With Aetna Deal, CVS wants to turn the store into a health care center.
CVS Health is seeking to build a nationwide network of community Health clinics that will become “the leading edge of American Health care”.
According to CEO Larry Merlo’s statement on the Aetna deal, that’s the goal. For CVS, this is an ambitious company that is better known as a quick stop for tylenol and Coca-Cola.
On Sunday, the company said it agreed to pay Aetna cash and shares of $69 billion to meet its target. The two companies said they hoped to provide more health care at CVS.
“CVS wants more than just a retail store,” says Craig Garthwaite, a professor at northwestern’s Kellogg school of management. “They’re expanding the retail clinic so they don’t have very urgent care, but they’re going to be like a direct primary care facility.”
The company was renamed CVS Health three years ago and is trying to reposition itself with a healthcare company, not just a pharmacy.
Our vision is that customers, especially those covered by the antai insurance policy, will seek more basic medical services at the expanded CVS clinic.
CVS operates more than 1,100 MinuteClinics in its pharmacies and Target stores. CVS says its pharmacists and nurse practitioners can provide continuous medical care for people with chronic conditions such as diabetes, hypertension or asthma.
“In diabetics, doctors will get medical care by conducting face-to-face consultations at the store’s medical center and monitoring key indicators such as blood sugar levels.” CVS said in the announcement.
The companies are counting on people to go to clinics around the corner, repeatedly visiting doctors who may need appointments and waiting.
Garthwaite said the combination would also change the incentives for CVS to provide drug benefits – it now provides services to nearly 90 million people, including most people with Aetna health plans. “If you are only responsible for the cost of diabetes drugs, you may be able to impose higher co-payments,” says Garthwaite. “If you’re going to take all the medical costs that can be caused, if people don’t get their diabetes drugs, then you might want a smaller co-payment.”
Doctors and health policy and management professor at the university of Pittsburgh Walid Gellad said the CVS – a combination of Aetna is huge, but it is also the insurance company and health care providers together provide a continuation of the trend of integrated services.
For example, the insurance company Oscar health signed an agreement to work with the Cleveland clinic to sell health insurance in Ohio.
The combination of CVS and Aetna is intended to serve other purposes. “It’s a different Angle because the delivery is focused on the pharmacy, not the hospital or the doctor’s office,” Mr. Gaillard said. “Many medical institutions are pushing for more health care services, which is one of the mechanisms to achieve this.”
He says Aetna can help patients get into CVS because it is cheaper to go there than to a primary care doctor. “The real potential here is to change the way health care is transmitted in primary care institutions,” he said.
CVS does not need to buy Aetna to achieve this, says Lynn Quincy, a consumer healthcare analyst at Altarum, a health care analysis and consulting firm. She said she doubted the merger would save consumers.
“We’ve seen that pharmacy welfare managers don’t really have the clout to serve consumers,” she said. “There is no comment on this deal, and that will change.”
‘CVS can’t really transform itself from a pharmaceutical company into a comprehensive healthcare company,’ says Martin gayner, an economics professor at Carnegie Mellon university. “It’s a very big step,” he said. “In fact, from the point of view of being a health care center, it’s not just a step.”
The obvious motivation behind the merger, he says, is that CVS and Aetna can reduce the cost of prescription drugs by simplifying the complexity of paid drugs, and eliminate a middleman who wants to profit.