Key Takeaways

• Changes in consumer preferences related to medical service access and use are fueling a once-in-a-generation health market disruption likely to result in new business models, service offerings, and a fundamental recentering of the US healthcare system on patient preferences.

• Factors contributing to this market realignment include the following:

• Retail-centered medical service offerings demand more healthcare workforces than traditional provider-owned or hospital-led practices making employers of medically skilled workforces potential targets for M&A.

• Implementing technology-enabled care and services makes highly customizable care models attractive to insurers and consumers.

• The COVID-19 pandemic has normalized consumer attitudes toward virtual care options.

• Prescriptions drive medical reimbursement, and medical prescribers have become a commodity in the healthcare market.

• New data-enabled care and benefit designs will drive reimbursement changes that favor measurable outcomes over process-oriented payment approaches.

• Replacing medical prescribers with empowered consumers at the center of the healthcare ecosystem will create new demand that will fundamentally change care delivery systems and upend established medical pricing models.

Key Takeaways

• The healthcare market has largely resisted disruption from the 4th industrial revolution (or the leveraging of digital technologies to reimagine product and service delivery) that has occurred in nearly every other sector of the U.S. economy.

• Good news for disruption advocates: change is on the way and could be big.

• The business opportunity for CVS Health and Amazon appears ripe, given key shifts in consumer shopping behaviors since the onset of the COVID-19 pandemic. In November 2022, CVS Health released the results of a 2022 patient survey that found significant shifts in consumer shopping behaviors.

• Amazon (AMZN) announced Amazon Clinic, a message-based virtual care service now available in 32 states that connects customers virtually with Amazon for telehealth or digital care options.

• On its most recent earnings call, digital therapy company Dario Health (DRIO) announced a partnership with CVS Health/Aetna (CVS). We believe this partnership is part of CVS’s new Virtual Primary Care medical services model, planned to go live nationwide in January 2023 (details are yet unannounced).