CVS Health is planning to build “50 to 60” new Oak Street Health clinics in 2024, the company … [+]
Two months after CVS Health closed on its $10 billion acquisition of Oak Street Health, the drugstore giant is planning a major expansion of its senior clinics.
CVS Wednesday said it will be expanding the senior healthcare services of Oak Street to 25 states from 21 by the end of this year. Oak Street, which currently employs about 600 primary care providers and has more than 170 medical centers, will increase the number of health centers by another “50 to 60” in 2024, CVS said.
“As Oak Street expands to additional geographies, these opportunities to drive higher patient growth will continue to increase,” CVS chief executive Karen S. Lynch told analysts and investors on a call Wednesday to discuss second quarter earnings.
“By the end of 2023, we expect to have Oak Street clinics in 25 states, up from 21 at the close of the transaction,” Lynch added. “We will also open new Oak Street clinics co-located with CVS Pharmacies this year and have already identified additional locations for 2024. We now expect to build 50-60 clinics next year.”
The expansion puts CVS on track to meet its original goals for Oak Street when the company was purchased two months ago. By 2026, CVS has said Oak Street Health “will have more than 300 centers, each of which has the potential to contribute $7 million of Oak Street Health Adjusted EBITDA at maturity.”
CVS Tuesday reported a 37% drop in profits to $1.9 billion in the second quarter thanks largely to costs from restructuring and acquisitions made this year including the purchase of Oak Street.
CVS, which for years now has operated in-store clinics staffed by nurse practitioners and has expanded the number of healthcare services and products within its retail locations by converting certain stores into HealthHUBs continues its push deeper into healthcare. Last year, CVS agreed to spend $8 billion to buy home care provider Signify Health.
Given CVS Health’s thousands of drugstores and Aetna health plan members who don’t have access to a primary care physician, Lynch sees a huge growth opportunity for Oak Street’s services. Oak Street centers and services are also covered by other health insurers.
“We are accelerating patient growth through our broad community presence and ability to engage consumers across multiple channels,” Lynch said on the company’s earnings call. “Today, there are approximately 1 million Medicare eligible seniors who visit CVS Pharmacies each week that are located near an Oak Street clinic.”
Marketing of Oak Street Health services and locations has been well underway this summer since CVS closed the acquisition in early May.
“We launched new member engagement initiatives focused on creating connections between Medicare eligible CVS customers both in-store and digitally and Oak Street Health providers,” Lynch said. “We are also connecting Aetna Medicare members who are currently without a primary care physician with their local Oak Street provider to reengage them in their care. These initiatives will drive Oak Street patient growth and accelerate the path to mature clinic profitability while broadly serving the needs of Medicare members.”