CVS Health pushes forward with efforts to reshape segments of the healthcare industry
Recent acquisitions give the company a platform from which to provide seamless experiences for consumers and nudge the industry toward value.
About two decades after adding the first three MinuteClinics to its stores, in 2005, CVS Health continues to grow as one of the biggest disruptors in healthcare.
The company has embarked on a series of strategic transactions that make it a major player across an increasingly large swath of the industry, as described this month during a presentation at the 41st annual J.P. Morgan Healthcare Conference in San Francisco (information and comments in this article were taken from a provided recording).
“CVS Health is positioned uniquely to support an individual’s health and well-being at every stage of their life,” said Karen Lynch, president and CEO.
She said the company already can finance consumers’ health through its Aetna health plans, directly provide care both at health hubs such as MinuteClinics and virtually, manage chronic conditions through Aetna, and manage medication adherence through Caremark, its pharmacy benefit manager.
“Our vision starts with everything to do with a consumer,” Lynch said. “Consumers have dramatically changed their expectations around healthcare, and they want healthcare to be delivered with the same convenience, access and digital options that they have in every single aspect of their life.”
She added, “Our goal is to become the leading healthcare solutions company by delivering superior healthcare experiences.”
Leadership thinks recent moves will advance that objective.
Seeking to ramp up value
In the context of value-based payment (VBP), Lynch said CVS Health is looking to “swing the pendulum to where it’s more of a risk-adjusted value-based care arrangement.”
With VBP having had less than a transformational impact in the industry to date, CVS Health hopes to provide a key missing ingredient, said Shawn Guertin, executive vice president and CFO.
VBP “has been around for a long time, and it hasn’t gone away because it’s a good idea and it is the right idea for the future, but obviously something hasn’t been there to make it work,” Guertin said. “We’ve known for a long time [regarding] specific conditions what needed to happen to actually get better outcomes: It’s always been about engaging the patient.
“When you think about our proximity to the customer geographically, the frequency with which we naturally interact with that customer across multiple dimensions, the convenience that we can then bring to those interactions, I think that’s going to be a real winning formula for us to unlock engagement.”
He added, “We’re really learning [about] some of the things to do that actually can alter behavior in a positive way. We’ve used the financial club for a long time to try to affect that. But convenience is really a big ‘unlock’ in this.”
A future cog in the portfolio
Last year’s $8 billion acquisition of Signify Health, a transaction that is on track to formally close during the first half of 2023, was initiated to enhance CVS Health’s value-oriented capabilities. Signify uses data and technology to support the VBP efforts of payers and providers, including by offering in-home health assessments to a customer base of more than 2 million.
“Being in the home is the future of healthcare,” Lynch said.
Beyond that, Signify in early 2022 had purchased Caravan Health, which specializes in provider enablement services for accountable care organizations. The combined proficiencies of those two companies should make CVS Health a factor across the VBP spectrum.
“All good strategy is premised on powerful trends,” Guertin said. “Value-based care is one. The desire for care in the home — and the home as sort of a situs of care — is one of those trends. That’s not just personal preference, that’s what’s happening technologically with the ability to treat people in the home for different conditions. That is a really important long-term trend that we’ll continue to build on — but Signify gives us this great platform to step into that space.”
A possible next target
Areas where CVS Health lacks a major presence include primary care, acute care and post-acute care, although its expanding capacity in home health could be a way to grow in the post-acute and, possibly, acute care spaces.
Primary care is on the company’s radar, but no acquisition is imminent.
“It’s an asset that we want in our portfolio,” Lynch said. “We want to make sure it’s the right asset at the right time. We continue to evaluate our options.”
“There could be an owned capacity through which we deliver that and get benefit, but there can also be an enabled capacity,” Guertin said. “I think we see ourselves, for a variety of reasons, playing in both spaces — enabling that transition to value-based care for non-owned clinicians, if you will, and then having our own clinicians where we think that makes sense.”
The company’s 2022 estimated operating cash flow of between $13.5 billion and $14.5 billion will allow for continued investments, Lynch and Guertin said.
For example, CVS Health this month invested $100 million in Carbon Health, a cloud-based platform designed to improve primary care and urgent care by offering easy access to an integrated care team. The platform will be piloted inside select CVS locations.
Headwinds on the health plan side
Aetna is one part of the CVS Health portfolio where positive momentum has been harder to sustain recently, at least in Medicare Advantage (MA). The company projected this year’s percentage enrollment growth in its MA plans to come in somewhere in the low- to mid-single digits, a rate that would not meet expectations.
“This result was due to a highly competitive open-enrollment period,” Lynch said, noting that the disappointment was partially offset by increases in Aetna’s dual-eligible special needs plans and MA group plans.
The relatively sluggish growth may have stemmed in part from a decrease in the health plan’s public-facing MA rating for its national PPO contract from 4 stars to 3.5 on a 5-star scale. Lynch said the key factor was a small drop in the CAHPS survey score.
To reverse the decline, she said, “There are a lot of opportunities for us to drive actions to improve our engagement with consumers.”