CVS buying Aetna: transformative or intrusive?

CVS Aetna Acquisition
CVS has agreed to buy insurance giant Aetna in a roughly $69 billion deal that will create a first-of-its-kind integration of drug stores, pharmacy-benefit management, and health insurance.

Imagine one of the more than 200 Philadelphia-area CVS stores as the center of your health-care universe.

The local CVS could become a central clearinghouse for patients, where they get help with medical appointments, are guided to lower-cost care, and learn when to avoid the emergency room and how to comply with treatment plans.

That’s the vision executives touted Monday during a presentation to Wall Street analyst on CVS’s pending $69 billion acquisition of Aetna.

“Think of a Genius Bar at Apple, for example, and this ability to walk in the store and get help,” said Aetna chief executive Mark Bertolini, referring to Apple’s in-store technical support.

Lawton R. Burns, a professor of health-care management at the University of Pennsylvania’s Wharton School, doesn’t buy it.

“I think it’s nonsense,” Burns said. “Drug stores have never been the center of the health-care universe. It’s always been doctors. Doctors have always been the center of the health-care universe, and they still are.”

What’s undeniable is that the deal between CVS and Aetna, expected to be done in the second half of 2018, matches the mood of experimentation in health care as all sectors seek ways to keep up with competitors, cut the growth rate in health spending, and improve quality.

The proposed transaction “highlights the dynamic pace of [mergers and acquisitions] in health care that will inevitably continue and involve other nontraditional pairings of various entities,” Moody’s Investors Service said.

The combination of CVS and Aetna, the Philadelphia region’s second-largest commercial insurer, would create a colossus. It would bring together a company of 9,700 stores, including 1,100 with MinuteClinics (a walk-in clinic for basic care), with an insurer that has 22.2 million customers and operations in all 50 states. CVS said 70 percent of the U.S. population lives within three miles of a CVS pharmacy. Together, the companies had $221.4 billion in revenue and $18.5 billion in operating income in the 12 months ending Sept. 30.

Aetna has more employees in Pennsylvania (6,500, including about 1,000 in Blue Bell) than in any other state.

Hal F. Rosenbluth, who co-founded Conshohocken-based Take Care Health Clinics, sold to Walgreen Co. in 2008, called the CVS-Aetna strategy brilliant. “They are beginning to bring together the various components of the health-care ecosystem, which to date have been all very separate,” said Rosenbluth, who now runs another health-care start-up, New Ocean Health Solutions.

The deal could be a mixed bag for consumers.

Sometimes it is hard for the elderly to absorb over the phone complex information about their benefits and health, said Paula Wade, a Nashville-based principal analyst at DRG Resources, a health-care information firm.

“An elderly person would just have to drive to the pharmacy, and they could actually have somebody with some knowledge and some access and credentials, a clinician, sit down and tell them what’s going on with this or that medication or this beeping on their monitoring device,” Wade said.

On the other hand, she said, the vertical integration of the pharmacy, the pharmacy benefits manager, and the provider of the Medicare Part D drug benefits could mean the only one left to stand up for the patient would be the  “very, very busy M.D.”

To William Aaronson, founding chair of the department of health services administration and policy in Temple University’s College of Public Health, the notion that CVS-Aetna would serve as the front door to the health-care system has downsides.

“I don’t think the consumer’s going to be happy at all, particularly when they find out, ‘Oh, I can’t go to X hospital where I go when I fall and hurt myself. I have to go to the CVS MinuteClinic and follow their rules,'” he said.

Aaronson had a taste last year when he got a letter from CVS Caremark, the pharmacy benefits manager under his Temple insurance, saying that he had to go to CVS to get his maintenance medications or get them online.

“I wasn’t happy with it. I had a great relationship with my Rite Aid pharmacist,” he said.