How the CVS Aetna Deal Will Change How You Get Health Care

 

http://fortune.com/2017/12/04/cvs-aetna-healthcare-what-it-means/

On Sunday, CVS and Aetna announced what would be one of the largest health care deals of all time. The retail pharmacy giant agreed to buy the health insurer—one of the biggest in America with more than $63 billion in 2016 revenues—in a deal valued at $69 billion. And, if approved by the companies’ boards and federal regulators, the corporate marriage has the potential transform the way the health industry does business and how millions of Americans receive their medical care.

Consolidation is certainly nothing new in the U.S. health care sector. Traditional pharmaceutical giants regularly scoop up leaner, meaner biotechs to insource drug innovation; hospital chains join forces to grapple with shifting reimbursement models. But, within the insurance industry, recent attempts to integrate horizontally—such as Anthem’s bid for fellow insurer Cigna and Aetna’s proposed deal for rival Humana—have faced roadblocks over antitrust concerns. Both those proposed M&As died following regulatory pushback.

Those failures may be, in part, what helped prompt a different kind of consolidation strategy for CVS and Aetna. Unlike going horizontal within their own industries, a deal with each other would present a more diversified consolidated company that moves vertically through the health care supply chain and could provide consumers with a new kind of health care experience, the firm’s top executives argue. CVS’ pharmacies and in-store MinuteClinics would gain access to Aetna’s millions of plan holders, including its giant footprint in the employer health coverage market; Aetna customers would be able to walk into a local CVS pharmacy to discuss primary care treatment options and get their prescription drugs without having to trudge through the various middlemen that pepper America’s fragmented medical system. Consider: CVS is also one of the largest pharmacy benefit managers in the country through its Caremark arm, so insurance coverage, filling prescriptions, and treating chronic health conditions like diabetes could all be housed under one company.

“[I]t’s really the perfect time to bring these two companies together, to create a new health care platform that can be easier to use and less expensive for consumers, and really create a new front door to health care in our country,” CVS Health CEO Larry Merlo told CNBC on Monday. Aetna chief Mark Bertolini added that there would be about 10,000 of these new “front doors” created by the merger thanks to CVS’ ubiquitous pharmacies and clinics. (My Fortune colleague Phil Wahba has a great piece on what CVS stores could look like if the Aetna deal goes through.)

One broader result of the deal may be an even larger push for cross-sector mergers—especially with the specter of Amazon reportedly vying for a foothold in the pharmacy business. Leerink Partners analyst Dr. Ana Gupte has argued that a successful CVS-Aetna M&A could spur Wal-Mart to pursue a deal with insurer Humana, with which the retail titan has a long-standing relationship.

But the critical question will be whether such deals will ultimately prove fruitful for patients. Merlo and Bertolini say the cost-savings and efficiencies will clearly cut costs for consumers. Critics, though, point out that driving customers to fewer and fewer options across the gamut of health services could prove risky for them in the long run.

Just think about it… once a pt gets “entangled” in CVS being in charge of your healthcare. You will be dealing with one huge FOR-PROFIT A COMPANY…

The insurance arm of the new company could “cut a deal” with various hospitals, labs and other services and put in place financial incentives or disincentives for those covered by their insurance program.

Between their insurance arm and their PBM arm ( Caremark) they could “cut deals” with pharmas where they are putting financial incentives or disincentives where “therapeutic substitution” is their SOP… we are not taking generics being substituted for a brand name.. but.. they will only pay for a particular medication is a specific therapeutic category.. that they have deemed to be what is “best” for all of their beneficiaries…  think what can be purchased for the least cost/day for therapy.

Aetna currently offers Medicare Advantage programs and of course, now you will be enrolled in Silver Scripts that is CVS’ Medicare Part D prgm and is managed by their PBM Caremark.

Then they now own Omnicare.. the largest nursing home pharmacy provider in the country… which the vast majority of nursing home residents are on Medicare and use a Part D provider… how much are they going to be able to self-refer those pts to the Aetna Advantage prgm and/or Silver Scripts Part D prgms ?

Often in nursing home.. especially those classified as SNF (Skilled Nursing Facility) where they take care of sickest of those staying in a nursing home and being transferred out to hospitals is pretty normal.. will these pts now mostly/exclusively be ambulance transported to
“CVS partner hospitals ” ?

I am sure that the “number crunchers”  at CVS will find other venues in which to move money from the pt’s pocket to their bottom line.. while making the pt believe that they are getting the best care available.

After all, the primary focus of a publicly held for profit company is to increase their stock price and  bottom line profits ..

One Response

  1. Almost scarier than Trump! Was part of this driven by us being forced to go to Wahlgten’s? I changed to UHC AARP last year and the games they play shifting drugs to upper tiers for greater cost is criminal!

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