CVS Health reached an agreement to buy Aetna, the insurance giant. The combined companies would have more influence with drug manufacturers and seek to provide more medical care to consumers in retail clinics.
Gene J. Puskar / AP
Gene J. Puskar / AP
CVS Health reached an agreement to buy Aetna, the insurance giant. The combined companies would have more influence with the drug manufacturers and aspire to provide more medical care to consumers in retail clinics.
Gene J. Puskar / AP
CVS Health seeks to create a national network of community health clinics that will serve as "the United States gateway to quality health care."
That's the goal, according to a statement by CEO Larry Merlo about his company's agreement for Aetna. It is ambitious for CVS, a company better known as a quick stop for Tylenol and Coke.
To get there, CVS agreed to pay $ 69 billion in cash and shares for Aetna, the companies said on Sunday. The companies said that together they want to offer more health care services at CVS pharmacies.
"CVS wants to be more than just a retail store," says Craig Garthwaite, a professor at Northwestern's Kellogg School of Management. "They are expanding the retail clinics so that they are not quite urgent care, but they will look like a direct primary care facility."
The company changed its name to CVS Health three years ago and is trying to reposition itself, has a health care company instead of just a pharmacy.
The vision is that clients, especially those covered by Aetna insurance policies, will seek more of their basic medical care in an expanded CVS clinic.
CVS operates more than 1,100 MinuteClinics at locations in its pharmacies and Target stores. CVS says that its pharmacists and nurse practitioners can provide ongoing medical care to people with chronic diseases such as diabetes, high blood pressure or asthma.
"Patients with diabetes will receive care between visits to the doctor through personal counseling in a store" based health center, and remote monitoring of key indicators such as blood glucose levels, said CVS in the announcement of the acquisition.
Companies have the idea that people will prefer to go to a clinic just around the corner, repeated trips to their doctors that might require appointments and waits.
Garthwaite says the combination it will also alter CVS's incentives when it provides pharmacy benefits, which it does now for almost 90 million people, including most of those who have Aetna health plans. "If you are only responsible for the cost of diabetes medications , you can impose a higher copayment, "says Garthwaite." If you are responsible for all medical costs that may arise if people do not get their diabetes medications, then you may want a smaller co-payment. "
The combination of CVS-Aetna is huge, but it is also the continuation of a trend towards insurance companies and health service providers that come together to offer a integrated service, said Walid Gellad, a physician and professor of health policy and management at the University of Pittsburgh. 19659008] For example, the insurance company Oscar Health signed an agreement to work with the Cleveland Clinic to sell health coverage in Ohio.
The combination of CVS and Aetna points to something else. "This is a different angle because the delivery part focuses on pharmacies, not hospitals or doctors' offices," says Gellad. "Many are pushing for more health care services to happen in pharmacies, and this is a mechanism to make that happen."
He says that Aetna could help drive patients to CVS clinics making it cheaper to go there than to a primary care doctor. "The real potential here is to change the way health care is provided in the centers. of primary care, "he says.
CVS does not need to buy Aetna to make that happen, says Lynn Quincy, a consumer health badyst at Altarum, a health consulting and badysis firm. She says she is skeptical that the combination of the two companies will generate savings for consumers.
"We already see that pharmaceutical benefit managers do not really use their influence in the service to consumers," she says. "Nothing about this agreement says it's going to change."
CVS is unlikely to really transform from a pharmaceutical company to an integrated healthcare company, says Martin Gaynor, an economics professor at Carnegie Mellon University. "It's a very big step," he says. "In fact, it's more than a step to becoming a health care center."
He says the obvious motivation behind the merger is that CVS and Aetna can save money on prescription drugs by simplifying how complicated the drugs are paid and eliminating middlemen looking to make a profit.