Major pharmaceutical and retail companies are pushing hard to turn themselves into medical providers.
Key Details
- Walgreens recently announced plans to purchase New Jersey-based Summit Health-CityMD for $8.9 billion.
- Walmart announced a partnership in September with healthcare provider UnitedHealth Group to provide preventative care for senior citizens.
- CVS, who already owns Aetna, won a bidding war in September to purchase Signify Health, with a bid of $8 billion.
- Amazon has also made numerous attempts to compete in health care.
- There is no sign that any of these companies are going to slow down their expansions or acquisitions.
Why it’s News
The health-care market is fiercely competitive and difficult to break into but the recent successful acquisitions and partnerships by pharmaceutical companies and retail companies are turning up the heat. The demand for cutting-edge health-care companies is hot and is creating opportunities for established companies to expand.
“For CVS, which already owns a pharmacy-benefits manager and insurance giant Aetna, now isn’t the time to take its foot off the accelerator, despite pressure to focus on buying back shares,” says The Wall Street Journal.
Now is the time to compete as major networks rapidly consolidate and take advantage of current market headwinds.
“Just as important is the long-term opportunity as an aging American population leads to growth in Medicare Advantage enrollment, which is shifting providers into value-based reimbursement models. This largely explains the race to acquire your local doctor’s office. While your family doctor might have belonged to a small practice, chances are he or she is part of a bigger group now as consolidation in the primary-care space heats up,” says WSJ.
Notable Quote
“The obvious model for CVS-Aetna, as well as other insurers seeking to bulk up their medical businesses, is UnitedHealth Group Inc. Through its medical-provider arm, Optum Care, it has been buying multi-specialty physician practices, and it now counts 60,000 physicians in 2,000 locations … UnitedHealth’s strategy has helped it outperform its peers, making it the seventh most valuable company in the U.S. with a market capitalization of more than $500 billion,” reports the Journal.
