Primary care provider focused on seniors sees growth after CVS Health acquisition.
February 2024 – The Journal of Healthcare Contracting
By Daniel Beaird
CVS Health acquired Oak Street Health last May for approximately $10.6 billion and Oak Street continues to operate as a multi-payor primary care provider as part of CVS Health. Its care model specializes in providing older adults comprehensive preventive care, including personalized wellness plans, integrated health services, and educational and social activities to support overall health and well-being.
With plans to expand to 25 states, the primary care provider for seniors currently employs about 600 clinicians at over 170 medical centers with plans to add up to 60 more centers in 2024. Karen Lynch, CEO for CVS Health, told analysts and investors on an earnings call in 2023 that opportunities to drive higher patient growth will continue to increase as Oak Street expands to additional geographies.
“We will open new Oak Street clinics co-located with CVS pharmacies this year and have already identified additional locations for 2024,” she said. By 2026, Oak Street will have more than 300 centers, according to CVS Health, “each of which has the potential to contribute $7 million of Oak Street Health Adjusted EBITDA at maturity.”
Few Americans feel healthcare is handled very well in U.S., especially for older adults
Just 12% of Americans think healthcare in general is handled extremely well or very well in the U.S., and fewer think the same about healthcare and community support for older adults, according to a poll from the Associated Press (AP) and the NORC Center for Public Affairs Research.
“When we think about primary care, it is the foundation of how we deliver healthcare in this country,” said Dr. Sree Chaguturu, executive vice president and CMO for CVS Health, in a statement. “It’s that trusted relationship that helps you navigate the complexity of the American healthcare system.”
CVS says value-based care aims to increase the focus on primary care by improving the quality of care. “We know that when you increase primary care access, good things happen,” Dr. Chaguturu added.
Oak Street is a Medicare-focused primary care provider that addresses senior patients, of which over 50% have a housing, food or isolation risk factor that impacts their access to quality care. In addition to Signify Health, a home healthcare provider also recently acquired by CVS Health, Oak Street increases access to care for older adults.
Health services segment for CVS sees increase in third quarter
CVS Health’s health services segment, including both Oak Street and Signify, increased total revenues by 8.4% in the third quarter of 2023 compared to the prior year driven by pharmacy drug mix, growth in specialty pharmacy, brand inflation and the acquisitions of Oak Street and Signify. During its third quarter earnings call, Lynch said CVS Health is scaling capabilities to accelerate growth at both Oak Street and Signify.
“Oak Street’s clinical model continues to demonstrate exceptional performance,” said Tom Cowhey, interim CFO for CVS Health, during the earnings call. He said Oak Street was among the top 5% of ACO REACH program participants in the CMS 2022 savings performance, generating a gross savings rate of 21%.