CVS and Aetna say that their great merger will be excellent for consumers. Here’s why you should be skeptical –

CVS and Aetna say that their great merger will be excellent for consumers. Here’s why you should be skeptical


The CEOs of drug retailer CVS and health insurer Aetna were wonderfully synchronized on Sunday when they jointly announced the $ 69 billion merger agreement of their companies.

The agreement "will further empower consumers," said Mark Bertolini of Aetna. This "will create a platform that is easier to use and less expensive for consumers," according to Larry J. Merlo, president and CEO of CVS Health. They repeated these mantras to the press in a series of joint interviews.

The only thing that was missing was a clue as to how, exactly, this nirvana could be achieved of better and cheaper medical care. The clues about how little attention companies have paid to that detail could be found through their joint announcement. "With Aetna's badytics and the human touch of CVS Health, we will create a health platform created around individuals," said Merlo, in a masterpiece of vacuo corp-speak.

After all, Aetna does not need to merge with CVS to exploit its "badyzes"; ostensibly, you already have data available to help your clients manage their health needs, and if you need a firm like CVS to help, companies could sign a contract. The announcement states that the merger will end "helping patients avoid unnecessary hospital readmissions," as the announcement says. But the merged company will not own any hospital and is not planning, at least initially, to place more doctors on its payroll.

Companies say that "instead of feeling lost and confused, selected high-risk patients discharged from the hospital … may stop at a health center location to access services such as medication evaluations, monitoring at home and use of durable medical equipment, as needed. "This would be a good thing; What is not clear is why CVS and Aetna have to complete a $ 69 billion merger to make this happen. What prevents CVS from converting its pharmacies into "health centers" by itself, today?

Regarding the "human touch" of CVS, congratulations to the public relations badistant who came up with that phrase. Do you feel "moved" by humans when you are in your CVS neighborhood? Me neither.

The wonders of better data and better badysis have been cited to justify previous mega-mergers, especially those between insurance companies. Already in 2004, the Woodland Hills-based WellPoint merger in Indianapolis-based Anthem would produce immense savings by combining its computer systems and allowing customers' medical data to be exploited to benefit the vast scope of the new company.

It does not matter that the president and CEO of WellPoint, Leonard Schaeffer, was online to take $ 37 million out of the deal plus a payment to lump sum of $ 45 million in accumulated pension rights. We are still waiting for the technological benefits of the WellPoint / Anthem agreement to appear after 13 years, and the stakes here are that we will still be waiting for the virtues of merging Aetna's badyzes with the human touch of CVS to appear within 13 years.

That does not mean that the data badysis is not beneficial for Aetna and CVS. David Anderson of Duke University, a former data manager at the University of Pittsburgh Medical Center Health Plan, describes some of these benefits: Aetna, he notes, has served in the Medicare, Medicaid and private insurance markets, allowing him to track the health care history of members going to and from each market. [19659002] But "there are always serious holes in Aetna's list," he writes. "Either someone has never been to Aetna before or there was a major change in health status when that person was covered by someone else, this is where CVS comes in. There is a very good chance that CVS has filled some prescriptions for people who need it. " they will not appear in the Aetna data banks. "Now they will do it, allowing Aetna to better establish the prices of their products."

"The biggest data boom," he adds, "is that CVS's non-prescription data is linked to the loyalty card that almost all of them carry. key chain. "That gives the merged company a window on everything from when a couple plans to have a baby to someone who is suffering from an arthritis outbreak." In the right hands, CVS / Aetna could take care of those people with advice on prenatal care or management. of pain, in the wrong hands, could prompt CVS / Aetna to look for ways to take those potentially costly patients to competing insurers.Obviously, there is no guarantee that the company will use its deepest knowledge in the privacy of clients. he ate lives exclusively for goo.

Other positive aspects of the merger cited by Merlo and Bertolini are equally nebulous. "An entirely new health service offering available in many places will function as a community health center dedicated to connecting the necessary roads to improve health and answer patients' questions about their health conditions, as well as rec and health coverage, "he added. the ad says.

What does that mean, precisely? Apparently, it means that existing 10,000 CVS pharmacies "will include space for wellness, clinical and pharmacy services, vision, hearing, nutrition, beauty and medical equipment." Some already meet this exacting standard. You can buy makeup in the CVS of your neighborhood. Contact lenses (vision) and wheelchairs (devices) can be purchased online. You can get vaccinated against the flu in your neighborhood CVS, and if you have the proper insurance, CVS will vaccinate you at no charge and bill your insurer. Obviously, the standard CVS already offers pharmacy services. If CVS is going to bring some of these purchase options online to the retail floor, that's a breakthrough, but it means that CVS's retail location will look more like Costco.

It is appropriate to note that Aetna has not been an example of customer service in the recent past. Last year, the company announced that it was withdrawing from all four states except for four of the 15 states in which it offered individual Obamacare insurance because of a business decision: it was simply losing Too much money in the Obamacare exchanges. It was a surprise, given that only a few months before, Bertolini had promised the company to participate in the exchanges in the long term, calling it "a good investment". A federal judge ruled in January that Aetna's rationale The withdrawal was a lie: the decision was not based on profit and loss, but was designed as retaliation for a federal antitrust lawsuit that blocks the proposed $ 34 billion merger Aetna with Humana, another health insurer. (The judge blocked the merger.)

The truth is that the CVS / Anthem merger is not driven by the desire to help ordinary Americans better manage their healthcare costs. It is driven by the desire to scare away frightening new competitors in the healthcare industry, such as Amazon and Wal-Mart. Will it save money? Hardly: Approximately $ 8.5 billion will be transferred to the Aetna shareholders of CVS (based on the $ 26 premium that will be paid for your shares in cash and CVS shares on the Aetna price on Friday). The companies say they will gain part of this by modernizing their operations, which usually involves cutting staff. If the truly redundant staff is fired, the average consumer may not realize the difference; if it is a wholesale hatcheting, that will mean less efficient services for more customers.

Evidence that the merger will lead to a "new creation" or "remodeling" of the US health services market. UU it is scarce, if not nonexistent. That's because what may be the most important business affected by the CVS / Aetna agreement is not pharmacy or health insurance services; it's the pharmacy benefits administration business.

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11:04 a.m.: This publication has been updated with the comments of David Anderson.

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