How CVS & Aetna Could Change Healthcare

Business Insider: “CVS Pharmacy’s $69 billion deal to acquire the health insurer Aetna — the second-biggest deal of the year — is different. It could actually make treatment simpler and easier for Americans, and it catches a bunch of trends in the market that push costs down. There are two big streamlining ideas at work here. First … Pharmacy Benefit Managers (PBMs) are the gatekeepers between insurers and a patient’s medical treatment, and CVS already has one. Ideally it ensures that the PBM is incentivized to keep costs for the insurer as low as possible.”

“For the most part, though, this doesn’t fundamentally change Americans’ experience when they get sick. PBMs are faceless entities, and insurance is a foreign language to a lot of people. This is where the second streamlining idea in this CVS acquisition comes into play … the company will be ‘promoting lower-cost sites of care’ after this acquisition. That means turning brick-and-mortar stores into treatment centers and hiring medical staff. That’s expensive, but it will keep sick people out of more expensive hospitals, which keeps costs down for insurers and ultimately customers.”

“And unlike a lot of new urgent-care facilities hitting the market to do this very thing (keep people out of hospitals), CVS comes with a ton of brand familiarity. Plus, quarter after quarter CVS has seen that its other businesses are outperforming sales in its retail channel. Turning brick-and-mortar stores into healthcare facilities is one way to make good use of them.”

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