CVS Health (NYSE: CVS) announced Wednesday that it has agreed to purchase Oak Street Health (NYSE: OSH) for $10.6 billion. The companies expect for the transaction to close sometime this year.
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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