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How the CVS-Aetna merger could shake up health system strategy

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With CVS Health planning to buy Aetna for nearly $69 billion in cash and stock, a combined CVS-Aetna company would represent significant bargaining power in negotiating with hospitals, employers and pharmaceutical companies.

Should the deal be finalized, there are at least two major implications for health systems.

First, the merger would create a formidable new competitor for health systems in the population health business. If a CVS-Aetna company could expand access to clinical pharmacy services, then the new entity could potentially out-compete traditional health systems on both cost and quality of care for low-acuity patients. That's because most providers struggle with creating a financially sustainable model for delivering clinical pharmacy services.

Drug therapy is an increasingly important strategy for managing complex and chronic disease patients, and pharmacists are ideally positioned to provide medication therapy management. Yet in a fee-for-service environment, most health systems are unable to provide robust medication therapy management, the absence of which contributes to avoidable complications, non-adherence and sub-optimal patient outcomes.

Second, the merger could affect health systems' retail pharmacy strategies. In recent years, many health systems have been investing in retail and specialty pharmacies to capture new revenue streams and improve continuity of care for their patients. It's likely, however, that as a result of the merger, patients' who receive their pharmacy benefits from CVS-Aetna would be encouraged to fill their prescriptions at CVS. The change would threaten not only health system-owned retail pharmacy revenues, but it could also compromise health systems' ability to coordinate medication management for their patients.

The move is likely to be the first of many health plan joint ventures or mergers with pharmacy organizations that highlight plans' need to go beyond traditional methods of medical management and seek new partners in addressing rising drug costs.

The first iterations of these joint ventures focused on provider partnerships. Plans are now looking to pharmacy organizations (retail clinics or PBMs) to drive results as well. In particular, these partnerships offer three potential advantages:

  • Support for medication adherence. An aging population and more medical (as opposed to surgical) treatment focus efforts on care plan adherence.
  • Access to better real-time data. Health plans need to know how their members are doing to intervene if something seems awry. Pharmacy data present some of the most accurate information on how members are adhering to a care plan.
  • Instant availability for care. Retail pharmacies present an opportunity to provide care after traditional provider hours to hopefully prevent the need for a higher acuity setting such as the ED.

A combined CVS-Aetna will increase pressure on all provider organizations to increase efficiency in order to compete, the potential of the new entity will accelerate the push to population health, with the array of services available from CVS perhaps bringing some efficiencies to the industry that haven't been available before.

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