It has been widely reported that healthcare mergers and acquisitions are off to a strong start this year after ending a record-breaking year in 2017. In fact, the healthcare press this year has been replete with articles extolling the “good news” about healthcare investment and transaction activity. For example:

  1. As reported by Kaufman Hall, the number of “hospital and health system transactions announced in 2017 totaled 115, up 13% over 2016 and the highest number recorded in recent history.” Kaufman Hall, “2017 in Review: The Year M&A Shook the Healthcare Landscape,” January 29, 2018;
  2. According to data from Bloomberg, the total deal value of healthcare transactions announced in the first quarter of 2018 is approximately $156 billion. “Health-Care M&A Balloons in Busiest Start in More than a Decade,” by Manuel Baigorri (March 28, 2018) ( Not surprisingly, Bloomberg’s transaction value data also shows that first quarter 2018 is the busiest first quarter in more than ten years; and
  3. As reported last month by Forbes in, “Why Private Equity Loves Retail Healthcare from 2012 to 2017,” Nirad Jain, Kara Murphy and Jeremy Martin, April 4, 2018,, “From 2012 to 2017, the number of deals involving retail health companies—those that operate freestanding health-related outlets like dental clinics or urgent care facilities—has soared, increasing at a compound annual rate of 34% in the North American market.” Citing, the Bain & Company’s Global Private Equity Report 2018 (, the authors write that the growth in retail healthcare transactions is, in some significant part, a function of the fact that, “retail health is a fragmented, high-margin sector with strong growth characteristics. In a sea of high prices, it still offers targets at reasonable multiples and many opportunities to unlock substantial value.”

As evidenced by the multiplicity of articles, reports, white papers, etc. on the subject, the financial and economic aspects of the healthcare mega-merger trend could easily consume the time and attention of countless numbers of healthcare business analysts, economists, strategists, and soothsayers. However, it is important to note that such an analysis, if conducted in isolation, would miss one of the most important questions to be asked and answered about the mega-merger trend:

How will all of this deal activity impact the way healthcare is provided in the United States?

Clearly, there is no one simple answer to this question. In fact, the answer changes dramatically depending upon what type of healthcare service, or healthcare provider, or patient demographic, or healthcare payor category is at issue. Therefore, to prevent this blog post from becoming epic in length, lets focus on the rise of retail healthcare and its impact on what many consider to be the basic building block of healthcare in the United States – a routine visit to your doctor’s office.

Will a routine visit to your primary care doctor’s office survive the mega-merger trend and the growth of retail healthcare?

In an April 7, 2018 New York Times article entitled, “The Disappearing Doctor: How Mega-Mergers Are Changing the Business of Medical Care”, the authors posit that the wave of blockbuster healthcare mergers (both recent and in the offing) have presented a challenge to traditional models of primary care practice in the U.S.

In response to factors such as: (1) the persistent shortage of practicing primary care physicians in the U.S., (2) the perceived[1] cost savings associated with the promotion of preventive care as opposed to therapeutic care, and (3) the perceived[2] benefit (a greater likelihood that patients will access essential care on a more frequent basis under a retail healthcare model than they would under a physician office model) from having the convenience of retail practice locations as opposed to physician offices, many companies, both healthcare and otherwise, that have not previously focused on the delivery of direct-to-patient primary and preventive care are seeing business opportunities in the acquisition and expansion of retail healthcare ventures such as in-store health and wellness clinics and urgent care centers.

Aetna and CVS Health

Looking at some of the biggest healthcare deals that are currently in play from the retail health perspective, the proposed merger between Aetna and CVS Health is, in many ways, an extension of Aetna’s longstanding collaboration with CVS Health to make CVS Health’s MinuteClinics available to Aetna members, and, by so doing, encourage Aetna members to utilize the conveniently-located MinuteClinics as an alternative to more expensive settings.

In a co-branded Aetna/CVS flyer from 2013, Aetna and CVS advertised MinuteClinics as “neighborhood wellness centers” for Aetna members who have preventive benefits as part of their Aetna medical plan. The flyer reads:

Want to start working on your health goals? Can’t seem to find the time? Now you have a fast and easy way to get started. Aetna and MinuteClinic, the walk-in medical clinic inside select CVS/pharmacy locations, have come together to bring wellness coaching to you — right in your own neighborhood.

