Note: This post has been updated with comments made by CVS Health CEO Larry Merlo and Aetna CEO Mark Bertolini on a conference call with analysts Monday.
CVS Health and Aetna officially announced their acquisition plan after months of speculation. The $69 billion acquisition of Aetna by CVS Health will give the insurer access to CVS Health’s network of Minute Clinic and pharmacy locations and nursing professionals.
The deal gives Aetna the ability to offer members care closer to patients’ homes in a wider variety of settings which could lower care delivery costs. In the company’s third-quarter earnings call with analysts last month, Aetna CEO Mark Bertolini talked about the benefits of having alternative care settings to hospitals.
” I think you have to think of it as keeping people away from the medical-industrial complex by offering better services in the home by meeting social determinants of health, which are big drivers of healthcare expenditures today, much bigger than people understand. And then where we have the opportunity to do blood draws, infusion, imaging, discharge planning, we can do those closer to the home or in the home [more] than we do today.”
The announcement by the two companies noted that the combined network would include CVS Health’s network includes more than 9,700 pharmacy locations, 1,100 MinuteClinic walk-in clinics, Omnicare’s senior pharmacy solutions, Coram’s infusion services, and more than 4,000 CVS Health nursing professionals providing in-clinic and home-based care across the nation.
Another selling point for the deal was a claim that the CVS Health and Aetna would collectively do a better job of treating chronic conditions, according to the news release. Patients with diabetes could receive care between doctor visits by getting counseling at CVS Health stores via telehealth and remote monitoring of blood glucose levels.
“These types of interventions are things that the traditional healthcare system could be doing,” CVS Health CEO Larry Merlo said in the news release, “but the traditional healthcare system lacks the key elements of convenience and coordination that help to engage consumers in their health. That’s what the combination of CVS Health and Aetna will deliver.”
Update On a conference call with analysts Monday, Merlo and Bertolini made the case that the integrated group created by the merger fills an unmet need in the current healthcare system.
They both claimed at different points in the call that the CVS-Aetna deal is “a new front door to the healthcare system”. Asked by an analyst which markets the deal allows Aetna and CVS Health to impact the most, Merlo said the real opportunity is going to be with government business, particularly with the growth of Medicare and Medicaid patients. Bertolini noted that the deal will create more flexibility on where it can meet patients. A visit to a Minute Clinic or getting virtual care in the home will be more affordable than an unnecessary trip to the emergency room, Bertolini said. By making care navigation less complex for Medicare patients, Bertolini argued, it will create a place that Medicare patients want to go for lower cost products.
Merlo and Bertolini also offered up their vision of how CVS would look in five years time, assuming the merger is approved by the government and the integration goes according to plan.
“You have heard us talk for awhile now about how the front of store evolves…You have seen us begin that journey starting with Minute Clinic but also seen us pilot vision centers and audiology centers. There is no question we have opportunities to repurpose some of the space in our stores to make that happen,” Merlo said.
He also noted that CVS Health stores could complement care for people with chronic conditions between doctor appointments in their own communities. He spoke of the role the integrated company could play using nutritionists, pharmacists, and expanded services to help people adhere to their care plan. But Merlo frequently used the word “pilot” to describe these initiatives, underscoring the reality that much of the vision behind this merger is a bet that an unproven experiment will work by bringing together an insurer and converting a drugstore into a primary care provider.
For his part, Bertolini described how the businesses will work together this way:
“It is a store which builds a network around it, where the members… go into the provider system prepared. They know what their path will be, what their services will be. We encourage them to use us as a navigator up front, they keep coming back to the store because we can coordinate care better that way. As a result, the experience is better for them, it is simpler and cheaper because we find the lowest cost of care.”
If the deal closes in the second quarter as the companies project, Aetna shareholders will own approximately 22 percent of the combined company and CVS Health shareholders will own approximately 78 percent, according to the news release.
One concern is that a judge could block the deal over antitrust concerns since one did so before when Aetna tried to acquire Humana.
In the wider scheme of things, the new deal not only stands to better position CVS Health for Amazon’s pharma aspirations but also helps CVS Health champion a new form of integrated health system where it can control more of the moving parts. But the agreement also raises some key questions, as Axios points out. Will CVS Health force Aetna members to buy medications within CVS Health’s network of pharmacies? Will there be surcharges for using out-of-network pharmacies? Or would that logic be applied to the Minute Clinic’s services? Will this deal spur similar ones between retail drugstores and insurance companies?
Photo: crazydiva, Getty Images
Download the latest insights from leaders at AstraZeneca, Ipsen, and EMD Serono.
Epharmix has developed a way to help hospitals improve patient-provider communication to meet HgbA1c goals.
You may be interested
King Lear: Anthony Hopkins, Emma Thompson, Andrew Scott and Christopher Eccleston to star in new BBC adaptationFrank - Apr 18, 2019
Frank's source: http://www.independent.co.uk/arts-entertainment/tv/news/king-lear-bbc-two-2018-anthony-hopkins-emma-thompson-a7987191.html
LEGO Ninjago Movie: The Video Game review: Another genuinely enjoyable LEGO titleFrank - Apr 18, 2019
Frank's source: http://www.independent.co.uk/life-style/gadgets-and-tech/gaming/lego-ninjago-movie-the-video-game-review-ps4-xbox-one-switch-a7982336.html
Demonized Smartphones Are Just Our Latest Technological ScapegoatFrank - Apr 18, 2019
As if there wasn’t enough angst in the world, what with the Washington soap opera, #MeToo, false nuclear alerts, and…