SCAN Health Plan CEO Sachin Jain joins Yahoo Finance Live to discuss retail’s venture into the health care space, its potential benefits, Humana’s push into Medicare, and driving toward a more integrated experience for patients.
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JULIE HYMAN: Amazon's acquisition of One Medical has pulled health care M&A into the spotlight. For a deeper dive, let's get to Yahoo Finance's Anjalee Khemlani who's here with a guest.
ANJALEE KHEMLANI: Thanks, Julie. Big retailers and tech giants continue to make their way into health care, with a potential for industry transformation, but not without downside risk. To lay out the path forward on the push into health care delivery, we have Dr. Sachin Jain, SCAN Group and SCAN Health Plan Executive Officer.
Sachin, thank you so much for joining us today. I know that this is something that you have really opined on. You recently wrote up a piece about it as well. It seems like there is a lot of interest in this retail push into health care. But I know that you have sort of a cautionary tale. Tell us about it.
SACHIN JAIN: Thanks so much for having me, Anjalee. Look, these are potentially industry transforming deals. I think people have long hoped that retail plus health care equal-- could equal a better experience for patients. But the cautionary tale is really about the very different cultures of retail and clinical service entities. And I think these deals could end up being highly transformative for health care, or they could go down as potentially the worst deals in the history of the health care industry.
Both Oak Street and One Medical are remarkable companies. I think, hatched as independent companies, venture backed, grew rapidly over the last decade, remarkable founders, huge attention to clinical culture. And they're now being merged into large publicly traded companies that do other things. And I think the opportunity is really to connect the dots, to take the Amazon Prime offering and connect it to the clinical care offerings in One Medical, for CVS to merge some of its insurance offerings through its Aetna franchise, with some of the retail capabilities through CVS with some of the clinical capabilities of Oak Street.
I've just been around the block enough to know that oftentimes publicly traded entities don't necessarily understand clinical culture. They're making decisions sometimes for the short term. And when you are making decisions to hit a quarterly earnings target, you aren't necessarily doing the things that you need to do to improve people's health over the long term. And so these deals, again, like I said, could be the very best thing that happens for US health care or potentially the very worst.
ANJALEE KHEMLANI: It's interesting to me that we're seeing this push considering what I think is the complete opposite happening, say, in the pharma sector, right? You see companies divesting their consumer brands, trying to become leaner machines. So it almost goes to this whole-- this health care industry at large isn't really on track, no one's on the same page, and there are so many little, little things going on at the same time. I just wonder, should consumers really be paying attention to these moves because I almost feel like people don't even know that CVS is more than just a drugstore company?
SACHIN JAIN: Yeah, I think-- look, I think consumers are going to be hit over the head with it over the next couple of years because they're going to see it every time they walk into a CVS store. And so-- but they have seen it already through MinuteClinic. But I think those of us who've kind of been CVS customers, have walked into the store, have experienced the fact that they're still figuring it out. They're still figuring out how to make all the different pieces of the business work together to create a better experience for the consumer.
I think the possibilities are incredible. You have a company that owns an insurance arm. You also have a company that now owns a clinical care delivery arm as well as a retail pharmacy. And so if you can make the pieces work together, it'll be great.
But as somebody who runs a nonprofit health care organization, I worry that some of these large entities will put profits before patients. And I think that is a real risk that we have to grapple with. I think the American public is tired of being seen as a profit center when it comes to their health and their wellness. And so I think that there is an opportunity, actually, for the nonprofit sector to step up and start to try to make some bigger moves.
That's something that we're doing at SCAN Group. We announced our intention to merge with CareOregon, which is a nonprofit Medicaid-focused health plan in Oregon, and really try to make one plus one equals three to improve the experience for patients because I do think that the American consumer is tired of being seen as a profit center by US health care.
ANJALEE KHEMLANI: Well, we've seen a lot of that, right? We've seen, for example, hospitals, there are also many still non-for-profit, struggle to do so. And that's sort of where corporate comes in, where for-profit comes in. We saw during the pandemic, the government link up with these for-profit centers because of the scale, because of the ease of distributing services. So how can they compete in this space when you have the money and the network with these profit centers?
SACHIN JAIN: Well, I think it's sort of the integrated experience. At the end of the day, I think these acquisitions cover one piece of the health care experience, primary care. But the minute that you need something outside of primary care, you may need a specialist, you may need a hospitalist, you may need a dialysis center, and so I think one of the potential risks of these acquisitions is actually further driving what I would think of as the lack of connectivity to people's health care delivery because a lot of health care delivery exists outside of primary care. And so, again, I think the complexity of primary care services is one challenge for these large entities.
But I think the complexity of connectivity to the broader health care ecosystem is something that the actual-- actually, the large health care systems have actually done decently well. If you have a major illness and you go to a large health system, your care can largely be contained to that large health system. You wouldn't be able to say the same thing about One Medical in its current form or Oak Street in its current form, even with all the assets that exist within Amazon and CVS. So I think that opportunity is for the nonprofit health systems to continue to drive towards a more integrated experience for complex patients.
ANJALEE KHEMLANI: Certainly something to watch. OK, so pivoting really quickly to Humana and their push into Medicare Advantage. We know that Medicare Advantage at large, and an area you operate in, has been criticized for waste and for-- potential waste, sorry. And we've seen reports to that effect. What should we take away from this push into Medicare Advantage and away from commercial?
SACHIN JAIN: Look, we need companies that are focused on older adults. This is a specific segment of the population. And Medicare is focused-- Medicare is the federal government program that is focused on people who are older adults and are disabled. I think that notion of focus is a very good focus.
The thing I worry about, though, is Humana is a public for-profit company that has to deliver to shareholders. And I think, as such, there are opportunities, I think, to focus more on shareholder return than on patients. And that's why I think the American public writ large needs to grapple with this question of, do we want to be delegating the provision of medical care to for-profit corporations that are beholden to shareholders first and to patients second?
I think that's a big-- big question that we as a society have to grapple with. On the face of it, the move's a good move. Increasing focus on a single segment will hopefully improve service for people within that segment. But I do think that there is this bigger question of, who-- what kinds of companies should be delivering these services? And I think we as a society need to grapple with that more-- more seriously.
ANJALEE KHEMLANI: Certainly, especially as employers are also starting to question their third-party administrators. But we don't have time to get into that today. Dr. Sachin Jain, SCAN Group CEO. Thank you so much for joining us today.
SACHIN JAIN: Thank you, Anjalee. Really appreciate the opportunity.
