Retail is remaking healthcare as CVS Health expands its footprint into the value-based and primary care sectors through acquisitions, as digital efforts also continue to advance.
Announcing fourth-quarter 2022 earnings on Wednesday (Feb. 8), CVS President and CEO Karen Lynch was joined by Oak Street Health CEO Mike Pykosz as they talked investors through the $10.6 billion acquisition of Oak Street confirmed today.
Taken along with its pending acquisition of Signify Health, CVS is building a network of retail clinics covering the spectrum from value-based care to primary care to urgent care with its Minute Clinic locations, feeding into a broad overall strategy.
“Retail delivered another strong year, outperforming our initial guidance and long-term target,” Lynch said, adding that pharmacy sales rose 8% and front store sales were up 7% driven in part by higher Q4 demand for consumer health and cough cold and flu products.
On the Q4 earnings call, Lynch said, “The acquisition of Oak Street Health will broaden our value-based care platform into primary care and accelerate our long-term growth. Primary care drives patient engagement and positive clinical outcomes. Although it is a very small proportion of total health spend at just about 10% nationally, it wields significant influence over healthcare utilization. Individuals who seek routine primary care services report fewer serious medical diagnoses, lower mortality rates, and a 33% lower annual health care expense.”
She added, “Oak Street Health has a proven senior-focused primary care model that is scalable at a national level,” pointing to an “innovative care model [that] goes beyond typical primary care to provide patients with comprehensive preventive care to support overall health and wellbeing.”
See also: CVS Deepens Healthcare Roots With $10.6B Oak Street Deal
Oak Street has 169 medical centers across 21 states now, and Lynch said, “we see a significant opportunity to expand in the next few years and provide superior care to many more patients” the “ability to improve patient outcomes and experiences at a time when consumers are increasingly frustrated with their experience in the healthcare system.”
In September 2021, Oak Street was selected by AARP as the only primary care provider to carry the AARP name, as the provider specializes in treating Medicare members.
Oak Street’s Pykosz was on the call and said, “We operate a network of primary care centers to specialize in care for older adults. We focus on areas with large concentrations of Medicare-eligible patients with incomes below 300% of the federal poverty line, areas where we can make the biggest impact.”
Lynch said the Signify deal is expected to close in the second quarter of 2023.
While executives didn’t call out digital efforts in their remarks, the Q4 earnings press release notes that CVS “increased unique digital customers by seven million to over 47 million, reached eight million active users on CVS Health’s individualized Health Dashboard and interacted with nearly five million customers daily across our community footprint.”
Reporting Q4 top line revenue of $83.8 billion, up 9.5% year over year, CVS CFO Shawn Guertin said it was “at or above internal expectations for each of our foundational businesses.
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