The settlement is being paid to resolve allegations that Oak Street violated the False Claims Act, specifically by paying kickbacks to third-party insurance agents. The DOJ alleged that Oak Street paid kickbacks to those agents in exchange for the recruitment of seniors to its primary care clinics.

The violations occurred from September 2020 to December 2022, through Oak Street’s “Client Awareness Program,” which involved those insurance agents, who then urged seniors eligible for Medicare Advantage (MA) to consider Oak Street services. 

“Agents then referred interested seniors to an Oak Street Health employee via a three-way phone call, otherwise known as a ‘warm transfer,’ and/or an electronic submission,” the DOJ said. “In exchange, Oak Street Health paid agents typically $200 per beneficiary referred or recommended. These payments incentivized agents to base their referrals and recommendations on the financial motivations of Oak Street Health rather than the best interests of seniors.”

The settlement acknowledges that Oak Street knowingly provided kickbacks to these insurance agents during the above time period.

As part of the overall settlement, the whistleblower will receive $9.9 million.

“Health care providers that attempt to profit from kickbacks will be held accountable,” Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, said in a statement. “We are committed to rooting out illegal practices committed by Medicare Advantage providers, insurance agents and brokers that undermine the interests of federal health care programs and the patients they serve.”

Oak Street Health is a senior-focused primary care provider. CVS Health purchased the company for more than $10 billion in 2023. Like its peer Walgreens Boots Alliance (Nasdaq: WBA), CVS has built out a significant health care services arm as part of a company evolution. In addition to Oak Street – which does provide some care in the home – CVS Health has the home-focused, value-based care platform Signify Health under its belt. It also owns Aetna.

CVS acquired Signify Health for $8 billion, around the same time it acquired Oak Street.

Oak Street’s violations came before it was officially a part of CVS.

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Thanks to impactful, large-scale transactions over the last decade, the collective face of home-based care has changed forever.

Traditional providers in both home health care and personal home care have merged. Payers became involved in the home-based care space like never before. Of late, retailers have too.

But it’s often easy to forget how the current landscape became what it is.

Below, Home Health Care News takes a look at some of the most important and impactful deals in home-based care over the last decade – deals that explain, in part, where the home health and home care industries are today.

‘Big time’ provider deals

This past decade’s first blockbuster remained one of the most impactful throughout the last 10 years.

In 2014, April Anthony’s Encompass Home Health & Hospice was acquired by HealthSouth Corporation for $750 million. HealthSouth took a swing at home health and hospice, merging an in-patient facility business with a post-acute care business.

Four years later, HealthSouth would rebrand completely, taking on the home health and hospice entity’s name. Encompass Health Corp. (NYSE: EHC) still exists today, but is again without post-acute care capabilities.

The HealthSouth-Encompass deal is like a few other deals in home health care, in that it set off a domino effect and a winding life cycle of a home health entity.

Anthony left Encompass Health in 2021, and after her home health and hospice company operated as a segment within the larger organization for nearly a decade, Encompass Home Health & Hospice was spun off into its own public company: Enhabit Inc. (NYSE: EHAB).

That happened in 2022, and two years later, Enhabit may land in the hands of a different owner after it concludes its own strategic review. Anthony now runs VitalCaring, which is backed by her, The Vistria Group and Nautic Partners.

Over the decade, larger health care organizations like Encompass Health have also bundled up services, and also unbundled them.

For instance, Brookdale Senior Living (NYSE: BKD) had one of the largest home health footprints for a long time. After COVID-19 woes, however, it offloaded that to a health system eager to get into home health care: HCA Healthcare (NYSE: HCA). LHC Group would later acquire some of the assets jointly owned by Brookdale and HCA Healthcare.

Ascension Health, too, teamed up with TowerBrook to buy the home health and hospice provider Compassus in 2019.

A theme that has been a mainstay, and will likely remain a mainstay, is health systems changing course on their strategic planning – and deciding whether to own home health care themselves or focus on core operations and partner with home health care instead.

“You’re seeing a lot of these facility-based providers divesting or spinning off assets,” Chaz Bauer, director at Fifth Third Securities, told Home Health Care News. “They realize they have fundamentally two different businesses. They’re very related and intertwined. But fundamentally, you have these facility-based businesses that are very centralized models, very capital intensive. Whereas home-based care businesses, they’re very decentralized; they’re very capital-light. Part of the motivation there – in unbundling – is they can unlock value for their shareholders by splitting those businesses.”

But then there’s the M&A that has come from within the home health sector itself.

For instance, “the merger of equals” that turned LHC Group into a true home-based care powerhouse.

In late 2017, LHC Group agreed to merge with Almost Family in a $2.4 billion transaction. A straight line can be drawn from that deal to UnitedHealth Group’s (NYSE: UNH) acquisition of LHC Group, which was finalized in 2023.

LHC Group and Almost Family’s merger is not an anomaly, either. Not long after, Great Lakes Caring, National Home Health Care and Jordan Health Services combined in a three-way merger to create another one of the largest home health companies in the U.S.: Elara Caring.

That deal was powered by the PE firms Blue Wolf Capital Partners and Kelso & Company.

PE money in home-based care has turned a lot of sizable providers into powerhouses. The aforementioned PE firms – Blue Wolf, Kelso, Vistria and Nautic – have all played a part in that, in the transactions mentioned already and otherwise.

