FOR PROFIT HEALTHCARE

Health exec: 'Publicly traded entities don’t necessarily understand clinical culture'

CVS, Amazon health care mergers ‘could be highly transformative’: SCAN Health CEO

Anjalee Khemlani
·Senior Reporter
Fri, March 3, 2023 

Retail health care is not a new concept. There's the recent push into the space by CVS (CVS), with its $10.6 billion Oak Street Health acquisition, and Amazon (AMZN) acquiring One Health Medical for $3.9 billion. But all that activity is a reason to pause and reflect what kind of culture for-profit entities will bring to a medical service space.

That's according to SCAN Health Group CEO Dr. Sachin Jain, who said the acquisitions could be an opportunity to connect existing health care verticals with the new clinical services. (See Video Above)

For example, CVS is not just a national drug chain anymore. It is also an insurance company and pharmacy benefits manager. That means it will want one part of its business to support the other, like finding a way to "highlight" Oak Street Health with its Aetna members, according to an executive on the latest earnings call.

"I've just been around the block enough to know that, oftentimes, publicly traded entities don't necessarily understand clinical culture. They're making decisions, sometimes, for the short term," Jain said. "When you're making decisions to hit a quarterly earnings target, you aren't necessarily doing the things you need to do to improve peoples' health over the long term."

It's why the deals could easily fall apart in the future. Or not. The jury is still out.

"They're still figuring it out," Jain said.

In addition to the providing health care services, retail pharmacies like CVS and Walgreens (WBA) are looking to get into the drug trial space, but even that is a work in progress.

Jain currently runs the California-based non-profit insurance company, but has held several positions in the past including in the U.S. Health Department, at Anthem (now Elevance Health (ELV)) and Merck (MRK). He is part of a segment of experts that worry about the impact of mergers and acquisitions by large for-profit entities in health care. Over the years, the cost of care has gone up as a result of such M&A activity and an influx of private equity, according to studies.

It's why, for now, traditional health care organizations are still the best bet. But that could change with the retail moves.

"I worry that some of these entities will put profits before patients. I think the American public is tired of being seen as a profit center when it comes to their health and their wellness," Jain said.