How Home-Based Care Became Table Stakes For CVS, Walgreens, Amazon

Last December, I wrote about the “retail giants ready to disrupt home-based care.”

Though confident in my hypothesis that these larger companies – CVS Health (NYSE: CVS), Amazon (Nasdaq: AMZN), Walgreens Boots Alliance (Nasdaq: WBA) and Walmart (NYSE: WMT) – were going to enter further into the home-based care space, I was not under the impression it would happen so fast.

Less than a year later, each of these companies has made significant, transparent and strategic moves to do so.

Back then, it was CVS Health’s insistence at its investor day that it wanted to get into home health care that prompted me to write a breakdown.

Just this week, it agreed to acquire Signify Health (NYSE: SGFY) for $8 billion. I believe it will go after a primary care asset next, after losing out on One Medical (Nasdaq: ONEM) to Amazon. But hold that thought.

For this week’s exclusive, members-only HHCN+ Update, I’m taking a step back and looking at how far these companies have come in home-based care – and where they may be going next.

Walgreens Boots Alliance

I begin with Walgreens Boots Alliance because CVS Health’s recent maneuvers mirror Walgreens’ over the past couple of years.

Walgreens’ majority investment in CareCentrix becoming official went under the radar last week due to the Signify sweepstakes. Its $330 million investment in CareCentrix – one of the larger post-acute technology platforms – gives Walgreens 55% ownership, with the option to acquire more of the company down the line.

“What’s exciting about the Walgreens investment is the short-term investment in capital for CareCentrix to deliver on care in the home and the community,” CareCentrix CEO John Driscoll told me. “In the long term, the win for patients and health plans is Walgreens’ commitment to really invest more in developing a real network solution for care outside of hospitals and nursing homes.”

In addition to the CareCentrix investment, Walgreens has invested over $6 billion into VillageMD, a primary care provider with a home- and community-based focus. With Walgreens, VillageMD is rapidly expanding across the country.

“We created Walgreens Health to reimagine local health care and wellbeing for all,” Walgreens Boots Alliance CEO Roz Brewer said. “This partnership advances our ability to address the needs of people across care settings immediately following hospital discharge. … Our collaboration with CareCentrix is one of the many ways we are expanding on our pharmacy and patient expertise to surround individuals with care when and how they need it.”

CVS Health

Then there’s CVS Health, which was jockeying with Amazon for the primary care provider One Medical. Though it lost out to Amazon’s $3.9 billion bid for One Medical, CVS leaders have said that another acquisition on that front is more than possible in the near-term future – perhaps even by the end of the year.

If it does pursue another deal, just like Walgreens, it will have significant primary care and home-based care capabilities.

Though not exactly the same, Signify and CareCentrix can both be broadly defined as “conveners.” Whereas Humana, for instance, has an actual home health provider underneath its umbrella with CenterWell Home Health, Walgreens and CVS have formidable, advanced and powerful middlemen.

Both companies also help with risk-identification and preventing negative health outcomes. For CVS, the addition of Signify will allow its insurance arm, Aetna, more accurately document its members’ conditions.

Signify also brings Caravan Health to the risk table.

“CVS’ purchase of Signify is just an endorsement of what CareCentrix and many others have been saying for many years: that the opportunity is huge to deliver better outcomes at lower cost by keeping people out of the hospitals and nursing homes who don’t need to be there,” Driscoll said. “I just think it’s thrilling that CVS, Walgreens and others are starting to put real investment in building out that last mile to provide for more care at home.”

Amazon

The common thread among these first three giant retailers is the desire for primary care and home-based care capabilities.

CVS and Walgreens have an inherent head start given their health care backgrounds. CVS also has Aetna, one of the largest health insurers in the country. But Amazon has both a strong desire to disrupt health care and lots of money. And money always helps.

With One Medical, One Medical’s Iora Health and Amazon Care, Amazon was on the brink of also having at-home and primary care capabilities. Then it announced it is shutting Amazon Care down.

What’s next is likely more acquisitions. It was also reportedly in the run for Signify Health. Based on that and Amazon’s interest in at-home visits through Amazon Care – and its in-home tech capabilities – another step into the home only seems logical.

It is reportedly testing out other health care businesses on its own – one codenamed “Katara” – according to Business Insider. That specifically appears to be a direct-to-consumer, virtual model. For now, home-based care as we know it doesn’t seem to be involved in the plans.

Chances are, there’s a lucky seller out there who is taking calls from Amazon now. They opted for a buy over build strategy with One Medical. Now that it nixed Amazon Care, the same strategy could be applied in the home.

Walmart and Best Buy

Announced Wednesday, Walmart is partnering with UnitedHealth Group to help deliver value-based care to seniors.

What’s most intriguing is the possibilities not mentioned in this press release.

If UnitedHealth Group’s deal for the home health provider LHC Group Inc. (Nasdaq: LHCG) goes through, home health care service offerings could be a part of what Walmart could advertise to its expansive consumer network.

Walmart already had partnered with LHC Group’s competitor – Amedisys Inc. (Nasdaq: AMED) – to expand home health care access in 2019.

“We want to support people being in their home and aging in place,” Walmart Health’s former SVP Marcus Osborne said last year. “We also want to address social isolation and … how technology is playing a role there.”

Meanwhile, Best Buy has been turning its Geek Squad into pseudo care teams.

“We are also making progress leveraging our Best Buy capabilities in this space,” Best Buy CEO Corie Barry recently said. “Our Geek Squad team successfully completed additional health training in Q2 and launched a new Geek Squad pilot service with Geisinger Health.”

The company has its hands in the hospital-at-home marketplace after acquiring one of the premier home-focused technology companies in Current Health for $400 million earlier this year. It also acquired GreatCall — a company that specializes in helping seniors age in place through smart phones, medical alert devices and other technology – for $800 million in 2018.