That will also continue, particularly as some of the holding periods of the largest companies turn over. There’s also a chance, however, that PE firms direct more attention to other parts of home-based care – like personal care – given the uncertainty surrounding home health payment rates.

In home care, Vistria and Centerbridge Partners uplifted Help at Home, turning it into one of the largest providers of home- and community-based services (HCBS) in the country.

Waud Capital recently acquired the large home care franchise Senior Helpers. Wellspring Capital Management acquired Interim HealthCare’s parent company Caring Brands International in 2021. Last September, The Halifax Group acquired Comfort Keepers from Sodexo.

PE has always been involved in home care. Bain Capital’s 2018 creation of Arosa, one of the largest non-franchised home care companies in the country, is one past example.

In the future, it’ll be interesting to see if PE will drive more large-scale, impactful deals like it has in home health care over the last decade.

Payers enter the fold

Any commentary on the biggest deals in home-based care over the last decade needs to note increased payer involvement.

Enter Humana Inc. (NYSE: HUM).

When people think of the company’s home-based care investments, most go straight to its takeover of Kindred at Home.

But let’s take a step out of the last decade, just for a second.

In 2011, Humana acquired the home-based care provider SeniorBridge, which was doing just $72 million in annual revenue at the time. When that deal was announced, it was not exactly frontpage news. But one could argue that kickstarted a chain of investments that changed the M&A landscape in home-based care forever.

“SeniorBridge fills a growing market need and is consistent with Humana’s focus on delivering clinical care for seniors in their homes,” Michael B. McCallister, Humana’s chairman and CEO at the time, said in a statement. “Acquiring SeniorBridge will immediately expand Humana’s existing clinical capabilities with the addition of SeniorBridge’s national network of 1,500 care managers. The company does a terrific job of reducing hospital readmissions and emergency-room utilization, all while helping seniors achieve lifelong well-being.”

Humana’s home-based care thesis was already there, but the SeniorBridge deal was likely the deal that set the stage for what eventually became CenterWell.

“The deal was a game changer. I was initially surprised by the size of the transaction. It was pretty small by Humana standards,” Mertz Taggart Managing Partner Cory Mertz told HHCN. “It didn’t take long for Humana to tout the savings SeniorBridge created for their membership, saving it billions of dollars within the first couple years of the deal, by keeping their members at home and out of the hospital.”

Nearly 13 years later, Humana is one of the largest home health providers in the country through CenterWell Home Health.

The company, with the help of the PE firms TPG Capital and Welsh, Carson, Anderson & Stowe (WCAS), acquired and merged Kindred at Home and Curo Health Services. Yet another home health and hospice powerhouse was formed, this time under the watch of one of the largest payers in the country.

In 2021, Humana opted to take over a remaining 60% of the enterprise (it had previously owned 40%), which was worth over $8 billion at the time.

In 2022, it divested the hospice and home care operations of Kindred to Clayton, Dubilier & Rice (CD&R). Those divested assets became what is now known as Gentiva, led by David Causby, the former CEO of Kindred at Home.

The home health assets Humana held onto are now under CenterWell Home Health. CenterWell, overall, includes primary care, pharmacy and home health services.

In 2024, most large payers – namely the ones with large MA memberships – have some sort of home-based care capabilities. That was not the case when Humana acquired SeniorBridge way back when.

“This has been an ongoing development, and it’s really just vertical integration,” Bauer said. “The thought is: why not get into that downstream, and then be able to more directly control those costs and quality outcomes on the payer side?”

The other heavily involved payer is the only one that has a leg up on Humana in MA: UnitedHealth Group.

UnitedHealth Group’s Optum already had a variety of health care provider assets, but it decided to make its first big home-based care splash early in 2022 when it announced the $5.4 billion acquisition of LHC Group.

While payers liked the thought of vertical integration, large providers like LHC Group were also recognizing an existential threat to home health business: MA penetration. More MA beneficiaries meant fewer traditional Medicare beneficiaries, which meant a less sturdy financial leg to stand on.

UnitedHealth Group further cemented its interest not long after, when it made a $3.3 billion all-cash offer for Amedisys. That deal was agreed to in June of 2023, but is still pending.

Though UnitedHealth Group may have to divest some Amedisys assets to finalize the deal, the company will most likely have the largest home health market share when that deal closes. Estimates suggest Optum will have about 10% of the U.S. home health market under its belt.

Not only are payers now involved in the home health industry, but they are also creating scale.

“You can make an argument that Optum acquiring LHC group, and now Amedisys, is a scale transaction, like ones we’ve seen before,” Bauer said. “Because it puts together two of the largest providers to make an industry leader.”

New kids on the block

Like payers before them, another group of companies is now firmly involved in home-based care investment: retailers.

In fact, they’re so invested, they may not be labeled as just retailers five to 10 years from now.

CVS Health (NYSE: CVS) has a new health care services segment dubbed CVS Healthspire. Walgreens Boots Alliance (Nasdaq: WBA) has the same with its U.S. Healthcare segment.

Both of those segments are arguably the future of their respective parent organizations. And both include home-based care services.

Payers and retailers have different business models, but tend to want the same thing: pharmacy, primary care and home-based care services.

In 2020, Walgreens made an over $1 billion investment in VillageMD, a home- and community-focused primary care provider. After subsequent investments, it has backed VillageMD with over $6 billion.