Trying to quit smoking? Concerned with your weight? Interested in understanding your health screening numbers? It’s easy to get the answers….

Visit your neighborhood MinuteClinic when you can. It’s open seven days a week, including evenings and weekends. You don’t need an appointment. Just walk in.

The three paragraphs above focus on the most common arguments supporting the benefits of retail health – convenience resulting from multiple geographically-dispersed locations and business days/hours that exceed those of traditional physician offices; ease of use from first come/first serve process (no appointments necessary); and a focus on wellness in addition to the provision of low-complexity therapeutic treatment services. As a result of the foregoing and other factors, proponents of retail clinics argue that people will be more likely to seek out and follow through on wellness/preventative care. In turn, it is argued that the ready availability of wellness services will likely reduce the treatment of disease or illness in higher acuity/more expensive settings – a good result for the patients and the healthcare system, alike.

Interestingly, the above sentiments are repeated and expanded upon by Aetna and CVA Health in their December 3, 2017 joint press release in which they formally announced their impending merger. ( In the release, Aetna and CVS Health state that the merger will create a new health service offering that, “…will function as a community-based health hub dedicated to connecting the pathways needed to improve health and answering patients’ questions about their health conditions, as well as prescription drugs and health coverage.” (emphasis added). Clearly, during the four years between the time when the flyer and the joint press release were issued, healthcare reform concepts – care coordination and population health management – have become increasingly important to the retail healthcare equation. It would seem that the infrastructure that has grown up around such concepts – bundled payments, quality-based reimbursement mechanisms, etc. – have increased the appeal of retail healthcare in the eyes of both strategic and capital investors.

Walmart and Humana

On March 29, 2018, The Wall Street Journal announced that, “Walmart Inc. is in preliminary talks to buy insurer Humana Inc., according to people familiar with the matter, a deal that would mark a dramatic shift for the retail behemoth and the latest in a recent flurry of big deals in health-care services.” Dana Mattioli, Sarah Nassauer, and Anna Wilde Mathews, “Walmart in Early-Stage Acquisition Talks With Humana,” The Wall Street Journal, ( . Currently, there is some reporting that the Walmart/Humana transaction may be tabled as a result of Humana’s April 2018 announcement regarding its pending acquisition of a 40% stake in Curo, a provider of hospice care to patients in 245 locations in 22 states. Nevertheless, neither Humana nor Walmart have announced any changes in their intent to enter into and complete the transaction. Moreover, regardless of whether the transaction is consummated, the possible Humana/Walmart transaction remains instructive as to the transformative nature of the mega-merger trend in the healthcare industry.

As noted in Bloomberg, the possible combination of Humana and Walmart caught many people off-guard (“Walmart – Humana Sounds Wild, But Makes Sense” by Tara Lachapella and Max Nisen, March 30, 2018, Bloomberg, at Although the parties’ March 2018 joint announcement evoked both surprise and wonder from some healthcare strategists and consumer groups, many of these previously bewildered individuals and groups are now saying that the combination, upon further consideration, makes sense for consumers and presents many benefits for both Humana and Walmart.

In the Mattioli/Nassauer/Wilde Mathews article published in The Wall Street Journal and referenced above, the authors identified several benefits (as well as detriments) for Walmart, Humana, and consumers that could materialize if the transaction were to be successfully completed.

Whether the transaction is completed by an acquisition or merger or the deepening of the parties’ current collaborative relationships, the transaction would create and/or capitalize on significant synergies between the two parties and their respective current healthcare-related activities. For example, in the retail healthcare space, the combination of Humana’s recently formed primary care subsidiary, Conviva,[3] with Walmart’s retail pharmacy business could result in significant synergies between the parties that would increase business volume for both Conviva and the Walmart pharmacies. Walmart is currently one of the largest retail pharmacies in the country. In the future, the combination of the Conviva clinics and the Walmart pharmacy operations could transform Walmart into a one-stop-shop for Humana’s 14.2 million policyholders as well as policyholders from other non-Humana healthcare plans. By co-locating the Conviva clinics and the Walmart pharmacies in Walmart’s retail stores, the Walmart pharmacies and the Conviva clinics retail clinics could generate additional business for each other – business that may not have materialized if the clinics were not moved to the Walmart retail/pharmacy locations.

