Accessibility Drives A Consolidating Digital Health Market

BY GRACE MOEN

Walgreens announced last Monday it will acquire provider network Summit Health for $9 billion on behalf of primary care provider VillageMD. The addition of Summit Health expands VillageMD’s portfolio, which already includes CityMD and others, to continue their efforts at providing wrap-around services for whole-person care. 

The acquisition is part of a wave of consolidations by retail giants in 2022. In July, Amazon bought One Medical for $4 billion. In September, CVS bought Signify Health for $8 billion. Walmart purchased MeMD in May for $6 million, which launched the retail giant’s foray into telehealth services. 

What all these deals have in common is a strategic interest in expanding the type of care offered—primary care, cardiology, women’s health, and LGBTQ+ health services are seeing major investments lately—as well as where it’s being offered. Solving the access issue within healthcare is multifaceted; it can take many forms, from policy changes to education investments, but the most pressing one today is the double-bind issue of resource shortages and consumer affordability, both which continue to be a considerable barrier, with poorer outcomes as a result. But, this is changing. 

Take for example, Amazon, which “may well be the ‘Amazon of healthcare,’” said Marissa Schueter of OMERS Ventures in a June digital health forum dedicated to the topic of investments and merger and acquisition activity. The brand's ubiquity in people’s lives positions them as an effective delivery vehicle for almost everything, including healthcare. 

It’s a framework that works, and folding healthcare services into its offering might just be the difference between someone consulting a doctor when they need one, or not. Or refilling a prescription, or not. While the meet-people-where-they-are approach is not a new model, it has gone mainstream. 

Healthcare is no longer relegated to inside clinic walls. Health happens everywhere, and so too does healthcare. Companies that function in retail, virtual, or in-home environments are gaining in momentum and money. The pandemic only accelerated this trend, forcing the hand of policymakers and tech-reticient physicians and patients alike. Reporting from McKinsey indicates a 38x increase between pre- and post-pandemic telemedicine usage. Throughout the pandemic, retail clinics were essential as a distribution point for vaccines and other primary care services, proving themselves as a concept with real value. And the big players are taking notice. 


Everyone needs healthcare and, if it can be made accessible and affordable, that’s the game. Rather than develop their own products in-house, the Amazons, Walmarts, Best Buys, and Walgreens of the world are swooping up the products that already have traction in the market, thus furthering their play at wrap-around health services in an environment that’s convenient to consumers. 

Rock Health, an investment and advisory firm that’s been tracking the digital health market since 2010, broke down M&A activity into four distinct archetypes to help understand what motivates a large company to acquire a smaller one. 

The industry did not get here overnight. In the early days (2008) of technology-enabled healthcare, tech was a humble product feature within existing analog systems. Then it became a data storage container, then data collector, then a mechanism to integrate disparate systems and share data between them. Today, tech is the fuel that powers everything from billing and scheduling, predictive disease models, and patient experience. 

The utility of tech is not the only market indicator to evolve though. The size and scope of deals has also changed dramatically since the mid-aughts, from a few-hundred thousand to the multi-billion deals of 2021. Today’s $9 billion Walgreens-Summit Health deal is, relatively speaking, not huge. The Teladoc-Livongo deal was twice that. But it is a meaningful indicator of Walgreens’—and other big players—intentions towards building the full-service care delivery ecosystem of the future.   

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Grace Moen