After spending nearly $20 billion to pick up Signify Health and Oak Street Health this year, CVS rebranded its health services business to "CVS Healthspire" as it plots its long-term growth strategy.
During the Forbes Healthcare Summit in New York City on Monday, CVS chief executive officer Karen Lynch said Healthspire will encompass CVS' pharmacy services business, its care delivery assets, including home health company Signify Health and Medicare-focused primary care player Oak Street Health, as well as its new Cordavis operation. Cordavis is a new segment CVS launched in August that aims to work with drugmakers to bring additional biosimilars to market.
"This is where all our multi-payer assets will be combined together so that we can integrate the care for our multi-payer capabilities, and set further our ability to drive our journey. We're really excited about CVS Healthspire and it's our journey to really drive to the pinnacle of healthcare," Lynch said during the Forbes event.
The goal is to create an "integrated ecosystem" for patients, executives said in a statement. The groups within CVS Healthspire will continue to focus on integration across the company’s assets to deliver connected patient care, pharmacy benefits and innovative provider support solutions, the company said.
The CVS Healthspire brand will begin to roll out publicly this month and into 2024.
At the end of 2021, Lynch laid out a strategic vision for the drugstore retail chain to expand beyond pharmacy services. During the company’s investor day nearly two years ago, Lynch and company executives detailed plans to enhance the company's capabilities in health services and primary care.
CVS Health's acquisitions in the past year delivered on those commitments, Lynch said at the Forbes event. The company closed its $10.6 billion acquisition of Oak Street Health in May. That deal came less than two months after CVS finalized its $8 billion acquisition of Signify Health.
The retail pharmacy giant will likely go into more detail about its rebranded business during its investor day, scheduled for 8 am ET Tuesday, December 5, the first one in two years.
Back in August 2022, Lynch said CVS was looking to enhance its health services in provider enablement, home health and primary care.
CVS' acquisition of Signify Health checks the first two boxes while Oak Street Health checks the third one.
The company operates nearly 10,000 drugstore locations across the country and more than 1,100 MinuteClinics. CVS also is the parent company of major health insurer Aetna, which has 25 million members, and pharmacy benefit manager CVS Caremark.
The company aims to build a vertically integrated healthcare company including clinics, pharmacies, a health plan and other services. CVS brought in $2.3 billion in profit in the third quarter and $89.8 billion in revenue, up from $81.2 billion in the third quarter of 2022.
Lynch said CVS Health's assets in healthcare and pharmacy are "unmatched" and hit on major macro trends with demographic shifts as the U.S. population ages, more healthcare moving into patients' homes and consumers seeking convenient options to receive medical care.
"Our strategy is envisioning, in its simple form, connecting those experiences and simplifying those experiences to improve the health and improve quality and affordability in healthcare," Lynch said Monday. "We're making good progress but we've got a long way to go. The entire healthcare system has a long way to go. It really all has to start and end with the consumer."
CVS Health is not alone in its ambitions to push further into healthcare services. Walgreens, Walmart and Amazon also are ramping up their focus on in-home medical services and primary care. Amazon shelled out nearly $4 billion for One Medical. Last year, Walgreens' VillageMD bought Summit Health-CityMD, an urgent and primary care chain, in a deal worth close to $9 billion. This year, Walgreens also bought CareCentrix, which currently manages care for more than 19 million members through over 7,400 provider locations. The company also closed its acquisition of Shields Health Solutions in December.
Healthcare services represents a $1 trillion market opportunity, Lynch said during the Forbes Healthcare Summit.
"As we thought about our strategy, I think we all recognize that primary care is the quarterback of healthcare. And, people also are looking for alternative ways to delivery care," Lynch said. "As we stepped back, we said, 'We know that healthcare is really moving to value-based care. We're really moving from fee-for-service to value-based care.' And, we've got an aging population. Both Oak Street and Signify are serving older Americans."
Oak Street was founded in 2012 and went public in 2020. The Oak Street deal added about 600 primary care providers and more than 170 medical centers across 21 states to CVS' business. Oak Street's approach to primary care also helps to address older patients' social needs, Lynch noted.
"When I went to visit Oak Street, it was fascinating because it's not just some place to go to get care. It's a community and it's a place that addresses social determinants of health. A lot of people have issues with transportation. We have vans that go and pick up our patients. We talk to them about their primary care and we set care plans," she said.
With Signify Health now in the fold, CVS Health is significantly expanding its footprint into the home health and managed service organization markets.
Launched in December 2017 as the result of a merger between CenseoHealth and Advance Health, Signify Health offers health risk assessments, value-based care and provider enablement services. Signify has a network of more than 10,000 clinicians in all 50 states and serves about 2.5 million patients. The company brings providers into the home to identify chronic conditions, close gaps in care and address social determinants of health.
"With Simplify Health, we spend twice as long in the home. What we're finding is a lot of those individuals don't have a primary care. So we're able to connect them to primary care services and we're able to reconnect them into their pharmacies to have conversations," she said. "It's a powerful combination of those two assets connected to our retail locations and connected to our insurance products. And we're making all the connections, all powered by technology. We only closed Signify in March and we closed Oak Street in May. They're relatively new and we're already seeing meaningful change in how we're interacting with our patients."
Lynch sees two major trends driving healthcare: value-based care and technology innovation.
"We are at the forefront of the technological revolution with artificial intelligence and generative AI and it is going to make a substantial difference in healthcare," she said. "We're already seeing it and we're already using those technologies in all all parts of our business."
CVS Health is using AI to improve operations in its Aetna health insurance business. "We're using it in our Signify and Oak Street clinics to do case summarization in a much more effective way. We're using it in our pharmacies to improve the workflows of our pharmacists so they can connect with patients and have more time in those conversations," she said.
Lynch stressed the importance of "responsible AI" to protect patient and consumer information. "We are, as a company, very committed to responsible AI. And I think we all have to be as we think about the dramatic change that we will see over time with generative AI and artificial intelligence. We all have to make a commitment to the industry to truly be very responsible and protect patient data."