CVS’ Oak Street Deal Signals Big Retail’s Ongoing Healthcare Push

Big Retail’s continued healthcare push is poised to advance with a $10 billion deal.

CVS is in the running to buy Oak Street Health, and beyond the money involved, strategically speaking, the deal would broaden the retail pharmacy’s healthcare offerings beyond its own aisles and bring primary care more firmly into the mix in a continuum of services.

There’s precedence for a CVS-for-Oak-Street deal. Walmart, as a prime example, spent part of last year laying the groundwork for Walmart Health locations adjacent to its Walmart Supercenters to be opened in 2023. The company also bought MeMD in 2021, which is geared toward virtual healthcare. And last fall, Walmart branched into over-the-counter hearing aid sales.

Walgreens is also branching into primary care through its VillageMD unit. Summit Health owns CityMD, the urgent care provider.

The most recent earnings results from Walgreens underscore the value of a healthcare model that is more fully end to end in nature. U.S. retail pharma sales were down 3% year over year in part due to last year’s upswing in COVID-19 vaccines. As for the U.S. healthcare efforts, the unit’s most recent quarterly sales of $989 million were up 38.4% on a pro forma basis. VillageMD grew 48.7% on the strength of clinic visits.

Eyeing Analytics and Technology

For CVS, the Oak Street Health acquisition would come after the company spent $8 billion to acquire Signify Health, which uses analytics and technology to offer in-home care for health plans, employers, physician groups and health systems.

Data from PYMNTS signals the appeal of using technology, and the platform model, to keep consumers connected to all manner of healthcare, to navigate seamlessly between channels as the situation demands. In the report “Healthcare in the Digital Age: Consumers See Unified Platforms as Key to Better Health,” a PYMNTS and Lynx collaboration, 71% of consumers said they would prefer to use a unified digital channel for everything from scheduling appointments to accessing benefits.

As for the data aspect of it all, most consumers — 77% — would prefer to have the ability and option to share medical records with a range of providers. And a high percentage of consumers (again, more than three-quarters) would want to be able to fill out medical documents using information stored on those digital platforms.

Eighty-two percent of consumers want to use a healthcare platform to get better information about their access to medical, dental and vision benefits, and 82% of consumers want a platform that gives them information about their pharmacy benefits, including pharmacy discount cards. The latter stat shows the ways and means by which pharma giants can start to leverage their core functions into a broader span of care that touches everything from the initial visit to picking up (or getting delivery of) the prescriptions that are part of a holistic healthcare strategy.