CVS Pharmacy Chain buys Aetna Healthcare Insurance
Pharmacy chain CVS Health has agreed to buy health insurer Aetna for $69 billion in cash and stock, retaining its current management, the companies announced late Sunday.
The deal brings together one of the largest providers of pharmacy services with the No. 3 U.S. health insurer, which together would establish a healthcare giant with more than $240 billion in annual revenue.
The CVS-Aetna deal would likely give the combined company bargaining power in negotiating with hospitals and pharmaceuticals if they chose to go in that direction. There has not been much to control the rising cost of pharmaceuticals since Congress has blocked Medicare/ACA (Part D) from negotiating pharmaceutical pricing. The possibility of more insurers combining with pharmacy retail businesses. United Healthcare may be looking to do the same.
Interesting Direction . . . .
CVS has effectively been a health insurance company for quite a while, since they merged with Caremark.
I think all three companies that I’ve worked for since 2006 have had similar benefits structures, where the company effectively self-insured to a certain level and then the plan was managed by external companies. Drug benefits were through CVS/Caremark.
Add that to their HCP services (Minute Clinic is already the largest urgent care network in the country and is expanding into primary care), they’re just extending that vertical integration horizontally. It’s just a matter of time until they buy a hospital network.
Goodwin:
Thank you for the reply and adding to the history of what is taking place in the healthcare industry consolidation. Feel free to add more.
I don’t think this is a good thing. I can’t help but think the patient/consumer is going to see little of what ever savings CVS manages to wrestle out of the suppliers.
Daniel:
The one thing Rusty was right on was the consolidation of the healthcare industry. It will be to the detriment of patients and little of the economies of scale will filter out in lower costs.