NOT YOUR FATHER’S CVS
Not too long ago, CVS pharmacies was content to fill prescriptions and sell tooth brushes. They do a whole lot more now. In just a few years, with little fanfare, CVS has become a mega-giant in healthcare, and not just organically by growing from 5474 stores to 9939. They made and haven’t stopped making major acquisitions, including MinuteClinic, Caremark Rx and Aetna Insurance.
Their merger with Caremark Rx, Inc. in 2006 gave them the largest Pharmacy Benefits Management (PBM) company in the country. CVS now fills 44.55% of the country’s prescriptions and every script going through CVS Caremark Pharmacy Services, Caremark, CVS Caremark, CarePlus CVS/pharmacy, RxAmerica, Accordant, SilverScript, and Novologix. Pharmacies situated in Albertson’s and other large grocery chains are owned by CVS, but they stay under their own banner.
They got into the primary care business when they bought MinuteClinic in 2016. That gave them an immediate 1000 in-store CVS health clinics. They are planning on adding hundreds more in-store clinics. With Amazon buying One Medical and Walgreens Boots Alliance buying VillageMD, CVS, needed to stay in the race for primary care. They settled on Oak Street Health, an award winning network consisting of more than 160 centers across 21 states and providing care for around 159,000 patients. Before they were sellers, they were buyers. They acquired RubiconMD in 2021 giving their primary care providers a virtual specialty café network
This deal has problems. Primary care is no walk in the park and to no one’s surprise, Oak Street hasnever been profitable. They reported a loss of $415 million in 2021 and almost $510 mililon in 2022. They don’t expect to be profitable until 2025. The American Economic Liberties Project urged the Federal Trade Commission (FTC) to block the transaction since they observed that the clinics had problems finding providers. More than 20 percent of Oak Street Health clinics listed no doctor on staff. T
CVS invested $100 million in Carbon Health, a hybrid company with 125 physical locations across the U.S. and after an unsuccessful bid to acquire One Medical (Amazon beat them out), CVS Health has outbid UnitedHealth Group, Amazon and Option Care Health and will spend another $8 billion to acquire Signify Health. The latter company provides in-home evaluations for Medicare insured seniors. The Justice Department has not yet approved either sale.
CVS became a health insurer in 2018 when it bought Aetna Insurance for a cool $69 billion. I addition to gaining its 22 million subscribers the deal included the First Health Group Corp., a ready-made network of doctors and hospitals that accept discounts from certain insurance companies. This packaged product gets sold to employers and insurers for hefty fees.
CVS bought itself a seat of honor at the medical-industrial complex table if not the table itself. And it happened with blinding speed and eye-popping costs.. Can Walgreens be far behind? That will be discussed in another blog, but they didn’t buy Village MD, Carecentrix and Health Corner just for the fun of it. They recently partnered with OptumRX , the pharmacy benefit management unit of UnitedHealthGroup and the second biggest overall.
Look for Target and Costco to dip their beaks into the healthcare pool.
It’s open season on fixer-upper primary care clinics.