Your CVS store could look much different
Chain’s deal to acquire insurer Aetna might reshape health care
Chances are your next trip to get treated for the flu, a sprained ankle or a rash won’t take you to the doctor’s office, but rather the drug store.
CVS Health’s $69 billion deal to acquire insurer Aetna could reshape basic health care as the combined company seeks to bolster its prescription drug business while nudging customers away from costly emergency room visits and toward affordable clinical care for routine ailments at the drug store.
If the deal unfolds as envisioned, the CVS store of the future won’t look much like the one you remember, when candy bars, trinkets, toothpaste and makeup dominated the aisles.
Instead, CVS, having already banned cigarette sales and added healthier foods in recent years, is shooting to become a one-stop shop for basic medical services.
With more than 9,700 locations at a time when real estate costs are a burden for many traditional retailers battling online sellers, CVS is hoping to remake itself as
a health care provider first and a traditional drug store second.
“Think of a Genius Bar at Apple, for example — this ability to walk into the store and get help. This is the kind of idea we want to create in the stores,” Aetna CEO Mark Bertolini said on a conference call.
In one sense, it’s a move driven by fear of the future. CVS is aiming to shore up its business as it faces the possibility of online behemoth Amazon selling prescription drugs. The company also recently announced plans to offer next-day delivery in a move widely viewed as a pre-emptive strike at Amazon.
“Together we plan to build an entirely new health care concept,” CVS CEO Larry Merlo said. He said the concept is based on the principles of making care easier to use and more affordable, while offering customers the ability to interact with trusted and familiar health care experts in their communities.
In addition, the nation’s No. 1 drugstore chain is trying to grab a greater share of health care spending and cut costs by combining Aetna’s 22 millionmember insurance rolls with its pharmacy benefits management.
Here’s what we know now: ❚ CVS plans to bolster its MinuteClinic, which currently provides
“Think of a Genius Bar at Apple, for example — this ability to walk into the store and get help. This is the kind of idea we want to create in the stores.” Mark Bertolini, Aetna CEO
nurse-practitioner treatment for minor conditions. That is likely to involve reconfiguring a significant portion of CVS’ 9,700 locations to add more services. The company plans to experiment in some locations by providing blood work, offering advice from nutritionists and delivering services that require “durable medical equipment,” Merlo said.
❚ Aetna insurance customers can still fill prescriptions elsewhere — at least for now. But in the long run, CVS could alter insurance terms to get more patients to fill prescriptions through its stores or the mail. ❚ Your health care cost increases
could taper off. The CEOs of CVS and Aetna pledged to use the combined power of their companies to lower health care costs. The companies hope to reduce patient visits to emergency rooms for conditions that aren’t serious. They also hope to cut down on instances in which recently hospitalized patients are readmitted to treat the same conditions.
“We will not only improve affordability and quality but we will eliminate the unnecessary complexities that frustrate today’s consumers,” Bertolini said. ❚ But pharmaceutical companies won’t lose much pricing power. Although CVS hopes to better control prescription drug costs after the deal, experts said pharmaceutical companies retain significant pricing power, in part due to strong patent protections. Pairing an insurance giant, Aetna, with a pharmacy benefits manager, CVS’ Caremark division, could yield greater sway in the high-stakes jockeying game of drug price negotiation. ❚ Maybe you won’t be buying drugs from Amazon anytime soon. If Amazon wants to begin selling prescription drugs, as is widely rumored, the pathway into the market just got a little harder. If CVS plays hardball and refuses to allow Aetna to extend insurance coverage to drugs purchased through Amazon, that could be a hard pill for the online giant to swallow as it enters a complex and highly regulated market.