[Marxism] Fwd: cvs aetna

Andrew Pollack acpollack2 at gmail.com
Tue Dec 5 07:40:21 MST 2017


Another case of healthcare objective socialization, this time by
centralization of pharmacy/retail/in-out patient clinics/insurance etc.
---------- Forwarded message ----------
From: Andrew Pollack <acpollack2 at gmail.com>
Date: Tue, Dec 5, 2017 at 9:19 AM
Subject: cvs aetna
To: Andrew Pollack <acpollack2 at gmail.com>


<img src="http://crain.d1.sc.omtrdc.net/b/ss/crainmodernhealth/1/H.25.4--
NS/0" height="1" width="1" border="0" />
[image: Modern Healthcare] <http://www.modernhealthcare.com/>CVS and Aetna
seek community-based care model in giant healthcare deal By Shelby
Livingston <http://www.modernhealthcare.com/staff/shelby-livingston>  |
December 4, 2017Through their $69 billion deal, CVS Health and Aetna are
swinging an axe at the traditional ways in which patients access healthcare
in hopes of building a new kind of model that's lower cost and more
convenient for the consumer. At the center of this strategy is what's
commonly called the new front door to healthcare: the walk-in clinic, and
CVS has nearly 10,000 of them.

Late Sunday, pharmacy chain and benefit manager CVS and insurer Aetna
announced what would be the largest healthcare transaction[1]
<http://www.modernhealthcare.com/article/20171203/NEWS/171209973/aetna-leadership-to-stay-on-after-cvs-deal>
to date, if approved by regulators and shareholders. The companies agreed
that CVS will take over Aetna, with the No. 3 U.S. health insurer becoming
a standalone unit inside the pharmacy giant.

On Monday, the companies laid out their vision [2]
<https://news.aetna.com/news-releases/cvs-to-acquire-aetna/>for how the
combined entity could reshape healthcare. The picture they painted is one
where retail healthcare clinics play a greater role in patient care,
becoming both the entry point and navigators of the system.

The companies want to make the retail clinics "a place where people want to
go because they get better help, they get a lower cost product and they get
navigated through the system over time, so we can eliminate prior
authorizations, we can set up appointments too, all those sorts of things,"
Aetna CEO Mark Bertolini explained Monday during a conference call with
investors to discuss the deal.

Because the storefront pharmacies and Minute Clinics are embedded in local
communities[3]
<https://news.aetna.com/2017/11/bertolini-at-techonomy-17-future-of-health-care-is-hyper-local/>
and have become places that Americans frequent, CVS CEO Larry Merlo said
the combined company will be better able to manage patients with chronic
diseases, who may see their primary care doctor only three or four times a
year. Patients with chronic diseases represent the lion's share of
healthcare spending.

According to the Centers for Disease Control and Prevention, 86% of the
nation's $2.7 trillion annual [4]
<https://www.cdc.gov/chronicdisease/overview/index.htm>healthcare costs go
to patients with chronic and mental health conditions.

"We're in the community, we're seeing those patients, we're becoming part
of their daily lives and routines. We can get them on that care plan, help
them achieve their best health and at the same time, reduce the cost of
care that we're incurring today," Merlo said.

He also said the combined company could invest in existing retail clinics
to expand clinical services to make this vision a reality. Perhaps Minute
Clinic services will expand to include blood draws, or CVS could station
nutritionists in its stores, he said.

"We know there's a solution there in terms of being a complement to the
physician and the medical team for those patients," he said.

For this reason, the deal could be a good thing for patients, observers
say. "This brings Aetna out closer to the consumer, and with CVS' retail
strategy and Aetna's membership, it's a way to really expedite the movement
away from reactive inpatient care to proactive retail and in-home care,"
said David Gregory, healthcare consulting practice leader at advisory firm
Baker Tilly.

Already, insurers and self-insured employers have been steering patients [5]
<http://www.modernhealthcare.com/article/20170218/TRANSFORMATION02/170219900>toward
lower cost care settings. Even hospitals have been opening retail clinics
to capture patients and pull them into their systems. The cost of care at a
retail clinic is much lower than in a doctor's office, and evidence has
shown that the care quality is equal.

