Will Retail Health Really Disrupt Healthcare?
The American Hospital Association Center for Health Innovation recently released a report forecasting the revolutionary changes that retail firms and tech giants will bring to healthcare delivery in 2023 and beyond. This shift signals a potential change in the retail healthcare sector as companies strive to gain market dominance in primary care, concierge medicine, virtual care and home medical services while providing patients with personalized experiences.
The $260 billion primary care market, previously dominated by traditional fee-for-service providers, is rapidly transforming. A Bain & Company report estimated that nontraditional players could capture up to 30% of the total market share by 2030.
Winning the Patient Acquisition Game
The shift from fee-for-service towards value-based care requires a massive collection of patients to manage appropriately.
Amazon is making a major investment by acquiring One Medical, a leading concierge primary care provider. The move comes at a price tag of $3.9 billion. One Medical has 188 offices across 28 markets, serving approximately 767,000 members.
Shortly after Amazon and One Medical announced their partnership, CVS Health unveiled its plans to acquire Oak Street Health for $10.6 billion.
Walgreens was bullish on primary care transformation and increased its ownership position in VillageMD to 63% from 30% in 2021. Last month, VillageMD announced the completion of its Summit Health-CityMD acquisition, creating a footprint of 680 provider locations in 26 markets.
Walmart already has a significant retail footprint with approximately 5,000 stores that generate walk-ins to their clinics. In addition, Walmart has opened 16 new health centers in Florida to bolster its primary health delivery, including labs, X-ray and EKG, behavioral health, dental, hearing, select specialty services, and community health.
Pharmacy As The Money Maker
CVS has over 10,000 retail pharmacies in the U.S. and Puerto Rico. The pharmacy benefit management arm brought in $43.7 billion in revenue in the quarter, up from $39.3 billion in the fourth quarter of 2021. The PBM giant also reported $169.2 billion in revenue for 2022, up from $153 billion in 2021.
RxPass from Amazon Pharmacy is a new subscription service that allows Prime members to get their prescription medications faster and more conveniently. For just $5 a month, members can enjoy free delivery on eligible prescription medications and access to discounted prices on select drugs.
The limitation with RxPass is that government-funded insurance such as Medicare or Medicaid is not eligible, and RxPass is not currently available to send medications to California, Louisiana, Maryland, Minnesota, New Hampshire, Pennsylvania, Texas, and Washington.
While RxPass may not contribute substantially to Amazon's revenue at the moment, with such an extensive base of Prime members, this is expected to affect their bottom line positively.
Healthcare Crystal Ball
One overlooked area is the rural parts of the country that lack sufficient healthcare delivery. A 2021 study showed that 80% of the country lacks adequate access to pharmacies, primary care doctors, hospitals, emergency services, and community health centers. This can be a potential opportunity.
Dollar General is stepping up by launching a trial program for mobile clinics at three locations in Tennessee. They are working alongside DocGo, who provide medical and transportation services onsite outside their stores. It's estimated that 75% of people living in America can be found within five miles or less of one of Dollar General’s branches - fulfilling the requirement for quality care that was not previously accessible.
It remains to be seen if retail health will create disruption and capture 30% of the market by 2030, with patients demanding healthcare that is just as convenient and easy to use as their other retail experiences. Will this ambitious goal become a reality? Only time will tell.