Experts analyze Aetna, CVS merger

CVS agreed to acquire Aetna for $69 billion over the weekend in a proposed deal that The Washington Post said is the biggest health-care merger announced in more than a year. CVS announced that as part of this merger, it planned to turn CVS stores into community medical hubs for basic procedures and primary care.

A health policy expert told Healio Family Medicine that the merger could offer benefits to patients, but with caveats.

“Preferred provider relationships with a large, nationwide pharmacy such as CVS will probably allow for decreased drug prices from market strength vis-a-vis pharmaceutical industry. It also might provide low cost acute care for many types of illnesses that CVS minute clinics typically provide,” Mark S. Roberts, MD, MPP, chair of Health Policy and Management at the University of Pittsburgh Graduate School of Public Health. “I suspect that ... CVS [also] feels it can add value by connecting a large group of patients with routine, clinic-based care that can take care of many routine functions,” and free up office time for physicians.

He outlined what the merger could also mean for Aetna customers.

“There is probably no question that this would be followed by preferred provider agreements between the Aetna insured populations and that their preferred pharmacy would become CVS — which might limit choice somewhat, but this already happens in many insurance plans.”

Roberts noted that this merger reflects the erosion of walls between different types of health care entities.

“Keep in mind these [integrated financing and delivery] lines are already going on in some organizations like Kaiser and are being blurred in many places where a large provider organization also decides to have an insurance arm, as we do here with University of Pittsburgh Medical Center and UPMC Health Plan, or Highmark and the Allegheny Health Network.”

Another expert told Healio Family Medicine that this coordination between the pharmacy and insurer could yield other benefits for patients, and the overall health care system.

“One potential advantage of integration between a pharmacy and a traditional health insurer is that the pharmacy side of the business now has a vested financial interest in ensuring that patients receive medication management and preventive care to avoid higher-cost healthcare use, since the integrated company would now bear risk for patients' drug and non-drug utilization,” Eric T. Roberts, PhD, assistant professor, University of Pittsburgh Graduate School of Public Health Department of Health Policy and Management, said in an interview. “The extent to which CVS is able to leverage its retail platform to provide those services to Aetna’s enrollees remains to be seen, but there would be a strong business rationale for the combined company to improve coordination between its pharmacy, retail clinic, and traditional health insurance businesses.

Medical societies stated they want to thoroughly vet the CVS-Aetna plan before casting opinions.

“At this point in time I can’t say we directly oppose the merger, but there are some questions regarding fragmentation of care and pricing that need to be looked at carefully,” AAFP president Michael Munger, MD, told Healio Family Medicine. “The merger could strengthen coordination and relationships between those patients with chronic conditions currently being seen at a CVS clinic by teaming them up with a physician on the Aetna side,” he continued. “On the flip side, if there is a push to move Aetna patients into minute clinics and away from primary care physicians and family physicians, that could fragment care and literally would not be good for the patient.”

AMA’s president, who called the proposed merger “one of the largest” in American health care history, said it “would have long-term impact on the markets for health insurance and pharmaceutical benefit management services.”

“[We are] committed to reviewing all issues triggered by this proposed merger to preserve the benefits of competition, including increased access and choice, lower prices and higher quality care for patients,” David O. Barbe, MD, MHA, continued.

The Washington Post has reported that the proposed deal could make health care costs more manageable, but Munger said in the interview that “history has shown” that mergers have not always translated to lower prices.

The merger could create a domino effect in the health care industry, and put Aetna more on par with UnitedHealth Group. The latter company has already made professional moves that have increased its business model to include health care data, surgery care centers and pharmacy-care services, the newspaper reported. Amazon has also reportedly been exploring options for adding prescription drugs to its offerings.

According to The Washington Post, the CVS-Aetna merger is contingent upon approval by regulators and shareholders but could close in the second half of 2018. – by Janel Miller and Ryan McDonald

Disclosure: Munger is president of AAFP. Barbe is president of AMA. Mark Roberts and Eric Roberts report no relevant financial disclosures.

