Healthcare in the Crosshairs of National Conglomerates
By Barbara C. Carey and Mike McCall, RN
Stronger Competition for Hospitals and Medical Clinics
Data is pointing to the huge growth in the healthcare sector as the largest generation - the baby boomers - are aging and requiring more healthcare services. The "Boomer" generation has been referred to as the “pig in the python” because their numbers dwarf those of other generations.
What are some recent acquisitions that are bulking up large companies in the healthcare sector?
CVS Health Corp. paid $8 billion to acquire Signify Health, Inc. This acquisition will add 10,000 physicians to the CVS network. They are also acquiring a very sophisticated patient technology system. Signify sends doctors on house calls with technology and analytics platform connected to iPads used in assessments and to connect with follow- up services. Acquiring physicians is the most important strategy for gaining market share in the healthcare industry.
CVS is transforming itself from a pharmacy company to an integrated provider of medical services. In 2018, CVS acquired Aetna which added a significant insurance component to their business.
CVS is also in the "walk-in clinic" business and has been adding clinics to their pharmacy locations. The new CEO, Karen Lynch has a goal of expanding the Company’s market share in home health. The home health sector is growing because seniors want to be treated at home and not in an institution when they have a choice.
Walgreens Boots Alliance, Inc. has finalized a deal with CareCentrix, for a majority stake in that business. CareCentrix emphasized value based care and analytics in their business model. They have 8000 providers. This gives Walgreens a national access point in the home health business. Walgreens also has “Community Care Clinics” and a provider network for referrals.
United Health acquired home health provider LHC Group in 2022 for $5.4 billion. LHC Group has 557 home health care locations, 170 hospice locations, 136 community based
service locations and 11 long term acute care hospitals. LHC Group employs 32,000 people.
Humana, Inc. agreed to take full control of Kindred at Home (now renamed Centerwell) last year. Kindred claims to be the largest provider of home health in the US with 775 locations in 40 states with 43,000 associates.
Walmart has recently entered the healthcare provider segment with Care Clinics in their stores as well as freestanding. They have 4700 stores in the US. They are positioned to become the largest primary care provider in the country. They state that “they are committed to making healthcare affordable and accessible.” Walmart has dominated every business segment that they have entered. Healthcare services are more complex than groceries, but Walmart is a data driven company and TCI believes that they will figure out how to meet their goal.
Will these new competitors stay in medical clinics, pharmacy and home health or will they venture into hospital care or outpatient medical services like imaging and labs?
TCI believes that these corporate entities will begin to “cherry pick” the most lucrative segments of health care and acquire companies that give them a market share in those businesses.
The question is…"Knowing how the industry is changing, how will hospital and clinic leaders position their organizations?" This is the strategic planning discussion that needs to happen in 2022 and 2023. Leaders need to do their research and think about the “What if’s?”
TCI recommends that hospitals and clinics use this precious time to strengthen their reputations with patients and their communities. The goal should be to gain patient loyalty and to be their preferred provider of choice. These new competitors will emphasize convenience and accessibility. Pharmacies currently have drive through services. Will they have drive through primary care? Will these new competitors begin to aggressively offer primary and specialty care through telehealth? These are the strategic questions that need to be discussed so that leaders can begin to position their organizations for great shifts coming in the healthcare industry.
Remember the neighborhood grocery, neighborhood pharmacy and neighborhood hardware stores?
Some still exist, but not as many as there were 20 years ago. Trends are emerging in healthcare and NOW is the time to prepare.
Contact us today for more information about our Community Outreach programs to grow patient and community loyalty as well as become the preferred provider of choice!
We Help Our Clients Understand Their Environment and to Find Solutions.
Call Us 1-888-922-2824 or Email barbara@tciconsults.com
