CVS Acquires Primary Care Provider Oak Street Health for $10.6 Billion
CVS Health Corp. (CVS) announced plans to spend $10.6 billion to buy Oak Street Health (Oak Street), which specializes in clinics treating Medicare Advantage patients. The company would pay $39 per share in cash for each share of Oak Street in a deal expected to close this year. This acquisition is another example of expansion in value-based care, which rewards providers for keeping patients healthy instead of paying them for every service performed.
Oak Street runs care centers primarily for lower- to middle-income people with Medicare Advantage plans, which are private versions of the federal government’s program for people aged 65 and older. Founded in 2012, Oak Street runs 169 locations in 21 states, and the company expects to have more than 300 locations by 2026.
“Enhancing our value-based offerings is core to our strategy as we continue to redefine how people access and experience care that is more affordable, convenient and connected.”
- Karen S. Lynch, CVS president and CEO
Employer Takeaway
CVS’ purchase of Oak Street aims to capitalize on the federal government’s interest in cutting costs and improving people’s health in its Medicare program. The health chain has already been expanding the amount of care it provides through its drugstores and has been talking about plans to add more primary care—just as their rivals Walgreen Co. and UnitedHealth Group Inc. have done.
Value-based care is becoming a dominant model in U.S. health care, using doctors, social workers and other providers to help people better manage their health. Many health care costs in the United States are related to people with chronic health problems who receive poor care and more severe medical issues. The end goal of value-based care is to hold off big medical expenses, such as hospital stays. Many employers are already nudging workers to choose high-performing doctors and hospitals and avoid unnecessary services and low-rated health providers to help cut costs and improve employee health.
Employers should continue to monitor health care news and trends.
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