CVS Health has announced its plans on Sunday to buy Aetna for about $69 billion to combine one of the biggest pharmacies with the insurance giant and potentially change the nation’s health care industry.
For the past few years, healthcare has been an issue that been on the tips of everyone’s tongue for some time now in Congress. Since Republicans have been making plans to cut Medicaid and axe the Affordable Care Act, everyone in that is slightly involved with the healthcare industry has been bracing for the worst possible outcomes. Along with these disruptions, prescription drugs prices have soared and online competitors like Amazon has made it more difficult for drugstores to compete.
The combining of CVS and Aetna could show the industry that they are paving ways for big changes within the industry. Since the industry is always changing, this merge could benefit consumers since companies mostly touch base with the basic health services. CVS is a force in chain pharmacies and retail clinics while Aetna can provide care directly to the patient. This merge would turn what multiple stops would be into one stop and shop for the consumer.
Critics of this deal have pointed out that Aetna customers from now on would have to get their prescriptions refilled and care at CVS making the customer’s choices now limited.
On Sunday, the two companies spoke on the merge and how they plan to transform the 10,000 locations to community-focused care.
CVS Health’s chief executive, Larry J. Merlo stated in an interview, “We think of it as creating a new front door to healthcare in America. We know we can make healthcare more affordable and less expensive.”
Aetna’s chief executive, Mark T. Bertolini, said using CVS locations would be an easier way to provide proper care for their consumers.
“It’s in their community. It’s in their home. CVS has the draw. People trust their pharmacist.”
The hope of the two companies is essentially, getting a sore throat checked would be easy and affordable, but consumers would also have the option to get better oversight of a more serious illness such as heart disease or diabetes. Monitoring of health would become quicker, and easier on the patients.
One question that of course in on everyone’s mind is where does Amazon play into this. Amazon has been rumored to enter the pharmacy business. Amazon’s Chief Executive, Jeff Bezos, has already successfully taken over markets such as retail, book buying, groceries and so on.
What Amazon does not have in the relationship between CVS and Aetna. The relationship with the two dates back seven years and have been slowly getting to today’s deal. These conversations have been brewing for months now so it was only a matter of time.
Neither CEOs mentioned Amazon by name but alluded that this opportunity would be a competitor.
Chasing our competitors has never been a solution,” Mr. Bertolini said. He added, “Our competitors will do what they do.”
Mergers in the past have been seen as successful and failures. Drugstores and Health Insurance would be seen as a harmless as a fuse of two companies. However, there has been past collapses within like Aetna almost buying Humana, and Anthem’s push to buy Cigna due to concerns to reduced competition and hurting of consumers.
CVS and Aetna have faith in their deal and that no one is threatening to take them down. In case of a breakup, the fee would not be large.
Mr. Bertolini reassured that the companies would not raise prices for consumers. “It doesn’t make sense for us to charge people more when we want more people in the store,” he said.
CVS and Aetna prove to have big plans to change the Health market at large. With an established relationship, it is refreshing to see two companies work together to create better solutions for their consumers and for the industry itself. Seeing change in the industry could energize the current market and shape what the future would look like.