After that, Walgreens found its next health care services asset in the health-at-home solutions platform CareCentrix. Though he is no longer in the position, CareCentrix’s former CEO, John Driscoll, was the initial leader of Walgreens new U.S. Healthcare segment.

“We continue to see strong results and potential for growth from our partnership with CareCentrix. Our full acquisition further accelerates our transformation to become a consumer-centric health care company, leveraging innovative platforms that extend our capabilities into fast-growing segments of health care,” former Walgreens CEO Roz Brewer said at the time. “CareCentrix is key to offering services to our patients at every stage of the care continuum, and to driving long-term, sustainable growth as part of our U.S. Healthcare strategy.”

Not to be outdone, CVS Health agreed to acquire the home- and value-based care enabler Signify Health in 2022 for $8 billion. Shortly after that, it got its primary care provider, too, with the over $10 billion acquisition of Oak Street Health.

While none of these assets are traditional home health or home care assets, this retailer involvement represents a seismic change in U.S. health care – and home-based care is a major part of it.

These companies could go after more assets in the future, or they could become major partners for those traditional providers.

Honorable mentions

It’s impossible to highlight every deal, but there are some that don’t fit perfectly into “themes” that are still worth mentioning.

The home care technology company Honor acquired the home care franchise brand Home Instead in 2021, for instance. In lieu of strictly partnering with providers to see its vision through, Honor opted to purchase Home Instead to speed up the process. The jury is still out on that deal, however.

Prior to agreeing to become a part of Optum, Amedisys also made plenty of deals that turned it into a multi-billion-dollar business.

It acquired the hospital-at-home platform Contessa Health in 2021 for $250 million.

It acquired Compassionate Care for $340 million in 2018, and AseraCare Hospice in 2020 for $235 million. Those two deals significantly bolstered its hospice arm.

Modivcare (Nasdaq: MODV) entered into the personal care game in a real way with its $575 million acquisition of Simplura Health Group in 2020 and its $340 million deal for CareFinders Total Care in 2021.

BrightSpring and PhaMerica completed a merger in 2019 that eventually led to today’s BrightSpring Health Services (Nasdaq: BTSG), which is now a public home-based care company.

Finally, Aveanna (Nasdaq: AVAH) – formerly a pediatric provider – entered into the home-based senior care world with its $345 million acquisition of Comfort Care Home Health in 2021 and its acquisition of Accredited Home Care for about $200 million later that year.

Addus Homecare Corporation (Nasdaq: ADUS) has executed several high-profile transactions of its own, most recently acquiring Tennessee Quality Care in a $106 million deal.

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Home-based care providers avoiding the shift to value-based care are running out of time and excuses.

The Centers for Medicare & Medicaid Services (CMS) wants 100% of traditional Medicare beneficiaries and the “vast majority of Medicaid beneficiaries” in accountable care relationships by 2030.

Home health providers are already under the Home Health Value-Based Purchasing (HHVBP) Model, which is, by definition, a value-based care model.

Plus, the share of Medicare Advantage (MA) beneficiaries is increasing, while the share of traditional Medicare beneficiaries is declining. MA plans pay less for home-based care services, and value-based arrangements may be the best way for providers to achieve healthy financial relationships with those plans.

Even if providers are not capable of moving fully toward value-based care on their own, there are plenty of partners that can help them get there. They’re not just health plans.

There are value-based payment enablers, risk-bearing delivery organizations and hybrids of the two that can be leveraged by providers.

Healthcare Management Administrators (HMA) recently released a 70-page report on the current value-based care landscape. CMS also recently unveiled a value-based care spotlight webpage to aid providers.

This week’s exclusive, members-only HHCN+ Update pulls from those new resources, as well as recent conversations with home-based care leaders, to paint a picture of what value-based care currently looks like from a home-based care provider perspective.

Value-based care entities

When regulators point toward and acknowledge a trend they’ll be following over the next decade, the private sector generally listens closely.

As value-based care has gone from a pie-in-the-sky term with no real meaning behind it to something legitimate, more opportunities have arisen for providers interested in moving further toward value.

“At the start of the movement, value-based arrangements primarily involved traditional providers and payers engaging in relatively straight-forward and limited contractual arrangements,” HMA’s report read. “In recent years, the industry has expanded organically to include a broader ecosystem of risk-bearing care delivery organizations and provider enablement entities with capabilities and business models aligned with the functions and aims of accountable care.”

It’s worth noting that most home health providers have been making shifts toward value, particularly after the implementation of the Patient-Driven Grouping Model (PDGM), which de-incentivizes volume.

But it’s also worth noting that providers were entrenched in the fee-for-volume cycle for a long time. Whether they would admit it or not, undoing those habits is an ongoing chore.

Luckily, they don’t have to do it all on their own.

HMA identified three different types of entities worth paying attention to in the current value-based care landscape, for instance:

– Value-based payment enablers: “Entities that partner with providers to help them in the transition to value; share responsibility for the cost and quality outcomes; does not own provider asset.”

One example given by HMA here was Caravan Health, which was acquired by Signify Health in 2022. Signify Health is an at-home care solutions enabler owned by CVS Health (NYSE: CVS). It is not a traditional home health provider itself, but does partner with home health providers.