CVS agreed to acquire Aetna for $69 billion over the weekend in a proposed deal that The Washington Post said is the biggest health-care merger announced in more than a year. CVS announced that as part of this merger, it planned to turn CVS stores into community medical hubs for basic procedures and primary care.

A health policy expert told Healio Family Medicine that the merger could offer benefits to patients, but with caveats.

“Preferred provider relationships with a large, nationwide pharmacy such as CVS will probably allow for decreased drug prices from market strength vis-a-vis pharmaceutical industry. It also might provide low cost acute care for many types of illnesses that CVS minute clinics typically provide,” Mark S. Roberts, MD, MPP, chair of Health Policy and Management at the University of Pittsburgh Graduate School of Public Health. “I suspect that ... CVS [also] feels it can add value by connecting a large group of patients with routine, clinic-based care that can take care of many routine functions,” and free up office time for physicians.

He outlined what the merger could also mean for Aetna customers.

“There is probably no question that this would be followed by preferred provider agreements between the Aetna insured populations and that their preferred pharmacy would become CVS — which might limit choice somewhat, but this already happens in many insurance plans.”

Roberts noted that this merger reflects the erosion of walls between different types of health care entities.

“Keep in mind these [integrated financing and delivery] lines are already going on in some organizations like Kaiser and are being blurred in many places where a large provider organization also decides to have an insurance arm, as we do here with University of Pittsburgh Medical Center and UPMC Health Plan, or Highmark and the Allegheny Health Network.”

Another expert told Healio Family Medicine that this coordination between the pharmacy and insurer could yield other benefits for patients, and the overall health care system.

“One potential advantage of integration between a pharmacy and a traditional health insurer is that the pharmacy side of the business now has a vested financial interest in ensuring that patients receive medication management and preventive care to avoid higher-cost healthcare use, since the integrated company would now bear risk for patients' drug and non-drug utilization,” Eric T. Roberts, PhD, assistant professor, University of Pittsburgh Graduate School of Public Health Department of Health Policy and Management, said in an interview. “The extent to which CVS is able to leverage its retail platform to provide those services to Aetna’s enrollees remains to be seen, but there would be a strong business rationale for the combined company to improve coordination between its pharmacy, retail clinic, and traditional health insurance businesses.

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Medical societies stated they want to thoroughly vet the CVS-Aetna plan before casting opinions.

“At this point in time I can’t say we directly oppose the merger, but there are some questions regarding fragmentation of care and pricing that need to be looked at carefully,” AAFP president Michael Munger, MD, told Healio Family Medicine. “The merger could strengthen coordination and relationships between those patients with chronic conditions currently being seen at a CVS clinic by teaming them up with a physician on the Aetna side,” he continued. “On the flip side, if there is a push to move Aetna patients into minute clinics and away from primary care physicians and family physicians, that could fragment care and literally would not be good for the patient.”

AMA’s president, who called the proposed merger “one of the largest” in American health care history, said it “would have long-term impact on the markets for health insurance and pharmaceutical benefit management services.”

“[We are] committed to reviewing all issues triggered by this proposed merger to preserve the benefits of competition, including increased access and choice, lower prices and higher quality care for patients,” David O. Barbe, MD, MHA, continued.

The Washington Post has reported that the proposed deal could make health care costs more manageable, but Munger said in the interview that “history has shown” that mergers have not always translated to lower prices.

The merger could create a domino effect in the health care industry, and put Aetna more on par with UnitedHealth Group. The latter company has already made professional moves that have increased its business model to include health care data, surgery care centers and pharmacy-care services, the newspaper reported. Amazon has also reportedly been exploring options for adding prescription drugs to its offerings.

According to The Washington Post, the CVS-Aetna merger is contingent upon approval by regulators and shareholders but could close in the second half of 2018. – by Janel Miller and Ryan McDonald

Disclosure: Munger is president of AAFP. Barbe is president of AMA. Mark Roberts and Eric Roberts report no relevant financial disclosures.