The combination of one of the country’s largest insurers and one of the country’s largest pharmacy chains will dramatically reshape the healthcare industry.
It’s a deal that could reshape the healthcare industry as we know it: the combination of one of the country’s largest insurers and one of the country’s largest pharmacy chains.
CVS and Aetna formally announced the completion of their $70 billion merger November 28, but rumors surrounding the deal-and predictions regarding how it could impact healthcare-have been circulating since late 2017.
Here’s what I think:
1. The merger could turn primary-care medicine as we know it on its head
My imagination is certainly running wild with the possibilities. Imagine MinuteClinic as the new primary-care option for patients insured through Aetna; more walk-in options for urgent and non-urgent events as Aetna’s influence over CVS Health’s offerings grows; and Target (whose clinics were acquired by CVS Health back in 2015) offering more healthcare-related services to shoppers, such as radiology units at the back of its stores. Why not take care of that MRI your doctor ordered while doing your grocery shopping?
In a statement announcing the merger, CVS Health’s President and CEO Larry J. Merlo said the new company will build healthier communities through a more local, easier to use, and less expensive healthcare model.
I agree that expanding the healthcare presence in retail settings could make primary care more accessible, more convenient, and more affordable than ever. Time will tell, however, if these exciting possibilities come to fruition.
Related article: Potential CVS-Aetna merger: Key takeaways for health execs
Some industry groups, including the AMA, have voiced concerns that the new company could decrease competition and increase costs. There are also fears that the combination could harm patient access and outcomes. If more Aetna patients are funneled to MinuteClinics, for example, it could jeopardize the important and long-term relationships many patients have with their primary-care doctors.
I’ll be watching closely to see how this all pans out, but it’s certainly going to be a transformative time for primary care.
2. It will shift the role of health insurance in our everyday lives
This merger gives Aetna access to one of the largest retail clinic networks available. Not just access to it, but partnership with it and leverage within it. Employers seeking new ways to increase access, convenience, and affordability for their employees and their families will have entirely new options with the new CVS-Aetna model. It will shift the insurance landscape significantly for consumers.
The combined company could also help employers better align their wellness initiatives. As Bruce Carver, associate vice president of payer services at MedeAnalytics told Managed Healthcare Executive (MHE) when news of the potential merger first broke, the combination may allow employers and consumers to better align their healthcare and pharmacy benefits. For example, allowing pharmacy benefits to incentivize people with chronic conditions to fill and adhere to their medication could reduce hospital admissions and readmissions. “An integrated insurer would be able to establish such incentives,” Carver told MHE.
In the CVS-Aetna merger announcement, Merlo said the merger will fully integrate Aetna’s data with CVS Health’s data, which he said will improve patient engagement, wellness, and personalization.
I agree that the opportunity to more fully integrate medical care and pharma data through the partnership could impact patient care and costs and the role health insurance plays in our everyday lives. Again, it remains be seen how positive an impact this will have.
Who knows how quickly the combined force of CVS-Aetna will shift models, access, and care delivery. In some surprising news after CVS and Aetna announced their combination, a U.S. District Court judge said he is considering delaying the merger, until he has a chance to weigh in.
It’s unclear how this will affect the outcome of the merger as, according to a recent article in The Hill, antitrust experts say this type of move by a federal judge is unprecedented. A hearing will take place December 18, after which we should have more clarity.
One thing is for certain, regardless of how this all pans out. In the coming years, we will continue to see more healthcare M&A activity related to expanded services as opposed to mergers solely focused on consolidation and scale. As the value over volume shift accelerates, companies will take CVS and Aetna’s lead, seeking new partners that can help them succeed in providing a more well-rounded approach to patient care.
I’d love to hear your perspective. Email me your thoughts: firstname.lastname@example.org.
Stephanie Kovalick is the chief strategy officer; general manager, strategy, at Sage Growth Partners (SGP). She is responsible for building SGP’s internal growth strategy as well as leading the strategy consulting team. She also has deep expertise in healthcare payment models and revenue cycle management.