For example, the availability of healthcare-related supplies, over-the-counter medications, and other healthcare items for purchase at the Walmart stores, when combined with the clinic’s ability to provide services that are tied to such items and supplies, could result in a significant volume of new business for Conviva. In other words, customers who go to Walmart to purchase over-the-counter drugs and other healthcare items and supplies may avail themselves of Conviva clinic services as they seek answers to questions about the condition that brought them to Walmart in the first place. On the flip-side, if a customer were to go to Walmart to address a healthcare complaint at the Conviva clinic, the patient would likely purchase any needed drugs/items/supplies from the Walmart in which the clinic was located. Certainly, if the patient would have gone to his/her primary care physician’s office if there was no Conviva clinic at a Walmart retail location, the likelihood that the patient would then go back to Walmart to purchase the necessary drugs/items/supplies would be less than had the Conviva clinic been located in the Walmart store.

Impact on Primary Care Physician Office Visits; Concerns Regarding Retail Healthcare

A Mixed Bag: Mega-Merger Impact on Traditional Physician Offices. To evaluate what the possible impacts are on traditional physician office practices as a result of the growth of retail healthcare, we can look at recent reports regarding the reported results of the historic and current growth of retail healthcare.

While retail clinics are expanding and reaching more population centers, office visits to traditional primary care doctors are already on the decline. According to analysis done by the Health Care Cost Institute, insurance data shows that visits to primary care physician offices have declined 18% from 2012 to 2016 while visits to urgent care clinics, in-store retail clinics, and specialty physician practice offices have increased ( Therefore, there appears to be some evidence and support for the conclusion that primary care physician practices may suffer from the proliferation of retail medicine.

The Advantages and Challenges of Retail Healthcare. Given the foregoing, an evaluation of the net impact of the apparent shift from traditional physician office practices to retail clinics must include a consideration of the advantages and challenges of retail healthcare.

1) The Advantages.

As noted above, the espoused benefits of retail healthcare generally relate to convenience and ease of access resulting from such factors as:

a. business hours (including early morning, early evening, and weekend hours) that are more convenient than those maintained by traditional physician office practices;

b. better locations for retail clinics (neighborhood locations, in-store locations, and other locations that are commonly frequented by patients for non-healthcare items and services) as compared to physician office locations that are often in healthcare-dedicated facilities which are only frequented by patients for the receipt of healthcare services after making special trips to get there; and

c. walk-in style office operations that do not require appointments.

By promoting convenience and ease of access in the ways described above, the common refrain is that the retail healthcare model results in:

a. increased preventive care visits and early intervention visits for the treatment of common illnesses and complaints in a manner that can prevent the progression of illnesses and complaints of something more serious; and,

b. the diversion of non-emergent and non-critical patients away from hospital emergency rooms and critical care units so that high acuity providers do not have to waste their limited resources on the treatment of patients who do not require high acuity services.

2) The Challenges.

In considering the above advantages, it should be noted that there are reports showing that some of the anticipated positive effects of retail healthcare may be illusory. For example, various reports have concluded that:

a. retail healthcare clinics do not reduce emergency room visits;[4] and

b. retail clinics may increase medical spending, rather than trimming costs.[5] Therefore, the positive impact on emergency room visits and positive financial impact need to be considered with some degree of skepticism.

In addition to the foregoing, many have argued that the retail healthcare model requires a patient to trade off their deeper and long-term relationships with their longstanding physician – a physician who has a detailed and comprehensive knowledge of the patient’s health history and, in many cases, personal history – for the immediate access to practitioners (both physician and non-physician practitioners) who may be in more convenient locations but have no experience or history with the patient.

Differentiation and Competition between Physician Offices and Retail Clinics: Can Retail Clinics and Physician Office Practices Succeed in Tandem?

