Aetna and Humana couldn’t pull it off. Cigna and Anthem had to nix theirs. Walgreens and Rite Aid did, too.
We’re talking about mergers, of course, something that these companies all discovered doesn’t happen easily in the healthcare sector.
Never a fan of monopolies, the Department of Justice typically will push back against mergers that it believes will hurt consumers. Which is why how it responds to the latest proposed merger in the news – a $69-billion cash and stock deal between CVS and Aetna – has so many watching so closely.
To persuade anti-trust regulators, CVS and Aetna will need to show that integrating Aetna’s insurance arm with CVS’s Caremark pharmacy-benefit arm would increase their efficiency and lead to lower cost of healthcare.
The deal will “dramatically further empower consumers,” Aetna CEO Mark Bertolini said.
It will “create a platform that is easier to use and less expensive for consumers,” according to Larry J. Merlo, president and CEO of CVS Health.
Maybe, maybe not.
The merger, skeptics say, isn’t being driven by a desire to help us manage our healthcare costs better. It’s driven by the desire to better arm these merger partners against Amazon and other new competitors in the healthcare industry.
What is certain is that, if allowed, the merger will mean that shoppers will find more medical clinics in the nearly 10,000 locations CVS has built.
The combined company also could expand in-store services to include eye care or perhaps centers for hearing aids.
That’s all a positive, no doubt. Whether it makes things less expensive is harder to foretell.
Patients also may find the CVS-Aetna combination much more involved in managing their care, especially for those with expensive chronic conditions like diabetes.
That’s not a bad thing, either, and could help patients stay healthier than those without the close guidance and care of a medical professional. A closely managed patient is typically one who stays out of a hospital, so there’s real potential in this aspect to help save money.
The combined company also may gain more negotiating leverage over prescription drug prices, but on this point, experts say it’s too soon to know how much or whether that benefit ever might trickle down to customers.
On the other hand, I can envision that to lure customers onto Aetna plans and into CVS drugstores, the combined company will entice us with discounted prescription drugs.
Whatever the answers might be to the many questions here, CVS and Aetna have one advantage over all the healthcare companies whose mergers never made it: their businesses have little overlap.
Scott Kennedy, president and COO of CCIG, has more than 30 years of insurance and risk management experience.
CCIG is a Denver-area insurance brokerage with the full-service capabilities of a national brokerage. We do more than make sure you have the right policy. We also help you manage your long-term cost of insurance with our risk and claims management expertise and a commitment to service excellence.
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