A 'bellwether': What hospital innovation chiefs think of CVS' $10.6B deal for Oak Street Health

CVS Health's $10.6 billion acquisition of Oak Street Health is a "bellwether" of what's to come in healthcare as patients demand more convenient access to primary care, health system innovation chiefs told Becker's.

"Medicine is moving to Main Street and out of ivy-covered office buildings," said Nancy Cibotti, MD, chief innovation officer at Cambridge, Mass.-based Beth Israel Lahey Health.

She cited Amazon's $3.9 billion deal for hybrid primary care chain One Medical in February as another example.

"Retail disruptors provide an excellent source of innovation and inspiration with respect to new delivery models for primary care. Satisfying consumers is their specialty, and they do it well," Dr. Cibotti said. "Large health systems such as my own are paying close attention. Those that can provide access to world-class medical centers, in addition to local, convenient and personal care, will set themselves apart in the market."

With the May 2 purchase, CVS now owns Oak Street's more than 170 primary care clinics serving Medicare Advantage patients, giving the company a ready-made asset for the ongoing shift toward value-based care. CVS has said it may locate some of the clinics in its retail stores. The healthcare giant also bought home health company Signify Health in March for $8 billion.

"Oak Street Health has been the bellwether for innovation in the primary care space," said Richard Zane, MD, chief innovation officer of Aurora, Colo.-based UCHealth. "A lot to like and emulate about their approach, their financials and, most importantly, their patient outcomes, making them a smart acquisition target and giving CVS Health a great opportunity to move quickly. Looks like Amazon with One Medical and now CVS with Oak Street Health are not dabbling."

Jeff Cohen, MD, chief physician executive of community health and innovation at Pittsburgh-based Allegheny Health Network, said the move could enable CVS to expand its telemedicine offerings and give it data on which to build out its payer model. CVS already owns insurer Aetna.

"The acquisition of Oak Street provides CVS a value-based provider network, which will expand from its geographic locations via a built-in IT network," Dr. Cohen said. "The disruption of the traditional, hospital-centric delivery system is underway, and will pick up speed as more hospitals are unable to achieve a positive operating income."

Chris Coburn, chief innovation officer of Somerville, Mass.-based Mass General Brigham, said primary care is "ripe for disruption" from delivery models that will make it more accessible, affordable and consumer-friendly.

"Organizations that span multiple categories, as do CVS and Mass General Brigham, can complement each other and set the pace for advancing innovation to improve the continuum of care," he said.

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