CVS to Buy Aetna for $69 Billion in a Deal That May Reshape the Health Industry

By Michael J. de la Merced and Reed Abelson
The New York Times, December 3, 2017

CVS Health said on Sunday that it had agreed to buy Aetna for about $69 billion in a deal that would combine the drugstore giant with one of the biggest health insurers in the United States and has the potential to reshape the nation’s health care industry.

The transaction, one of the largest of the year, reflects the increasingly blurred lines between the traditionally separate spheres of a rapidly changing industry.

A combined CVS-Aetna could position itself as a formidable figure in this changing landscape. CVS operates a chain of pharmacies and retail clinics that could be used by Aetna to provide care directly to patients, while the merged company could be better able to offer employers one-stop shopping for health insurance for their workers.

But critics worry that customers could also find their choices sharply limited. The deal risks leaving patients with less choice of where to get care or fill a prescription if those with Aetna insurance are forced to go to CVS for much of their care.

The merger would establish a new way of delivering care, with nurses, pharmacists and others available to counsel people about their diabetes or do the lab work necessary to diagnose a condition, said (CVS Health’s chief executive, Larry J. Merlo). “We know we can make health care more affordable and less expensive.”

Mark T. Bertolini, Aetna’s chief executive, said that by using CVS’s locations, the company can provide people with a better way of accessing medical care.

The hope would be that consumers would not only be able to see savings by going to a retail store to treat a sore throat but also have better oversight of a chronic illness, such as diabetes or heart disease. They could get advice on how to lose weight, or undergo tests to monitor their health.

“If they can drive the adoption of the care delivery model, that’s a big deal,” said Ana Gupte, a senior health care analyst for Leerink Partners.

David A. Balto, an antitrust lawyer who has been sharply critical of combinations among insurers and pharmacy benefit managers, said that he was wary of having retailers in charge of people’s health. He argued that doctors may be in a better position to treat illness than retail executives.

“Who do you want to run the health care system?” he said.…

When two for-profit mega-corporations merge, you can be sure that it is about the money, making more of it, much more. Although they may promise greater efficiency and lower costs through integration of services, the record so far suggests that such mergers provide greater market leverage and thus higher prices. That should certainly have us concerned, but there is something potentially much more ominous here.

Insurers today not only serve an intermediary role of processing claims, they also want to manage care. They benefit not only by selling us superfluous administrative services through higher insurance premiums, but also they game the system to increase profits, and they reduce patient access to beneficial health care services, allowing their insurance products to be more competitive.

But look at what is happening here. CVS not only has a huge pharmacy business, but they also have incorporated into their system Caremark, one of the nation’s largest pharmacy benefit managers – the middlemen that seem to be a major contributor to escalating drug costs. They also operate 1,100 retail health care clinics. What is particularly disconcerting is that they intend not only to provide walk-in and preventive services, they now want to provide oversight of chronic illnesses such as diabetes or heart disease. Chronic care is playing a much greater role in health care delivery, and CVS/Aetna wants in on the action. Care would be provided by nurses, pharmacists, and others (presumably lower-wage assistants – physicians have not been mentioned in the news reports).

Now add Aetna. Although the surviving organization will be CVS Health Corp., the Aetna division will remain intact with current Aetna executives, including Mark Bertolini, serving on the CVS board. Look at the package they will offer: insurance services, care management, bread and butter clinical services including the rapidly expanding field of chronic care, pharmaceutical services with their high prices and pharmacy benefit management, and a retail department of home health products.

This package is so complete that they could exclude everything else from their networks. Since some people will need highly specialized services or care in full-fledged emergency departments or in hospitals, the Aetna division could sell catastrophic plans as part of their deluxe package.

Aetna and CVS are not the only ones in this game. Other players or potential players include UnitedHealth with its surgery centers, urgent care clinics, and Optum pharmacy benefit manager, Anthem which is now forming its own pharmacy benefit manager, maybe Humana and Cigna, and now even Amazon is expected to move into the arena big time.

But what about physicians in their offices out in the community? Don’t need them. The primary care physicians could provide direct care or concierge care though they would have to rely on more affluent cash paying patients since the insurers would limit their networks to their own clinics staffed with lower cost professionals. And how many cash practices do you think could be supported in an economy with stagnant wages? Some of the specialists might survive as hospital employees, working in their outpatient clinics to see the really complicated cases referred by CVS-type retail clinics.

Can the for-profit corporate world really take over? To a great extent, it already has. With the pending tax legislation, the public seems to be accepting an even greater transfer of wealth to the top. How is this development in health care any different?

But if we really care, we could throw out the plutocrats and establish our own single payer national health program with free choice of our health care professionals and institutions, in a system that all of us could afford. If we care.

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