When the merger of CVS and Aetna was first announced, almost one year ago, everyone involved was clear about their grand plans.
“We think of it as creating a new front door to healthcare in America,” Larry J. Merlo, president and CEO of CVS Health, said at the time
According to both companies, the deal finally closed this week, with CVS ultimately paying around $70 billion to bring Aetna into the fold.
In merging with Aetna, CVS plans to tap into the insurer’s significant stockpile of medical data in order to reshape offerings nationwide. According to USA Today, CVS locations are expected to evolve from the old pharmacy model, incorporating grab-and-go grocery items and other retail offerings, to full-fledged healthcare facilities.
“I don’t see the size of the store changing from what you would know it to be today, but I do see some space being repurposed,” Merlo told the newspaper.
An early indication of the revised approach might be the MinuteClinic areas currently featured in a little more than 10 percent of the company’s nearly 10,000 locations. CVS touts the availability of over 125 different treatment services at MinuteClinic facilities, including minor ailments and non-life-threatening injuries.
A concern within the broader healthcare industry is that the presence of CVS clinics at practically every corner will draw smaller scale but important business away from hospitals, which often respond to those needs in the emergency room and other clinical offices. These case don’t generate enormous revenue individually, but collectively they are an important part of keeping hospitals financially solvent.
For those reasons and more, major healthcare advocacy organizations, such as the American Hospital Association (AHA) and the American Medical Association, have taken a dim view of the CVS-Aetna coupling. In June, AMA President McAneny, MD, argued against the merger while testifying at a California Department of Insurance hearing.
“After very careful consideration over the past months, the AMA has come to the conclusion that this merger would likely substantially lessen competition in many healthcare markets, to the detriment of patients,” said McAneny. “The AMA is now convinced that the proposed CVS-Aetna merger should be blocked.”
The deal received a required formal blessing from the U.S. Department of Justice in October, contingent on Aetna’s sale of the portion of its business that offered Medicare Part D drug plans.
Even as the companies celebrate completion of the merger this week, one judge is suggesting it’s still a little early to pop the champagne corks.
According to Reuters, U.S. District Court Judge Richard Leon suggested in a hearing yesterday that he might not issue a final approval as quickly as the various parties expected, complaining the companies and U.S. Department of Justice have reduced the judiciary’s role to a mere “rubber stamp.” The judge raised the possibility of holding off on issuing the required decision, perhaps delaying it all the way to next summer.
For now, the newly fortified CVS is proceeding as if the concerns from the bench will prove fleeting and will not impeded forward progress. Stores piloting the new CVS model are expected to start appearing early in 2019.
“There’s a lot of excitement and energy in both organizations, and folks are ready to roll up their sleeves and get to work,” Merlo told CNBC this week.
Main image credit: Associated Press.
