Healthcare plays by CVS, Walgreens and Amazon will drive more partnerships, tech investment, experts say

CVS, Walgreens and Amazon are ramping up their focus on in-home medical services and primary care and it will cause major disruptions for more traditional brick-and-mortar providers, industry experts say.

Major retailers, including Walmart, are extending their reach deeper into the care continuum and it has major implications for how and where care is delivered and paid for, and by whom.

Earlier this month, drugstore giant CVS announced it would acquire home healthcare company Signify Health for $8 billion, a company sought after by many healthcare and retail companies.

"It's sort of like these companies have been sort of poking around the edges to see what might work and we're finally starting to break through," said Colin Banas, M.D., chief medical officer at DrFirst.

The Signify deal shows that CVS is "putting its muscle" behind its healthcare strategy and broadens its footprint. The move adds in-home care to CVS’s vertically integrated system that already included health insurance, drug management, retail and specialty pharmacy and urgent care, Banas said.

Signify Health offers analytics and technology to help a network of 10,000 clinicians provide in-home healthcare to 2.5 million patients across the country. CVS will add Signify Health's capabilities and clinician network to its existing portfolio of 40,000 providers,1,100 MinuteClinic locations, 9,000 retail drug stores and the nation’s third-largest health insurer, Aetna. CVS also gains Caravan Health, a company Signify acquired in March, which enables value-based care through its analytics and practice improvement solutions.

With the rapid move to healthcare at home, companies are seizing opportunities to take a piece of the market. CVS rival Walgreens made a $330 million majority-stake investment in post-acute and home care company CareCentrix. Best Buy shelled out $400 million for care-at-home platform Current Health. 

Amazon plans to buy primary care company One Medical for $3.9 billion and Walmart is expanding into medical services by opening about 20 in-person clinic locations across Georgia, Arkansas, Illinois and now Florida, with locations attached to its supercenter stores.

Banas, a former internal medicine hospitalist and former chief medical information officer for VCU Health System in Richmond, Virginia, has seen the rise of care at home in the past decade and that trend was accelerated by the COVID-19 pandemic.

"We used to run a housecalls program at Virginia Commonwealth University and it was targeted at the sickest of the sick in an effort to keep them out of the hospital," he said in an interview. "The ability to go out to the meet the patient at home and really spend the time to tailor specific care plans to their needs as well as see the home environment was wildly successful at the time and it allowed us to expand. You fast forward now to post-COVID and you're seeing obviously the rise of telehealth."

He added, "The Signify deal is CVS skating to where the puck is going to be in three to five years."

As the industry shifts to the home as a site of care, legacy patient-provider relationships and business will face disruption, executives at The Chartis Group wrote in a blog post.

"Health systems would do well to consider how they are positioned to deliver care at home as an integrated part of their care models. This may include evaluating legacy home health assets and programs, while also rapidly evaluating the business case for launching a hospital at home program as part of their broader strategic and operational plans," wrote Tom Kiesau, chief innovation officer and Chartis digital leader, along with Mark Krivopal, M.D., director, and Floyd Pitts, research analyst.

The Signify Health deal demonstrates the growing significance of industry consolidation shaping new healthcare market leaders and the importance of the home healthcare market, said Sunny Kumar, M.D., partner at GSR Ventures, a venture firm investing in early-stage digital health companies.

"By leveraging Signify’s expertise in this area, CVS better positions itself to pursue key initiatives in remote patient monitoring, decentralized clinical trials, and social determinants of health in support of a value-based care system," Kumar said.

With these players moving into the home health and primary care markets, hospitals and physician practices stand to lose younger, healthier patients to these non-traditional models, Banas said. That could end up disrupting traditional care models because of the higher costs to care for the sickest patients. 

These trends also up the stakes for health systems and practices to keep pace by investing in technologies for digital health, virtual care and analytics, experts say.

"This is yet another warning to health systems that if they do not own the front door—someone else will. So health systems will either need to build up their virtual team and partners to expand their own front doors, or hope they can eek out some partnerships with those who do," said Lyle Berkowitz, M.D., CEO of KeyCare, an Epic-based virtual care platform.

"Health systems need to be looking to technology partners to solidify their positions to provide these care models that are becoming, more and more, conventional care models, which were previously non-existent five years ago," Banas said.

The CVS-Signify Health deal also underscores how attention on Medicare Advantage will remain high, experts say. Health systems will need to develop the right strategies and capabilities to effectively serve evolving consumer needs within the all-important senior population, experts at The Chartis Group wrote in the blog post.

"The acquisition of Signify Health by CVS is another example of an industry-wide fascination with and obsession with quality data and analytics," said Kimberly Hartsfield, executive vice president of growth enablement at VisiQuate. "Traditional delivery models in the healthcare industry are being disrupted as organizations like CVS strive to meet patients where they live and bring easier access to care in their neighborhood. The same way population health management and patient care are getting a healthcare data facelift, organizations will be using data in a new way in the coming years to bring intelligent automation to back-office functions and financial efficiencies."

It remains to be seen whether CVS, Walgreens and Amazon moving further into medical services will improve patient care. Banas is bullish on the idea that CVS' home care capabilities coupled with new technology for in-home diagnostics, such as EKGs and blood tests could be the "game changer" that helps keep patients out of the hospital.

"It may offer a welcome alternative to payers seeking to expand the hospital-at-home model to reduce costs while meeting patients’ preferences. This could be good news for patients and the healthcare industry if it meets patients’ needs, keeps costs down, and does not sacrifice quality or safety," he said.

Industry watchers had a lot to say about the CVS-Signify Health deal and its implications for the industry.

Here are a few other perspectives:

"To really make this work, CVS needs to concentrate on the care, not the continuum. Making sure that patients are cared for in the most appropriate location/setting is key, and this requires diagnostically connected data that is accurate and available to every clinician involved. It is well known that more frequent interaction with chronic disease patients is critical. If cost reduction is the primary goal, patient care and well-being will not advance. However, if you apply appropriate care, the cost of care will fall, and patient health will follow," said Jay Anders, M.D., chief medical officer, Medicomp Systems.

"The acquisition of Signify Health underscores the importance of at-home care, especially in meeting the needs of our aging population, most of whom prefer to age in place. People are living longer and trying to manage one or more health conditions or chronic ailments, and most prefer to receive that type of care exclusively in the home. The emergence of value-based care models and payments, patient and caregiver preference, market pressure, and bed capacity strains are important factors driving more care into the home. We expect to see this trend continue to expand, and likely will be supported by additional acquisitions in the future," said Maryann Lauletta, M.D., CMO of Dina.

"The acquisition is one more step towards increasing access to care through virtual modalities and moving care into the comfort of the patient's home. I am hopeful it encourages our health systems to keep evolving this model for their organizations. Then we can support the best of both worlds, virtual care at home from the providers their patients know and trust, and who have access to their complete patient picture," said Sachin Agrawal, president of eVisit.