CVS’ $10B Oak Street Health Deal a ‘Stepping Stone’ for Value-Based Care in Senior Living 

CVS Health (NYSE: CVS) on Wednesday announced the company is buying Oak Street Health in a transaction valued at $10.6B.

With the deal, CVS is gaining a new value-based primary care service line that connects older adults with primary and preventive care. Oak Street has 169 medical centers across 21 states.

“This agreement will accelerate our ability to deliver on our mission and continue improving health outcomes, lowering medical costs, and providing a better patient experience,” Oak Street CEO Mike Pykosz said in a statement.

Pykosz will remain in charge of Oak Street with the acquisition and CVS will organize the company into its own health care delivery organization.

Though it remains to be seen how Oak Street’s new ownership will affect its work with senior living communities, the deal is sure to be a “key stepping stone” in the senior living industry’s larger move toward value-based care, according to Bickford Senior Living President Andy Eby.

“Generally speaking, the senior living industry is behind in the move to value-based care compared to other health care services out there, particularly in the primary care world,” he told Senior Housing News. “It’s one of the most complex systems that’s ever been built and one transaction is not going to meaningfully change it; but, it is a key stepping stone.”

Oak Street has in the past worked with senior living operators, including a partnership in 2020 to connect residents of affordable assisted living communities in Illinois with primary care.

Now, Eby believes that the senior living industry has a golden opportunity to improve the American healthcare system at large, given its proximity to so many older adults.

“If our industry can make a meaningful dent in improving outcomes and lowering costs, that has an exponential effect on the overall healthcare environment,” he said.

Bickford Senior Living puts that sentiment into action with its “Higher Path” care model which connects and coordinates resident care, among other ways.

For CVS, the deal comes after an $8 billion purchase of Signify Health earlier this year, signaling the retail giant’s bet on the primary care market. However, CVS is not the only major player looking to add health care practices to its balance sheet, as Amazon last year bought One Medical.

Other players interested in coordinating care for older adults includes Genworth Financial (NYSE: GNW), which this week announced it plans to advance its investment in the clinical health care space with about $30 million earmarked for an investment in CareScout, an eldercare guidance and assessment company. That investment comes after a $20 million investment to evolve capabilities in 2022, Genworth CEO Thomas McInerney said on the company’s 4Q2022 earnings call.

For Genworth, the CareScout brand will house four new senior care-focused business lines and will include a plan to expand into markets outside the U.S. as early as 2025.

While health care giants scoop up Medicare-based practices, the senior living industry is also deepening its focus on health care with the aim of preventing visits to the emergency department and keeping residents in a health care network.

For example, Pine Park Health – which sets up offices inside senior living communities – this September announced an expansion of its value-based care model. Another company, Avenue Development is advancing a new active adult brand that will prioritize preventative wellness while also partnering with local hospital systems.

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