Given the resources that are being poured into the retail healthcare market as evidenced by the current mega-merger trend, primary care practices can be assured that their retail clinic competitors are not going away anytime soon. Therefore, physician practices are well advised to find ways to successfully compete and coexist with retail clinics.

One such way for physician office practices to compete and coexist with retail clinics is to focus on those attributes which are perceived to distinguish physician office practices from retail clinics. For example

  1. (Perception of Higher) Quality. Patients often perceive physicians and non-physician practitioners in traditional office practices to have greater expertise, better professional pedigrees, and an ability to provide a higher quality medical service than their counterparts who practice at retail clinics.
  2. Trust. In part because of the quality factors described above, patients often have a higher degree of trust and confidence in their family/personal physicians than they do in the physicians or non-physician practitioners who practice at a retail clinic; and
  3. Service Differentiation. As noted, retail clinics are often focused on wellness services (inoculations, nutrition and weight loss counseling, etc.) and the examination and possible treatment of common complaints (sore throats, cold symptoms, etc.). Therefore, a patient may be more likely to perceive retail clinics and retail clinic physicians to be perfectly adequate and better situated to attend to situations that the patient considers be simple to handle. If a patient has this perception, the convenience factor may become of primary importance for the patient and, in turn, result in the patient being lured away from their physician’s office to receive care at a retail clinic.

From the physician office perspective, a patient is more likely to make the trek to their physician’s office when the patient perceives that the quality and trust factors are of paramount importance and, in turn, outweigh the retail healthcare convenience factor. In other words, when a patient believes that his or her symptoms are indicative of a medical condition that is inherently more complex than those conditions customarily seen in a retail clinic setting, the patient will prefer to receive services from their own trusted personal physician.

The Consumer will Drive the Success of Retail Healthcare and the Fortunes of Primary Care Physician Offices 

In the end, the ability of retail clinics and physician office practices to successfully cohabitate will depend upon the consumers. Consumers will determine where they want to have their primary healthcare needs met. Certainly, independent primary care physician office practices will not become dinosaurs any time soon as a result of the inroads being made by retail healthcare into the primary care physician office practice space.

Notwithstanding the above, the growth of retail healthcare may have a material financial impact on physician office practices, especially if the retail clinics’ scope of practice expands to include services that are hallmarks of a physician office practice (e.g., patient evaluation and management services from physicians who establish long-term relationships with their patients) and/or retail clinics begin to provide services which are not routinely included in a physician office practice – e.g., higher complexity radiology services and/or complex laboratory services that are not common in primary care physician office practices that routinely limit their laboratory offering to lower-complexity tests.[6]

[1] As described below, some studies have shown that the anticipated cost savings of retail healthcare and early intervention benefits resulting from the comparative convenience of retail clinics to physician offices have not materialized as anticipated.

[2] See, Fn. 1 above

[3] Conviva is a newly formed Humana subsidiary dedicated to the provision of primary care clinic services. Conviva is comprised of the primary care clinic businesses previously housed by Humana in four subsidiaries: MCCI Medical Group, CAC-Florida Medical Centers, Continucare Medical Centers, and MetCare of Florida. The merged entity will continue to provide services in South Florida and Texas.

[4] “Association Between the Opening of Retail Clinics and Low-Acuity Emergency Department Visits,” Grant Marstolf, Ph.D., M.P.H.; Kathryn Fingar, Ph.D., M.P.H., et. al., Annals of Emergency Medicine Volume 69, Issue 4, April 2017, Pages 397-403.e5,

[5] “Retail Clinic Visits for Low-Acuity Conditions Increase Utilization and Spending,” J. Scott Ashwood, Ph.D., M.A., Martin Gaynor, et. al., Health Affairs, v. 35, no. 3, Mar. 2016, p. 449-455,

[6] It is worth noting that the expansion of the range of services provided by retail clinics has already begun. On June 26, 2017, Quest Diagnostics and Walmart announced a collaboration to establish approximately 15 co-branded clinics in stores in Florida and Texas. News Release, “Quest Diagnostics and Walmart Team Up to Expand Access to Healthcare Services, June 16, 2017” As described in the announcement, the co-branded sites are intended to provide laboratory testing services in coordination with Walmart’s other healthcare offerings.