Amazon, CVS, and Walgreens are attempting to break into the healthcare market and change it for good.
- Many giant retail companies are breaking into the $4-trillion healthcare market including Amazon, CVS, and Walgreens.
- The companies are investing in an attempt to switch U.S. healthcare to a value-based model from a fee-based model.
- Many economists say these companies breaking into the market and making healthcare more consumer based could help lower healthcare costs.
Why it’s news
The United States has the world’s highest healthcare costs per capita.
In 2021, the U.S. spent an estimated $12,318 per person on healthcare while Germany, the second highest, only spent $7,383, according to Peter G. Peterson Foundation.
The U.S. healthcare system currently runs on a fee-for-service model—meaning that healthcare professionals are paid per service rather than getting paid for healing individuals.
What that means is that a doctor who performs five services on a patient is getting paid more than the doctor who performed one service to heal someone and some believe doctors are performing more services than needed.
Retail giants like Amazon, CVS, and Walgreens are breaking into the sector in an effort to change all of that. The companies are attempting to shift healthcare to value-based care.
VillageMD, which is mostly owned by Walgreens, recently acquired physician practice group Summit Health for $8.9 billion.
Walgreens is planning to move “swiftly to implement our vision of consumer-centric tech-enabled healthcare solutions that improve outcomes and lower costs for patients, providers and payers,” says Walgreens CEO Roz Brewer.
Both Amazon and CVS are also both acquiring healthcare companies that they seem fit in an effort to lower the costs of healthcare.