What CVS’s Signify Health acquisition means for the future of healthcare
CVS Health recently acquired home healthcare agency, Signify Health, for a whopping $8 billion. With the biggest players across the healthcare industry interested in making an offer, I only expect the popularity and availability of home healthcare to grow from here.
This healthcare evolution makes sense and has been happening steadily in recent years. Why? Because as consumers we value our time and convenience, whether it’s a two-day Amazon delivery or Doordash. People enjoy when products and services come to them (and fast) — healthcare included. Instead of patients travelling to doctors, doctors will now visit patients so that people receive the care they need in the place they’re most comfortable: their own homes.
This is not CVS’s first expansion beyond physical store locations. In 2018, CVS acquired the insurer, Aetna, and in 2007, the company acquired pharmacy services provider Caremark Rx. Adding Signify Health to the mix presents an opportunity for CVS to drive greater innovation in the healthcare industry, but it also creates new challenges as CVS attempts to scale operations and navigate highly siloed healthcare systems.
All in all, CVS has the potential to make a significant impact on the home healthcare sector — and the future of healthcare at large.
What are the opportunities for CVS and the healthcare industry?
With its collection of acquisitions, CVS is vertically integrating to fulfill patient needs across the entire care spectrum. It’s a big win for the company.
For example, a Signify Health provider may be scheduled to see a patient with mobility limitations at their home. Before the appointment, the provider can stop by their local CVS and purchase a cane. After the home visit, the same provider may prescribe medications for pickup at CVS (and the patient’s fees may be covered by their insurer, Aetna). In this way, CVS Health makes it easier for patients and providers to navigate the complex healthcare system by centralising services and improving coordination of care delivery.
Along with this vertical integration, CVS will likely increase Signify Health’s digital capabilities to improve patient-provider experiences. Since the early 2010s, CVS has embraced digital tools like texts, emails, and mobile apps to update and engage customers. Automated messaging about prescriptions, appointments, and vaccinations improve the patient journey, while alleviating time-consuming tasks for providers. CVS can integrate these existing digital capabilities into Signify to streamline communications between providers and patients.
Another common healthcare pain point CVS is well positioned to improve is the interoperability of electronic health records (EHRs). As CVS Health expands into different roles across the healthcare journey, the company earns access to more — and more accurate and up-to-date — patient information. With their enlarged scope, CVS is likely to reduce data silos between segmented networks and increase information-sharing across providers in order to improve patient care.
The vertical integration, increased digital capabilities, and improved interoperability CVS brings will push the healthcare industry forward as a whole. While I don’t expect change to occur immediately, patients and providers will likely gravitate toward CVS’s home healthcare model, creating a higher standard within healthcare spaces for coordination of services via technology.
What challenges does CVS face?
As the largest pharmacy chain in the U.S., at least 70% of the nation’s population lives within three miles of a CVS store. With this reach, the retailer has the potential to offer medical services to people outside of condensed urban areas — building out community-based care. But this scale is a blessing and a curse. Signify has over 10,000 providers, which means that CVS is now tasked with coordinating millions of appointments annually.
Many additional challenges come with this level of scaling, including creating provider schedules, managing routes, and communicating between providers and patients. Often, home healthcare providers are either overbooked to keep up with demand or underbooked and left struggling to pay their bills. And on top of hours booked, scheduling often doesn’t take into account the geographic distances between patients’ homes. Imagine a provider helping one patient at noon and then driving an hour away to another appointment that starts two hours later. Even more, if the provider gets stuck in traffic or has appointments that run late, the inability to communicate updates to future patients leaves folks in the dark — unhappy and unhealthy.
All of these challenges are fairly unique to home healthcare and — if done manually at the scale required by CVS’s acquisition of Signify Health — threaten operational efficiency, provider well-being, and the quality of care delivered to patients. In an industry that already faces high rates of turnover, if CVS isn’t able to solve these challenges at scale and soon, the company could face potential labour shortages that threaten long-term relationships with customers.
One possible solution to mitigate scaling challenges is AI-powered intelligent scheduling and communication technologies. CVS likely already uses some version of this software to route retail deliveries and schedule in-store appointments — but it will be interesting to see how the company adapts this technology to Signify Health. Intelligent scheduling software eliminates manual processes like creating schedules, accounting for provider/client preferences, and geographic distances, building routes and providing real-time ETA updates to patients.
An added benefit of applying this type of software to the home healthcare sector is improved provider experiences and reduced turnover. In fact, when equipped with the right technology, deskless workers (a category that includes home healthcare providers) are twice as likely to be very satisfied with their job and over 50% more likely to stay at their job for the next five years.
What does CVS’s acquisition mean for the future of healthcare?
Just as two-day delivery and food delivery services aren’t going anywhere, home healthcare is here to stay. I expect the sector will continue to expand and innovate as more retailers like CVS and Walgreens make greater investments in home healthcare agencies and continue to push digital transformation initiatives.
I’m left to wonder, what will come next as more major companies with minimal healthcare backgrounds continue to enter the healthcare industry? Will there be subscription-based healthcare services as opposed to the traditional fee-for-service model? Will providers and payers integrate into the same networks? Just like with CVS’s acquisition of Signify Health, we’ll have to wait and see what opportunities and challenges unfold for the healthcare industry.
About the author
Rachel Disselkamp, Senior Director - Industry Solutions, Healthcare, Skedulo
Rachel is a recognized innovator on customer experience, product utilization, labour scheduling, and several human capital management disciplines. Over her career, she’s been the editor of a textbook on workforce management, owned a consulting business, worked with enterprise software vendors, such as ADP, Ceridian, and GHX, been a featured speaker for powerful employer groups, including the National Retail Federation (NRF), and advised influential political epicentres, such as the Office of the White House. Before joining Skedulo, Rachel served as Senior Manager of Healthcare Go to Market Strategy at Ceridian.