OrthoNOW CEO Featured in HealthLeaders Media

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Aetna rids itself of group life and disability before CVS Health announces plans to acquire the insurer. The merger would connect Aetna to a major pharmacy benefit manager.

CVS Health’s move to acquire Aetna positions the retail pharmacy giant as a major player in healthcare just as Aetna abandons the notion that its members benefit from the integration of health and welfare insurance products.

The planned merger is the latest in a series of moves making over the traditional lines of healthcare business.

Aetna announced recently that it will sell its group life and disability business to The Hartford Group, and the health plan is now in discussions to be acquired by CVS Health. CVS Health signaled that it aimed for becoming more than a retail pharmacy with its acquisition of Caremark in 2007, and the likely acquisition of Aetna will be another huge step in that direction, says Suzanne McGarey, senior vice president of insurance consulting firm Ascende – A Division of EPIC.

CVS Health would connect Aetna to a pharmacy benefit manager (PBM), Caremark, and the combined entity would produce a bigger warehouse of data for healthcare analytics, McGarey notes.

“By joining CVS Health, Aetna gains new advantages in the market for actual healthcare dollars, in addition to healthcare administration and insurance revenue,” she says. “In return, Aetna’s members would be positioned to have efficient pricing and access to downstream healthcare services and supplies, such as prescribed over-the-counter medications, walk-in clinics and specialty pharmacy services.”

Potentially, CVS Health and Aetna could have a closer relationship with consumers by helping them spend healthcare dollars wisely in tax-advantaged consumer health accounts, McGarey says. The combined entity would be more accessible for regular health needs and better support members in monitoring and adhering to doctor’s orders for ongoing health conditions.

“Health insurance companies are often seen as a barrier to healthcare. Maybe this business venture is an opportunity for CVS Health and Aetna to become an avenue to better healthcare,” McGarey says.

The proposed CVS Health/Aetna partnership, and others like The Cleveland Clinic’s alliance with insurance company Oscar Health, are blurring the lines within the traditional healthcare industry, says Bruce Carver, associate vice president of payer services at MedeAnalytics, which provides data analytics to the industry.

“As the industry looks to reduce inefficiencies and improve care coordination, providers and payers need to work hand in hand. These partnerships enable that collaboration while eliminating some of the contract barriers around value-based care,” he says. “If the merger between CVS Health and Aetna is approved, healthcare executives will likely need to rethink traditional industry competitors as this would establish market competition against national payer UnitedHealth Group and its ownership of OptumRx.”

PBMs have historically been viewed as the drug purchasing middlemen to negotiate lower prices, Carver notes, but questions have arisen as to whether actual savings have been passed on to employers and consumers. As a result, the market is demanding more price transparency. Carver says new integrated models similar to the one created by the CVS and Aetna merger may help facilitate that transparency.

“This is only the beginning of major mergers as the industry looks to mirror the markets that operate outside of traditional health care and address consumer needs, like Amazon.com,” Carver says. “The way in which consumers access goods and services has radically changed over the past few years. These mergers are a way for the healthcare industry to address this.”

Clinicians and consumers may not benefit from the mergers, and care could suffer, says, Alejandro Badia, MD, a hand and upper extremity surgeon in Miami, FL, and CEO of OrthoNOW, an orthopedic urgent care franchise.

“As a clinician, I have great concerns about major mergers between the current entities that control healthcare. Frankly, this would be a very good idea if there was collaboration with the people that actually provide the health care and have the correct expertise to do so,” he says.

Healthcare is perhaps the only industry where the players involved do not have their incentives aligned, Badia says.

“If the goal is to improve quality, that will lead to decrease cost and help ensure our country remains on the top of the healthcare latter in terms of quality,” Badia says. “However, accessibility has been an issue and I believe a dialogue with clinicians during these proposed mergers is critical to have an ideal outcome.”

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