1. Major Customers are Drastically Changing Their Current Business Models
11/18/2018
Health Strategies Group
Author/Artist
Major Customers are Drastically Changing Their Current Business Models
The CVS/Aetna merger creates the potential for patient touches in all prominent retail settings. