CVS Health executives, after poor fourth quarter and full year 2018 financial results as a result of its long-term care business, reaffirmed that the growth opportunity with Omnicare was always focused on the independent and assisted living spaces.
CVS Health believes those opportunities still exist and are consistent with the company’s strategy of putting the customer at the new place of transforming care. The challenge facing CVS Health is that Omnicare’s business with skilled nursing facilities (SNF) are worse than the company originally expected.
Recent industry data suggest that CVS Health may be on the right path. A recent story in the New York Times confirms what many industry insiders have feared for years: Rural nursing homes are closing across the country. The story noted that more than 440 rural nursing homes have either closed or merged the past decade, citing data from the Cowles Research Group.
Also, a new report from the Centers for Disease Control and Prevention’s National Center for Health Statistics focused on the characteristics of the 28,900 assisted living and similar residential care communities that were providing long-term care services as of 2016.
Among the statistics cited in the report was that pharmacy and pharmacist services was the most commonly offered service among those measured, with 83.6% of communities offering it to residents.
CVS Health, in order to stabilize Omnicare’s SNF business plans to leverage the strength of its Advanced Care Scripts (ACS) specialty pharmacy business and provide higher levels of service to the facilities. Omnicare has invested in account management personnel and is seeing improvements in the business.
Omnicare plans to grow in assisted living through the implementation of a new service model, called community care centers, so that there’s a single point of contact with that community staff for senior living. Omnicare has also introduced multi-dose packaging that is an advantage over barcode scanning.
Omnicare is also leveraging the CVS retail pharmacies for staff deliveries to customer facilities that are closer than Omnicare pharmacies. This will allow them to respond more rapidly and develop a local relationship with these facilities along with the Omnicare pharmacy.