The Week in Disruption: June 6, 2019
The Week in Disruption goes beyond the headlines to uncover the significance of emerging trends in healthcare and beyond.
UnitedHealth Group has set an exceedingly ambitious revenue goal for its OptumCare unit: grow from $16 billion in 2018 to $100 billion by 2028. But while OptumCare, which already boasts a network of 32,000 clinicians in 75 markets, has plans to build or acquire more urgent care practices, surgical centers and primary care offices along the way, UnitedHealth CEO David Wichmann doesn’t have hospitals on his shopping list. During the 2019 Annual Strategic Decisions Conference, Wichmann told analysts that OptumCare is not looking to build or acquire inpatient or post-acute care, though it may partner with some health systems in select markets for hospital-based services.
Wichmann’s comments lay clear UnitedHealth’s intent of unbolting outpatient services from legacy hospitals on an aggressive timeline. Hospital and health system executives have certainly taken notice: 67 percent of respondents to Kaufman Hall’s 2019 State of Consumerism survey described UnitedHealth and Optum as a strong or extreme competitive threat to their hospitals or health systems.
CVS continues to invest in the ongoing transformation of its retail stores into HealthHUBs, or primary care centers offering chronic disease care, despite concerns from some investors about disappointing earnings reports since the 2017 Aetna acquisition.
CVS announced plans this week to open 1,500 of its HealthHUB stores by the end of 2021, using data on Aetna enrollees to help determine where to locate. CVS also plans to convert some of its MinuteClinics, which typically provide low-acuity care, into HealthHUBs.
Keeping a close eye on costs is a top-of-mind, daily priority for any business. But too much caution—especially for capital investments—can make it hard for legacy companies to shift to new business models when their customers’ habits change.
In the wake of a board and leadership shakeup at Bed Bath & Beyond, former employees told the Wall Street Journal about a widespread corporate culture of frugality that included a company-wide ban on Post-Its and underwhelming investments in technology, where one website update took three years.
While the conservative spending approach helped the houseware chain grow from a single store in 1971 to 1,500 locations, it left it ill-equipped for the continuing migration from retail to online sales. Today, Bed Bath and Beyond only makes 20 percent of its sales from e-commerce, while competitor Williams-Sonoma receives more than half in online sales.
“Frugalness was part of their success,” longtime former Bed Bath & Beyond executive Scott Hames told the Journal. “But being frugal can blind you. They lacked the ability to take risks.”