What the CVS-Aetna Merger Means for the Future of Health Care

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This “vertical” merger will combine the services of a health insurer, a pharmacy benefit manager, and a retail pharmacy.
This “vertical” merger will combine the services of a health insurer, a pharmacy benefit manager, and a retail pharmacy.

Healthcare providers are currently speculating about how the proposed CVS-Aetna merger, said to be a $70 billion deal, will affect the healthcare delivery system as a whole. Many believe this merger may lead to more streamlined patient care and reduced healthcare spending, as reported in a perspective article published in the New England Journal of Medicine.

Overall, this “vertical” merger will combine a health insurer, Aetna, with a pharmacy benefit manager, CVS, and a retail pharmacy and provider chain (eg, Minute clinics and CVS retail locations). The vertical design of the merger consolidates up and down the value chain and facilitates greater competition than traditional “horizontal” mergers. Based on the rise of “e-tailers,” which are quickly replacing over front-of-store pharmacy sales, the new partnership is aimed at updating the companies' provider service to remain current with the times.

The new company hopes to reduce total care spending by referring patients to lower-cost sites, in which the company may possess ownership stakes. Additionally, the new company may work to improve patient use of non-visit care technologies to monitor patient care, which may reduce visits to the emergency department and subsequently result in cost savings to the patient.

Aetna has also been building market share in Medicare Advantage plans. Those with Part D prescription drug benefits in the Medicare Advantage plan generally spend more on drugs than those with other prescription drug only Part D plans, potentially resulting in greater profits for the new company.

Customers, regardless of the market, have become accustomed to digital access to consumer goods, an area where retail clinics have yet to fully integrate. More importantly, providers are in a position where they need “to figure out how to provide better, more convenient, less costly care — to offer the best affordable pathway to good health,” whether or not they choose to partner with the Aetna-CVS company.

Reference

Dafny LS. Does CVS-Aetna spell the end of business as usual? N Engl J Med. 2018;378(7):593-595.

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