“We talked a lot through this journey about home health,” CVS Health CFO Shawn Guertin said after the Signify acquisition, also in 2022. “And the value-based care capabilities that this brings us is where a lot of the power is, I think, for the long haul. I’m very excited about the opportunity that Caravan could provide us for the future.”

– Risk-bearing delivery organizations: “Entities designed to deliver value-based care from the outset and assume accountability for the cost and quality outcomes of patient populations.”

Oak Street Health, which is now also owned by CVS Health, is one of these risk-bearing delivery organizations. It’s clear what CVS Health is trying to do from a strategic perspective.

Another entity mentioned is CenterWell, the provider organization owned by Humana (NYSE: HUM). CenterWell has three pillars currently: pharmacy, primary care and home health.

Over the next few years, CenterWell President Dr. Sanjay Shetty wants home health care to play an even larger role in the entity’s overall value-based care goals.

“I think the intent, with our pivot into value-based models for the home, is to first prove [things out],” Shetty told me this week. “We are making those investments within the business and within the clinical model, in order to change the way we’re doing things – to orient the teams on the ground towards the outcome. We’re still probably in the early days of that journey, but it’s been exciting.”

– Hybrids: “Entities that own risk-bearing delivery assets and offer VBP enablement services to external providers.”

A prime hybrid, which HHCN has covered extensively, is VillageMD. A primary care provider with a home- and community-based focus, VillageMD is backed by Walgreens Boots Alliance (Nasdaq: WBA). The latter has put up over $6 billion behind the former’s business.

“Home-based care is just going to become even more important,” Dr. Clive Fields, VillageMD’s co-founder and CMO, told Home Health Care News in 2021. “With the use of technology, teams and analytics, we think we can drive the same kinds of results for people who previously just may not have that access, either because of where they lived or because of the transportation that was available to them.”

Where providers stand

Some providers are taking on risk without a partner, through a Program of All-Inclusive Care for the Elderly (PACE), for instance. Some are partnering with PACE programs, too.

Other home-based care providers are partnering with health plans in value-based arrangements, though historically those have been on a more limited basis.

Home-based health care is lower-cost care, and also drives desirable outcomes when delivered correctly. Therefore, the aforementioned three types of value-based entities could all use home-based care providers. At the same time, the providers would also benefit from engaging with organizations already set up to deliver legitimate value- and risk-based care.

The first step is generally a cultural change, which is something I noted in last week’s update as well.

“I think the first relationship that you must establish – and this sounds a little hokey – is a pretty good internal harmony with your employee base, your stakeholders, your board, your governance, structure, whatever that might be,” Chapters Health System Andrew Molosky told me last month. “Because nothing will waylay an organization faster than when you have people viewing the priorities differently.”

CMS’ spotlight on value-based care reaffirms their commitment to the 2030 initiative, but it also proves just how behind many providers still are.

The webpage goes over some of the basics of value-based care – why it matters and how it can be achieved.

“CMS just launched a new Value-Based Care Spotlight page that explains in plain language what we mean by value-based care,” CMS Deputy Administrator and Director Liz Fowler said in a statement. “How it supports patients and providers, and why value-based care is important.”

Even if most home-based care providers are behind, value-based care will have to wait.

Time is of the essence, but health plans, patients and risk-enabled providers need home-based health care to truly provide the value-based care CMS wants.

“As with other healthcare organizations, entities in this segment are expanding their in-home care capabilities to support patients and caregivers in low-cost, convenient settings and a growing cohort of home-based innovators is emerging, each with slightly different approaches to optimizing in-home care,” the HMA report read.

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Signify — CVS Health’s acquired value-based care platform — conducted 649,000 in-home evaluations for multi-payer Medicare Advantage partners in the fourth quarter of 2023, marking a 20% increase from the previous year.

“Among our Aetna customers, we are broadening our addressable market, utilizing Signify’s strong capabilities and other products — including individual exchange and Medicaid,” Karen Lynch, president and CEO of CVS Health, said during a Wednesday Q4 2023 earnings call. “We will be expanding these capabilities with other clients and will deliver value by engaging consumers and their health across multiple channels.”

CVS Health originally completed its $8 billion acquisition of Signify Health — a value-based platform that offers at-home health risk assessments, among other services — in March 2023.

The company then closed on its $10.6 billion deal to purchase primary care provider Oak Street Health in May.

With both Signify and Oak Street, CVS Health continues to drive success in its health care delivery business, Lynch said. Oak Street – a risk-bearing senior care primary organization – ended 2023 with 202,000 at-risk lives, an increase of 27% year-over-year.

Through January, the number of Aetna members enrolled in Oak Street clinics doubled.

Total revenues increased to $93.8 billion, up 11.9% year over year. For its health services arms, revenue came in at $49.1 billion, up 12.3% year over year.

This increase was driven by factors like changes in drug mix, growth in specialty pharmacy, brand price hikes, and the acquisitions of Oak Street Health and Signify Health. However, changes in pharmacy client pricing partially offset these gains.

Thomas Cowhey, EVP and CFO of CVS Health, said the company is encouraged by the performance and growth of its health care delivery assets

Signify posted a revenue growth of 39% in the quarter compared to last year. Oak Street ended the quarter with 204 centers — an increase of 35 centers compared to 2023.

