CVS to Buy Oak Street Health

Image copyright: The Wall Street Journal

The Facts

  • In its third largest deal in the last decade, CVS Health Corp. has agreed to buy Oak Street Health Inc. and its primary care centers for $10.6B, or $39 a share, representing a roughly 73% premium to Oak Street's last closing price.

  • Along with Oak Street's 169 clinics, the deal will add about 600 physicians and nurse practitioners to CVS's inventory. The primary care network is senior-focused and provides COVID vaccinations, strep tests, and other medical services that CVS currently provides through its pharmacies.

The Spin

Establishment-critical narrative

Fewer competitors will lead to higher prices, and this economic reality hits hardest in the healthcare industry. Despite its aggressive rhetoric, the Federal Trade Commission (FTC) has done little to block the vast majority of primary care mergers, and the trend is only getting faster. The government needs to step in before every patient becomes just a data point on corporate investment charts.

Pro-establishment narrative

In opposition to recent fearmongering, data shows healthcare mergers lead to lower costs and higher-quality care. According to the American Hospital Association, hospital operating costs have dropped more than 2% throughout the recent primary-care merger boom – a positive for administrators, doctors, and patients.

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