a great impact on our ecosystem, because our people will be in the home and they’ll help individuals with continuity of care,” Lynch said earlier this year. “It’s not just about doing risk assessments.

“You have the opportunity to open the refrigerator to see if the patient is eating properly and consider other factors related to health in the home environment, and determine if they need follow-up care. The people at Signify can make sure that those patients get their return to care in the appropriate setting.”

She added that CVS Health will respond as more consumers become comfortable with receiving health care services at home. Together Signify Health and CVS Pharmacy, which operates more than 9,000 drug stores across the country, will make accessing care “very convenient for patients.”

The suite of assets that Lynch and her team are assembling promises to give CVS Health the tools it needs to develop a compelling vertically integrated, valued-based delivery model. The multichannel, multiplayer paradigm that the company envisions is intended to assist consumers across the continuum of care, buttress patient engagement and, ultimately, improve outcomes and lower overall health care costs.

The concept of a comprehensive ecosystem that CVS Health and others are pursing goes against the grain of health care delivery in the U.S. As currently constituted, the system has proven costly and inefficient. While wealthy Americans do receive the best care in the world, the nation as a whole gets substandard results for its $4 trillion-a-year investment in health care.

The evident problems with the existing model haven’t stopped calls for the government to block CVS Health’s move into primary care. Even before the Oak Street Health deal was announced, the nonprofit American Economic Liberties Project said that the Federal Trade Commission should bar the acquisition. It also opposes the company’s purchase of Signify Health.

The hope here is that critics will fail to convince the FTC to take action prematurely. The health care system is broken, and a strong argument can be made that one way to fix it is by taking a more holistic view of the patient and better coordinating care. CVS Health and a handful of other companies in the private sector are attempting to do just that. Regulators should not choke off innovation before those concepts are put into practice and tested in the real world.

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