“We continue to expect to add 50 to 60 centers in 2024,” Cowhey said on the call. “Oak Street also significantly increased revenue in the quarter, growing 36% compared to the same quarter last year.”

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Karen Lynch – CVS Health’s CEO – outlined that vision at the Morgan Stanley’s 21st Global Healthcare Conference Tuesday.

“As we step back and as we looked at all of our businesses, what we said was we needed to extend into other areas for growth,” Lynch said. “And we said we needed to build out national provider capabilities either through primary care or in the home.”

The company has done so in both areas, through its $8 billion purchase of the at-home and value-based care enabler Signify Health and its $10 billion purchase of the primary care provider Oak Street Health.

Those investments represent a complete shift in CVS Health’s business model, which has led to speed bumps.

In August, the company announced that it cut 5,000 jobs, or 1.6% of its overall workforce.

But, in the minds of CVS Health leaders, the strategic shift is necessary. The company wants to capitalize off of the shift to value-based care in the U.S., and believe it’s set up perfectly to do so.

“Oak Street Health and Signify, I would argue, are the two premier value-based care providers in Medicare today,” Lynch said. “Signify is a home health risk assessment company that is in three million homes annually. It has the power to unlock additional health services and has an interlocking connection with Oak Street Health. There’s value between the two businesses.”

In addition to connecting Oak Street Health and Signify Health together, CVS Health also wants to connect both with its pharmacy business.

“When we’re looking at Oak Street, we’ve been using our retail pharmacies to engage people when they don’t have a primary care physician,” Lynch continued. “Signify Health, when they’re in the home, and [a patient doesn’t] have primary care, we’re recommending Oak Street. … The results so far are promising and encouraging. There are two things that matter when you think about unlocking the value of those two businesses, one is membership and the second is lowering overall acquisition cost.”

Walgreens Boots Alliance (Nasdaq: WBA) is making the same connections with the primary care provider VillageMD, the at-home care technology platform CareCentrix and its own pharmacy business.

Walgreens has a U.S. Healthcare services segment now, which is led by CareCentrix’s former CEO, John Driscoll.

CVS Health is following a similar path, and announced last week that its CFO, Shawn Guertin, will be in charge of health care services moving forward.

“We always were going to have to have someone lead our health services division,” Lynch said. “I’m very excited that Shawn will be taking over the leadership role, which means Oak Street and Signify will report to Shawn, and he will be responsible for unlocking the long-term value, the revenue and earnings power of those businesses.”

CVS Health can believe in the value of unlocking at-home care and primary care, but it also needs those investments to pay off financially sooner rather than later.

Guertin will be tasked with that challenge moving forward.

“The health services strategy is really about accomplishing two objectives,” Guertin said. “One is to create more accretive earnings growth from year to year. But also, over time, to fundamentally change the growth rates inherent in this company as we build a new business that has more attractive long-term growth characteristics than the enterprise. That’s the big challenge, financially.”

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On Tuesday, CVS Health closed on its $10.6 billion deal of the Chicago-based primary care provider Oak Street Health. The company closed on its $8.6 billion deal for the at-home care enabler Signify Health at the end of March.

And it may not be done yet.

CVS Health CEO Karen Lynch said Wednesday that while the near-term focus will be on the integration of the recently acquired assets, more home-based care and tech add-on deals could be on the horizon.

“These acquisitions significantly advance our value based strategy by adding primary care, home-based care and provider enablement capabilities to our platform,” Lynch said on the company’s first-quarter earnings call. “I think, over time, we’ll look at what other assets [we need]. … As you think longer-term around the corner, there might be additional opportunities in the home. But right now, for the near term, it is important for us to execute on these important assets.”

Though Signify Health is now under CVS Health’s umbrella, it will still operate as a payer-agnostic subsidiary.

In addition to providing at-home evaluations, the Dallas-based Signify is a value-based platform that leverages analytics, technology, health care provider networks and its over 10,000 clinicians to power value-based payment programs.

“When we go into the almost 3 million homes we’re going to this year, so many of them don’t have a primary care physician or are completely isolated from a care team,” Signify CEO Kyle Armbrester said on the call. “So we’re very excited to have an option for those folks and to be able to drive them back to a model that we know is going to drive better outcomes and to connect them into Oak Street.”

On its end, the Chicago-based Oak Street Health has a footprint that includes about 169 medical centers across 21 states.

Oak Street and Signify help comprise a new segment of CVS Health, its health services segment, which brings together its pharmacy services and health care delivery operations together.

“There’s a tremendous amount of synergies that can bring in all of these three assets together – CVS with the brand and the reach, Oak with their differentiated model, and now our presence in the home,” Armbrester continued. “And when we pull all three of those together, I think we’re going to have a really unique experience that drives better patient outcomes across the country.”

Combined, the businesses in CVS Health’s health care services segment serve more than 110 million people, have more than 20,000 colleagues and combined annual revenues of nearly $170 billion, according to the company.

Overall, CVS Health’s revenues increased to $85.3 billion in the quarter, a 11% year-over-year increase.

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While Oak Street Health is a primary care provider, it does do work in the home. But, more broadly, CVS Health’s move to acquire the company sheds further light on a core and recent trend in health care: large retailers and payers going after two capabilities – primary care and at-home care.

CVS Health leaders have immediately begun touting what Oak Street Health could do under its umbrella, specifically next to the at-home care enabler Signify Health (NYSE: SGFY), which it agreed to acquire for $8 billion earlier this year.

