Corner health care
CVS buys Aetna to expand chain’s offering of convenient services
CVS Health wants to do much more than fill your prescription or jab your arm with an annual flu shot. The second-largest U.S. drugstore chain is buying Aetna, the third-largest health insurer, in order to push much deeper into customer care. The evolution won’t happen overnight, but in time, shoppers may find more clinics in CVS stores and more services at the company’s network of nearly 10,000 locations.
“They’ll be pretty much a soupto-nuts health company … except for the hospital part of it,” said Craig Johnson, president of Customer Growth Partners, a retail consulting and research firm.
Patients also may find the CVSAetna combination much more involved in managing their care, especially for those with expensive chronic conditions like diabetes. The bulked-up company also may gain more negotiating leverage over prescription drug prices, but it’s far too early to say how much or whether that benefit will trickle down to customers.
The $69 billion deal announced Sunday evening will push the drugstore chain more forcefully in a direction it has been heading for years, according to Wall Street analysts. The company already runs about 1,100 clinics.
The mammoth acquisition pairs a company that runs more than 9,700 drugstores with an insurer covering around 22 million people.
Analysts say the combined company could add more clinics and expand in-store services to include eye care or maybe centers for hearing aids. That could gradually turn CVS into a one-stop-shop for health care, a place where patients can get a hearing aid checked, then see a nurse practitioner and pick up prescriptions.
“If you think about it, we actually don’t have anything like that,” said Jefferies analyst Brian Tanquilut said.
The clinics have become an attractive option for customers in need of basic health care because they are usually open longer than the family doctor’s office. A clinic visit also can be cheaper than
a $100 doctor visit for someone who doesn’t have insurance, but they have drawbacks. Family doctors say they know their patients better and can check on their overall health during a visit rather than dealing with just the one issue that brought that person in.
Aetna Chairman and CEO Mark Bertolini has talked frequently about how most of a person’s life expectancy is determined by genetics and location and not by clinical care, which is where health care spending is focused.
“Our conventional operating model is not effective,” Bertolini said earlier this year. “People are angry at this model. It doesn’t work effectively in controlling costs.”
He has talked about the need to get into patients’ homes to gauge what they need, like whether they have enough food or may need transportation.
CVS can help through its home infusion business, which sends nurses to patients’ homes to deliver complex drugs for people with hemophilia among other conditions. The clinic and drugstore locations could also give patients with chronic conditions like diabetes more convenient options to get their blood monitored or counseling on their condition.