For instance, a 2014 study[6] <http:///> published in the American Journal
of Managed Care and conducted by researchers from the CVS Health Research
Institute and Brigham and Women's Hospital found that minor ailments
treated in retail clinics inside CVS pharmacies received care that was
equal to or better than care offered at ambulatory care facilities and
emergency departments.

CVS and Aetna said the new care model they hope to establish will primarily
benefit Medicare and Medicaid members, but also large employer customers.
But they will have to prove those benefits to antitrust regulators.

Of course, questions remain about the bargaining power the combined
company, which would have roughly $240 billion in annual revenue, would
have over hospitals and drugmakers. The takeover may also spark further
consolidation among insurers and pharmacy services providers.

The companies expect the deal to close in the second half of 2018. Aetna
stockholders are to receive $207 a share—$145 in cash and $62 in
stock—valuing Aetna at $69 billion. Including the assumption of Aetna's
debt, the total value of the transaction is $77 billion, the companies
said. After closing the deal, Aetna shareholders will own approximately 22%
of the combined company, with CVS Health shareholders owning the remainder.

The magnitude of the deal trumps Aetna's previous attempt to acquire rival
insurer Humana for $37 billion. That deal was blocked by a federal judge
earlier this year after the U.S. Justice Department successfully challenged
the tie-up for threatening to harm competition in the insurance markets,
particularly Medicare Advantage.

After calling it quits in February, Aetna had to pay Humana a $1 billion
breakup fee. It also spent $775 million in transaction and
integration-related fees in 2015 and 2016, most of which were related to
the proposed Humana merger.

But Aetna wasted no time before jumping into another relationship. Rumors
of merger talks between Aetna and CVS surfaced in October, as reported
first by the Wall Street Journal.

Unlike the Aetna-Humana deal, a CVS-Aetna merger appears to have few
antitrust hurdles, industry analysts said. However, both companies operate
Medicare Part D prescription drug plans and may have to divest customers to
seal the deal.

Aetna's 2016 revenue totaled $63.2 billion and membership topped 23.1
million. Its profit was $2.3 billion. CVS reported $177.5 billion in total
revenue in 2016, and $5.3 billion in net income. CVS also boasts more than
9,700 CVS Pharmacy locations and 1,100 MinuteClinic walk-in clinics.


Tags: Finance <http://www.modernhealthcare.com/section/articles?tagID=946>,
Insurance <http://www.modernhealthcare.com/section/articles?tagID=947>, Mergers
& Acquisitions <http://www.modernhealthcare.com/section/articles?tagID=236>,
Pharmacy benefit managers
<http://www.modernhealthcare.com/section/articles?tagID=6210>, Private Plans
<http://www.modernhealthcare.com/section/articles?tagID=5929>, Retail
Clinics <http://www.modernhealthcare.com/section/articles?tagID=939> Related
content

   - Aetna leadership to stay on after CVS deal
   <http://www.modernhealthcare.com/article/20171203/NEWS/171209973/aetna-leadership-to-stay-on-after-cvs-deal>
   - 'UnitedHealth envy' driving insurance industry shake-up
   <http://www.modernhealthcare.com/article/20171111/NEWS/171119971>
   - Storefront clinics, expanded telehealth gaining ground
   <http://www.modernhealthcare.com/article/20170218/TRANSFORMATION02/170219900>

Article links

   1. http://www.modernhealthcare.com/article/20171203/NEWS/
   171209973/aetna-leadership-to-stay-on-after-cvs-deal
   <http://www.modernhealthcare.com/article/20171203/NEWS/171209973/aetna-leadership-to-stay-on-after-cvs-deal>
   2. https://news.aetna.com/news-releases/cvs-to-acquire-aetna/
   3. https://news.aetna.com/2017/11/bertolini-at-techonomy-17-
   future-of-health-care-is-hyper-local/
   <https://news.aetna.com/2017/11/bertolini-at-techonomy-17-future-of-health-care-is-hyper-local/>
   4. https://www.cdc.gov/chronicdisease/overview/index.htm
   5. http://www.modernhealthcare.com/article/20170218/
   TRANSFORMATION02/170219900
   6. http://



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