December 5, 2017 Comments (0) Views: 359 National News

CVS, Aetna $69B Deal Remakes Retail & Healthcare Experience

CVS Health is acquiring Aetna in a monumental deal valued in the neighborhood of $69 billion, but perhaps even more important, the move reflects significant shifts underway in both the retail and healthcare sectors. Retailers are looking for ways to meet the challenge posed by online giant Amazon, and healthcare companies are seeking innovative avenues to better connect with customers and deliver services.

Not only is the vertical integration acquisition one of the largest so far this year, it creates an innovative triple threat through the combination of CVS’s pharmacy and pharmacy benefit manager (PBM) platform with Aetna’s insurance business. CVS’ retail footprint of nearly 10,000 pharmacies and more than 1,000 walk-in-clinics would be leveraged for pharmacy, nutrition, clinical, vision and even beauty services.

It also creates another customer touch-point outside expensive hospital emergency room visits for an insurer, and gives people new reasons to visit a CVS store, which will still sell traditional household goods. The effort to cut emergency room use by Aetna’s roughly 23 million members by enhancing preventative care in CVS locations could save more than $1 billion each year.

CVS is hoping to gain additional scale in order to negotiate better prices for prescription drugs sold through its PBM business. Aetna’s insurance business will be bolstered since it could potentially offer its customers lower co-payments.

The CVS/Aetna combination also will counter a potential threat from the big e-commerce retailer. Amazon is reportedly exploring a move into the drug industry, and has held preliminary discussions with generic drug makers to get into the pharmacy business. If consumers can fill their prescriptions via Amazon, that could eliminate a primary reason customers go to a CVS retail store.

Once the CVS/Aetna deal closes, which is expected in the second half of 2018, Aetna will operate as a stand-alone business unit within the larger company, led by members of the insurer’s current management team.

Read more at CNBC


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