“The acquisition of Oak Street Health will broaden our value-based care platform into primary care and accelerate our long-term growth,” CVS Health President and CEO Karen Lynch said Wednesday on the company’s fourth-quarter earnings call. “Oak Street Health has a proven senior-focused primary care model that is scalable at a national level. Their innovative care model goes beyond typical primary care to provide patients with comprehensive preventative care to support overall health and well-being.”

If all goes as planned, CVS Health will be well positioned to capitalize off of the U.S.’s aging population, as will its subsidiary, Aetna.

With Signify and Oak Street Health, it will have those primary and at-home capabilities in house, which are two areas of care that create demonstrable value in terms of outcomes and cost-cutting.

“CVS Health delivered strong financial results in 2022 and we are entering 2023 with tremendous momentum,” Lynch continued. “We continue to make progress on our strategy and will enhance the capabilities of our value-based care platform through the Oak Street Health and Signify Health acquisitions. We are excited about the opportunities ahead of us.”

Oak Street Health CEO Mike Pykosz will continue to lead the business post-transaction, and the company will operate within CVS Health as a payer-agnostic entity. The Chicago-based and value-based provider was founded in 2012. Overall, it operates more than 160 centers across 21 states.

In December, Home Health Care News sat down with Katherine Suberlak, the VP of clinical health services at Oak Street Health. Suberlak emphasized the uniqueness of her company, and its desire to continue to drive value through risk-based care.

She also commented on Oak Street Health’s home-based care initiatives, one of which is Oak Street Health’s own at-home program. That live in Chicago, Philadelphia and Detroit.

Those comments provided a glimpse at what Oak Street Health currently provides in the home, but also how it can – likely seamlessly – work with Signify Health.

“It’s entirely predictable that someone may age in the community and want to remain in their home, but still need home-based health care, personal care and primary care. And we can provide that,” Suberlak said.

Given that the seniors Oak Street Health – and Signify Health, for that matter – are taking care of often are chronically ill, they have a lot of health care needs. Sometimes, primary care can get lost in that shuffle, Suberlak said. The company added its at-home program to try to avoid that.

“We see patients often that are like, ‘I’ll skip the primary care,’ right?” Suberlak said. “Because they can’t skip dialysis, they can’t skip other care. But really, the primary care is shepherding all of that. So that’s also a good patient to have in the in-home program.”

Oak Street Health also has already built out a network of home care providers that it works with, including the Chicago-based Help at Home. With Signify Health by its side, it will likely expand the amount of home-based care providers it works with.

Outside of the big news Wednesday, CVS also announced its earnings results. In the fourth quarter, the company’s revenues totaled 83.8 billion, an over-9% increase year over year. For the full year, it brought in $322.5 billion, a 10% year-over-year increase.

Primary care, at-home care pairing

Barring regulatory challenges, by the end of 2023, CVS Health will have a significant and value-based portfolio driven by primary care and at-home care, with Oak Street Health and Signify Health, respectively.

Other retailers and payers are doing the same elsewhere.

Walgreens Boots Alliance (Nasdaq: WBA) has VillageMD, a value-based primary care giant. It also has CareCentrix, which is a post-acute care platform.

UnitedHealth Group (NYSE: UNH) has Optum, which has its own primary care network. It is also nearing the close of its deal for the home health giant LHC Group Inc. (Nasdaq: LHCG).

Amazon Inc. (Nasdaq: AMZN) has agreed to acquire the primary care provider One Medical (Nasdaq: ONEM). It initially tried its hand at at-home care through Amazon Care, but that was shuttered at the end of 2022. In 2023, there is still some speculation that the retailer will again try its hand at in-home care, whether that’s internally or through M&A.

Once each deal is closed, CVS Health will have spent nearly $20 billion to embed these two coveted capabilities. That’s all with the goal in mind of delivering health care services in a value-based fashion.

“We entered 2023 with great momentum, and we are well positioned for growth in our foundational businesses, and we are making continued progress against our strategy,” Lynch said on the call. “We are so excited about the opportunities ahead of us, including both the Signify and Oak Street Health acquisitions.”

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Despite the added costs that come with offering those services, the need to care for patients with those ailments is undeniable.

“Typically, these folks are 10 to 15 times more costly than a patient without behavioral health need experience,” Joe Cramer, president of hospice and behavioral health at Elara Caring, said during Aging Media Network’s Continuum event in December. “We’re looking at how to partner with primary care or psychiatric providers to do a total cost of care from either an episodic perspective, or a full total cost of care perspective, where we are essentially the quarterback of their care.”

Elara Caring is a Texas-based home health, hospice, personal care, palliative care and behavioral health provider. It has a 16-state footprint and does about 100,000 in-home visits for patients with serious mental illness or substance use disorder per year.

Prior to the pandemic, Elara Caring provided behavioral health services in two states. It now does so in nine states, and has been able to do so by training its psychiatric nurses on how to properly care for patients with specific needs.

Recently, Elara Caring developed a program called “Embrace,” which aims to help its members who have experienced loss. That loss could be of a loved one, their independence or their home, Cramer explained.

Patients can access the program at home, which could be a skilled nursing facility (SNF), senior living facility or a private residence.

