Primary care has been historically dominated by traditional providers that deliver care via fee-for-service models, but retail companies have been amping up their efforts to disrupt the space in recent years. Over the next decade, it will become increasingly difficult for hospitals and other traditional healthcare providers to ignore these disruptors, according to a recent report from the American Hospital Association. 

The report cited a Bain & Company analysis that predicted disruptors could own as much as 30% of the $260 billion primary care market by 2030. So what moves by Amazon, Walmart and CVS will the industry need to watch to assess whether these companies can make a truly disruptive entrance into the primary care space? 

Amazon

It’s not yet clear how Amazon is going to be able to scale its primary care offerings to compete with other retail disruptors like CVS and Walgreens, according to the report. 

The company has launched RxPass, a service allowing Amazon Prime users in 42 states to pay a $5 monthly fee to get as many as 50 generic medications, as well as Amazon Clinic, a message-based virtual care service available in 32 states.

The healthcare industry should watch closely to see if RxPass will help Amazon expand its pharmacy base, the report said. The pricing and distribution model could be favorable for some younger consumers, but it’s not yet known how seniors will take to the service.

Amazon also made a big move in July when it announced plans to buy primary care provider One Medical for nearly $4 billion, but that deal is facing scrutiny from the Federal Trade Commission. Recent reports have said that the agency is preparing a possible antitrust lawsuit to challenge Amazon’s practices as anti-competitive. Whether or not this deal will be completed is a major move for the healthcare industry to watch, according to the report.

The report also said it will be interesting to see how Amazon expands its collaborations with hospitals and health systems over the next few years. 

The company made big deals with health systems in 2022. For example, Amazon Web Services became the cloud provider for Geisinger and Tufts Medicine last year. Amazon also launched a new genomics service called Amazon Omics, that has been adopted by providers such as Children’s Hospital of Philadelphia.

CVS

Two years ago, CVS Health set a lofty goal for itself to achieve by 2030: to facilitate 65 billion healthcare interactions by 2030. To achieve this milestone, the company has made two huge deals in the past two months that healthcare leaders should be watching.

In September, CVS said it will acquire home care provider Signify Health. The deal, worth $8 billion, is expected to close in the first half of this year. 

Just a week ago, the retail pharmacy giant agreed to purchase primary care provider Oak Street Health for $10.6 billion in cash. The transaction is expected to close this year, but it will probably be met with a high degree of regulatory scrutiny. One antitrust advocacy group, the American Economic Liberties Project, already opposes the deal.

CVS is also strengthening its primary care strategy by expanding its MinuteClinics, of which there are more than 1,180 in the U.S. As the company continues to bolster its primary care expansion, it will be compelling to watch how it will engage with providers and payers for improved care coordination and delivery, the report said.

Walgreens

The other major retail pharmacy chain in the U.S. — Walgreens — has also recently made major deals in the primary care space. 

In 2021, the company made a $5.2 billion investment in VillageMD. The deal gave Walgreens a nearly two-thirds controlling interest in the primary care provider. Walgreens plans to open at least 600 primary care practices with VillageMD in more than 25 U.S. markets by 2025 — and 1,000 by 2027. It has yet to be seen whether these care sites can deliver the volume the partners hope, according to the report.

In November, the company said it will acquire medical practice Summit Health — including the urgent care clinic chain CityMD — for $8.9 billion. The deal is expected to close in the first quarter of this year.

Walgreens also closed a big home health deal last year. The company made a $330 million investment in home care company CareCentrix, obtaining a controlling interest in the company. 

It will take time for the healthcare industry to see whether Walgreens’ primary care expansion strategy pays off and how the company’s future revenues satisfy investors, the report said.

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