With another retail company making moves in the home care space, it begs the question of whether these companies will be effective leaders of the burgeoning sector of healthcare.

Ellen Herlacher, principal of LRVHealth, said while it’s too early to tell, retailers will likely prove beneficial for home health. Her comments come after Walgreens Boots Alliance (WBA) announced Tuesday that it will acquire its remaining 45% stake of CareCentrix for about $392 million. The Tampa, Florida-based startup provides several solutions to support care in the home, including home nursing, home infusion and home palliative care — and serves more than 19 million people in more than 7,400 locations, according to the news release.

“This is all unfolding in real time, so it remains to be seen whether Walgreens (or any of these retailers) are actually effective owners of home health companies,” Herlacher wrote in an email. “But if you’re bullish on this trend, then you probably believe that retailers are natural owners of home health companies because they are trusted brands in the consumer’s healthcare ecosystem … and trust is really important when you’re talking about business models that send strangers to frail and elderly people’s homes.”

Another industry leader agreed that retailers could be strong in the home health field. But they need three key ingredients to be successful, said Ashraf Shehata, KPMG U.S. national sector leader of healthcare and life sciences, in an email. First, they need to be a “convener” between the payer, provider, consumer and manufacturer. Second, they need a solid combination of technology, business design and consumer incentives. Third, home health needs to be part of a suite of other capabilities.

“They can’t stand on their own,” Shehata said. “Especially as we look at retailers across the board, they already have and are building robust health delivery organizations. As long as these home health acquisitions fit as part of a new architecture of capabilities, resources, products, and services, they’ll be very valued and will be a long term high contributing value to the organization.”

WBA, located in Deerfield, Illinois, first gained its 55% majority stake in the home care company in August with a $330 million investment that garnered CareCentrix an $800 million valuation. The full acquisition, pending approval, is expected to close by March. 

WBA’s news follows CVS Health’s September announcement that it is planning to acquire home care company Signify Health. Herlacher said that for both companies, the acquisitions pose benefits.

“At a glance, the CVS and Walgreens moves look similar — acquiring home health assets that have strong value-based care attributes,” she said. “The acquisitions give them a greater share of the healthcare dollar and they allow them to deepen their relationships with their customers and communities through a presence in the home.”

But while many retail companies are moving to home health, the trend isn’t necessarily driven by competitors’ actions, Shehata declared.

“It’s less of a reaction or a ‘me too’ approach,” he said. “It’s more about creating value for their business model with home health. Whether it’s a life sciences centered model, payer centered model, provider centered model, or retail centered model, home health has an answer in all of those. There is not a one-size-fits-all for why people get into home health but clearly, it’s becoming a more and more critical part of their competitive advantage. More importantly, a critical part of framing their solutions for the consumer.”

In buying CareCentrix, Walgreens is also bringing into its fold a company with a large revenue base.

In fiscal year 2021 for the retailer, CareCentrix had pro forma sales of $1.5 billion, according to the news release.

Becoming the full owner of the startup greatly improves WBA’s ability to reach the consumer, said Roz Brewer, CEO of WBA.

“Our full acquisition further accelerates our transformation to become a consumer-centric healthcare company, leveraging innovative platforms that extend our capabilities into fast-growing segments of healthcare,” Brewer said in the news release. “CareCentrix is key to offering services to our patients at every stage of the care continuum, and to driving long-term, sustainable growth as part of our U.S. Healthcare strategy.”

WBA did not return MedCity’s request for additional comment beyond what is in the news release.

Merger and acquisition activity in home healthcare likely won’t stop with WBA, Herlacher predicted.

“This is just the beginning of home health M&A,” she said. “There are so many factors that point to the home as an increasingly important site of care. Our population is aging, the throughput of healthcare workers does not meet current or projected needs, the cost of care continues to increase and will likely explode due to inflation. We must get comfortable with the home as a site of care, and we must make investments that enable that transition to occur.”

Still, solutions in the home health space need to prove themselves, Shehata said.

“Despite all of the energy and excitement, there still needs to be financial proof that these solutions are truly making an impact in curbing the cost of care, improving quality and delivery, and improving access,” he said. “The business case needs to be proven, but all of the ingredients are there. It’s just a matter of time until home health is a part of the critical delivery network.”

Photo: Kritchanut, Getty Images