“Roughly 50% of individuals going into senior living or a SNF have elevated anxiety or depression,” Cramer said. “Our nurses are really trained in supporting their behavioral health diagnosis.”

Senior care providers sometimes focus on the medical and think of behavioral treatment as secondary. However, Elara Caring’s approach is symbolic of a larger movement in senior care where the two kinds of care can be addressed under one umbrella.

“With Elara, we focus on the behavioral with the medical conditions there,” Cramer said. “We’re looking at what’s causing the anxiety or depression, if they have that, and what kind of loss they’re dealing with to really support them.”

Embrace, Cramer said, has reported a 78% reduction or stabilization of a patient’s anxiety or depression and 33% reduction in patients being admitted into facilities rather than the places they call home.

Payers and insurers are also involved heavily in this movement.

“ACOs, Medicare Advantage, Medicaid organizations, they’re starting to come to the table knowing that they have to start paying for these services,” Cramer said. “Right now, we’re trying to find a middle ground of what we can do to be able to support these services. For us, we’re also trying not to get over our skis and go too far down the line without having the full staff there. But looking at how we get reimbursed for the services is the first step.”

The Chicago-based Oak Street Health (NYSE: OSH) is a good example of targeted behavioral health services working. It has a network of value-based primary care facilities that serve adults on Medicare. As of late 2022, the company had 161 centers in 21 states with over 145,000 at-risk patients receiving its care.

“We’re often in several underserved communities where they don’t have access to other services, or those services have not been available,” Katherine Suberlak, VP of clinical health services at Oak Street Health, said at Continuum. “For us, behavioral health checks all the boxes. Clinically, it’s the right thing for the patient. It’s very helpful to our care teams to have the added specialty there. Lastly, we see the outcomes. It impacts our total cost of care when we include behavioral health as a service to our patients.”

By integrating behavioral health into its care programs, Suberlak said 73% of Oak Street Health report experiencing a sustained reduction in depression at 6 months following treatment.

Moving forward, Elara Caring and Oak Street Health both believe partnerships will be key to keep at this issue.

“As a full-risk provider, partnerships are key for us, particularly when we’re caring for a patient across a continuum,” Suberlak said. “We can’t do it alone.”

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Founded in 2012, Chicago-based Oak Street Health is a network of value-based primary care centers for adults on Medicare. The company currently operates more than 100 centers across 15 states, serving over 100,000 older adults. Its service lines include behavioral health, pharmacy and primary care, among others.

Even though Oak Street Health isn’t a traditional home health provider, the company’s willingness to offer care in the most appropriate setting became even more evident at the onset of the COVID-19 emergency last year.

“We had always done some form of home-based care, but when the pandemic hit it became important that we get our patients — who honestly face the highest risk for coronavirus and all the downstream consequences of that — home,” Griffin Myers, chief medical officer at Oak Street Health, told Home Health Care News. “We quickly pivoted to get our patients home and out of the center until we were able to transition back.”

At the time, this meant shifting from an entirely center-based model that was supplemented by home-based care to a majority telehealth model, enabling seniors to receive virtual visits from their homes.

Additionally, Oak Street Health complemented these services by delivering everything from meals to supplies, such as toilet paper and more, to seniors.

While Oak Street Health has transitioned back to its original model, it has retained a lot of that home-based care that aided its patients in the earlier part of the public health emergency.

“We do hundreds of home-based care visits a day,” Myers said. “The visits come in three flavors.”

One of the ways Oak Street Health enters the home is by providing check-ins meant to assess the safety of the senior’s residence. These home check-ins are conducted by the company’s licensed clinical social workers.

Another home-based care service Oak Street Health offers is its mobile integrated health model. This offering is available to the company’s highest-acuity patients. The model gives patients an on-demand team that visits patients in their homes, both for clinical and non-clinical urgencies.

“[This ranges from] medication education in the home to having to address some other adverse social determinants,” Myers said. “That team can pretty quickly mobilize and get in to do this.”

Overall, the company’s most robust effort, regarding the home setting, is its home-based primary care model where licensed clinicians enter the home.

In general, home-based primary care programs send primary care physicians and other medical professionals into the home setting to provide care for high-risk, medically complex patients. Compared to the traditional office or facility-based model, house calls give doctors a chance to observe social aspects of health while often spending more time with patients.

“Those three services are all orchestrated centrally, so we know which patients need what and how we can serve them,” Myers said. “What we’re trying to do is recognize that patients have different needs. The common theme is that they’re in the home. We have been able to build teams to go solve those problems for them in that setting.”

Oak Street Health typically sees a 50% reduction in hospital admissions compared to national averages, according to Myers.

After seeing success with its value-based care model, a recent AARP partnership has added another feather to Oak Street Health’s cap. AARP selected the organization to provide primary care for Medicare-eligible adults.

In fact, Oak Street Health will be the only primary care provider to carry the AARP name.

“In an effort to increase access to health care and offer guidance and provider choice to their members, AARP did a very extensive national research process to choose a value-based partner, and that’s how we landed there,” Myers said. “We were chosen as that trusted provider, largely because of superior clinical outcomes and patient experience, as well as a dedication to a really unique social mission — which has been in our DNA from the very beginning.”

Myers believes that the partnership may also lead to more opportunities for the organization.

