In the past six months, the big four healthcare retailers have made bold opening moves, with over $30B in healthcare acquisitions to rapidly expand their physical and geographic footprint and scope of services.
Here are the highlights:
Amazon’s healthcare expansion
Amazon’s $3.9B acquisition of One Medical, which closed in March of 2023, provides it with over 200 physicians’ offices and about 815,000 members. Amazon aims to disrupt primary care and leverage data expertise along with the Prime platform to rapidly expand the One Medical membership model.
CVS’s aggressive gambit
In March of 2023, CVS officially closed on Signify Health for $8B. It also plans to close on its $10B acquisition of Oak Street Health in 2023. All combined, CVS will have approximately 2,000 clinics, in-home services with a 10,000-provider network, health insurance, retail pharmacy, specialty pharmacy and pharmacy benefit management. Further, the company currently has a net worth of $104.6B.
CVS’s bold plays will position the organization for long-term growth. Additionally, it will gain a competitive edge in the evolving healthcare market.
Walgreens’ positional play
Walgreens’s late 2022 $8.9B acquisition of medical practice Summit Health, the parent company of urgent care chain CityMD, brings a combined 680 clinics and creates one of the largest independent provider groups in the U.S. This is in addition Walgreens’s plan to build 1,000 primary care practices by 2027.
Walmart attacks both sides of the board
Walmart has responded with an aggressive “build” and partner model. It plans to expand from today’s 32 Walmart Health clinics to 77 by the end of 2024, offering primary care, dental care, behavioral health, labs and x-ray, audiology and telehealth services within these in-store clinics. Additionally, Walmart is partnering with United Health Group/Optum on analytics. This showcases its strategic approach to tackle multiple aspects of the healthcare landscape.
A New Direction for Retail Health
Clearly, these four have business ambitions beyond “convenient care.” They are moving past the walls of their traditional physical stores to home and community. Further, they are all expanding their continuum of services to integrate physical, social and mental health needs over the longitude of life.
They are also moving to lead in Value Based Care with a keen focus on the Medicare Advantage market, which will soon cover 50% of all Medicare beneficiaries. Additionally, these retail giants are increasing their involvement in the $50B clinical trial industry. With unparalleled proximity to diverse populations and troves of patient data, they are uniquely positioned to expand access to trials and recruit patients.
If these strategies are well executed, the big four healthcare retailers will no longer be mere disruptors. Instead, they’ll become transformative forces in healthcare delivery. This could be achieved in a matter of years, not decades.
Traditional Health Systems’ New Role in Retail Health
Traditional health systems will find themselves cornered. Thus, they’ll no longer serve as the epicenter of healthcare delivery, but will instead be relegated to being cost centers. A recent Kaufmann Hall article articulates this shift:
If you follow the money in healthcare, it’s heading (rapidly) to primary care, specialty practices and into other areas and aspects of ambulatory care. Investors are strategically repositioning their resources, away from the pipelines and networks that have traditionally controlled hospital volumes. The potential end result? Hospitals becoming price-takers and cost-centers for the rest of the industry, left to manage the sickest, most complex and least profitable patients.
Already in 2023, the market is seeing a shift in the balance of power. The big four retailers and traditional health systems continue to compete for a larger market share of the healthcare field. Thus, delivery systems will be needed to develop and demonstrate agility in partnerships. Collaboration and innovation are requisites in the new market rapidly taking shape.
