The latest merger announcements such as Aetna-CVS, Humana-Kindred, and others raise immediate concerns of how to maintain stability and financial security. It is unknown if mergers such as these will bring quality, affordability, and accessibility to healthcare consumers.
Consider CVS-Aetna, which promises to provide high touch patient care, access to convenient, high quality, low cost healthcare at your nearest drug store, and an alternative solution for absorbing emergency department patients over flow. CVS-Aetna’s goal is to keep more patients out of the hospital, all while transforming payments to value-based versus fee-based care. Their ultimate vision is to deliver consumer-centric care in an affordable care setting, starting with the patient’s home.
CVS and Aetna will potentially provide unmatched access for consumers. For starters, there are 22 million Aetna members. And CVS has 1,100 minute clinics nationwide, with potential to expand to as many as 9,600 pharmacies – including those pharmacies recently acquired by Target.
But This is Perhaps Just the Beginning for Healthcare
A combined CVS-Aetna will create the third largest commercial health insurance in the nation – just like that of its biggest competitor (and the nation’s largest health insurance company), UnitedHealth Group. Nonetheless, those health systems fearing competition from the latest CVS-Aetna announcement are perhaps also feeling pressure from UnitedHealth Group, which has been buying up physician practices, urgent care facilities, and surgery centers through the OptumCare unit of Optum subsidiary.
Optum, with over 200 MedExpress urgent care and walk-in centers and about 30,000 clinicians, now plans to buy even more medical care providers nationwide. And Optum’s latest $4.9 billion cash purchase of Davita’s Medical group, with over 1.7 million patients, will improve healthcare access across an additional 300 medical clinics.
Mergers May Change Concepts of Cost in Healthcare
Mergers, whether horizontal or vertical, are exceedingly difficult to integrate, culturally and operationally, and mostly create more complexity; vertical mergers have additional complexity in that they may signal different corporate objectives and create confusion at the enterprise level regarding the identity of the new organization.
With all of this merger activity underway, the healthcare market is nonetheless now realizing traditional health systems may not necessarily promote greater affordability, accessibility, and patient convenience. Although the role of traditional health systems will still be critical when it comes to highly acute cases, acute facilities and hospitals may become a cost center versus a profit center. Skeptics think we have yet to see vertical or horizontal mergers and acquisitions deliver significant values, and the jury is out on the recent ones.
The central question for health systems is: Do they consider recent merger activities a threat? Or, should they just keep their heads down and believe health systems will always remain the focal point, no matter what actions the traditional stakeholders and new entrants to the health market take?