“We have every expectation, given the AARP brand and mindshare, that us being selected as their partner for this purpose, will help us connect with more older adults who are looking for primary care,” he said. “That’s something we’re super excited about.”

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The Chicago-based company sold 15.6 million shares at $21, which was slightly above its anticipated offering of $15 to $17, according to Renaissance Capital. At that pricing, Oak Street’s value was set at $5 billion, or roughly 10 times its 2019 revenue of $556.6 million.

In part, Oak Street’s bullish IPO reflects the broader need for a better way of caring for America’s sickest, most vulnerable populations. It also underscores the opportunity and value in diversified care delivery models, particularly those wrapped around in-home care, co-founder and CEO Mike Pykosz told Home Health Care News.

“I think people realize the traditional model of primary care just isn’t delivering the results that we need,” Pykosz said.

Founded in 2012, Oak Street Health currently operates more than 50 health centers across eight states, with a heavy concentration in the Midwest. The newly public company opened its latest center in North Carolina just days before its IPO.

Despite the uncertainty of the COVID-19 pandemic, Oak Street plans to launch a handful of additional hubs in Mississippi, New York and Texas later this year, Pykosz noted. Its public offering — which likely would have taken place regardless of the COVID-19 virus — will help drive that growth moving forward.

“Our care model is really predicated by investing in our patients’ care, investing more upfront in primary care and behavioral health — the resources they need to stay healthy and out of the hospital,” Pykosz said. “Obviously, investing takes capital. By [going public] now, we bring more and more resources into the company to continue our mission of expansion.”

A meaningful experience

Generally, Oak Street Health has built its business model on the idea of “quality over quantity.” In fact, the “vast, vast, vast majority” of the company’s revenue comes from its value-based contracts with payer partners, Pykosz said.

About 45% of Oak Street’s patient population is dually eligible for Medicare and Medicaid.

To deliver on value, Oak Street doesn’t just care for patients in its centers. It also has interdisciplinary home teams to treat older adults who have mobility issues — or who just prefer in-home care.

“It’s mostly in-home primary care,” Pykosz said. “There are wraparound services more around social work support, helping patients with their medication.”

By going into patients’ homes, Oak Street’s home teams also help address fall hazards and other hospitalization risks while simultaneously evaluating any concerns related to social determinants of health, such as barriers to transportation or proper nutrition.

“The most impactful and meaningful experience I’ve had at Oak Street is doing ride-alongs with our home-visit teams,” said Pykosz, a Harvard Law School graduate and former principal at Boston Consulting Group. “When we go into our patients’ homes, we really see the kind of factors that are potentially influencing their care.”

During one home visit the CEO remembers, for example, he watched a patient demonstrate how she normally got in and out of her bathtub, using the bathroom sink to support her weight. While doing so, Pykosz said he could see the sink clearly coming detached from the wall.

“At some point in time, that was going to pull off from the wall,” he recalled. “It was going to be a fall — it was only a matter of time.”

Since its founding, Oak Streeet’s multi-pronged care delivery model has seen a 51% reduction in patient hospital visits compared with Medicare benchmarks, according to company statistics. Similarly, it has also seen a 51% reduction in emergency room visits.

Apart from growing geographically, going public allows Oak Street to continue refining that model, Pykosz added.

“One of the great parts about the IPO is it brings more resources for us to both grow but also to continue investing in caring for our patients better,” he said. “The more we invest to improve our care model and keep people healthier, the more savings we generate. We can then keep using that to reinvest and drive that flywheel.”

Expanding into telehealth

In the past, Oak Street Health has operated in two spaces: its centers and the home. Earlier this year, the coronavirus propelled Oak Street into virtual care.

“We’ve always done care in the home,” Pykosz said. “But we did very little telehealth prior to COVID.”

Early on in the public health emergency, Oak Street was doing about 90% of its visits virtually, a trend that happened across the continuum of care, partially enabled by a series of telehealth waivers from the U.S. Centers for Medicare & Medicaid Services (CMS) and other regulators.

Today, Oak Street is back to doing in-person visits, though around 70% or so of its visits are still happening virtually.

“Our patients appreciated that we were there for them at a time when they needed us and were dealing with a lot of uncertainty,” Pykosz said. “Our clinicians felt they could actually make a difference for our patients virtually, but they’re excited to see the patient back in person.”

While it will likely never be a virtual-first company, Oak Street sees telehealth visits as “a nice adjacency” to its core center-based model.

‘Variations to the same theme’

Oak Street Health reported over $200 million in revenues for Q1 2020 on its S-1 — a 72% increased compared to the same period a year ago. It estimates its annual total addressable market size as about $325 billion, suggesting there’s lots of room to grow for the Chicago company.

Its recent momentum reflects the wider interest in alternative primary care models, too.

At the end of July, Humana Inc. (NYSE: HUM) announced a strategic partnership with Heal, a Los Angeles-based in-home primary care startup with operations across seven states and Washington, D.C. The partnership included a $100 million investment from Humana, which is also one of Oak Street’s top shareholders.

Meanwhile, just a few weeks before that news, Walgreens Boots Alliance (Nasdaq: WBA) and VillageMD announced a five-year, $1 billion plan to expand full-service physician services at Walgreens stores.

“I think what you’re seeing is a lot of different variations to the same theme, right?” Pykosz said. “And that’s the need to find more convenient ways to deliver higher-quality care and engage with patients.”

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