Money Matters

The CVS-Aetna Merger Is A Mortal Threat To U.S. Hospitals

(Source: www.forbes.com)

CVS Health’s proposed acquisition of Aetna is designed to keep patients out of the hospital for as much care as possible while escalating the move away from fee-for-service medicine to value-based care.

CVS plans to expand services in its pharmacies and retail clinics, and even deliver care to customers’ homes as a way to capture patients in lower cost settings and save premium dollars paid by Aetna clients, employers and those covered by Medicare and Medicaid insurance.

This is bad news for the nation’s hospitals, which still see millions of patients in their emergency rooms and provide care for ailments that CVS and Aetna executives say could be avoided or directed to an outpatient location.

“What they lack is the element of convenience and coordination,” CVS CEO Larry Merlo said of healthcare consumers . “When we talk about this unmet need, that’s really the unmet need that we’re filling.”

Watch on Forbes: The Future Of Health Insurance

CVS and Aetna want to see patients getting the right care, in the right place and at the right time rather than the fee-for-service system that encourages treatment by volume and adds to healthcare costs. The shift to value-based care and population health means more use of CVS Minute Clinic nurse practitioners, a nutritionist in the home or a pharmacist at the drugstore counter administering a vaccine or providing advice on the most effective medicine.

All of the services CVS provides now and in the future will be to the detriment of the nation’s large hospital operators like Tenet Healthcare, HCA Holdings and Community Health Systems and the nation’s nonprofit hospital industry as well. These hospital operators are also expanding into community-based urgent care centers and even forming partnerships with retailers like CVS and Walgreens Boots Alliance.

But hospitals admit they may not be moving fast enough to make their lower cost services more attractive to insurers and consumers. CVS’ $69 billion purchase of Aetna will give the pharmacy chain and its more than 1,100 retail clinics 22 million paying health plan members.

Hospitals have known a wave of change is coming. And executives have indicated the industry isn’t prepared for the loss of business in their facilities.

More Info: www.forbes.com

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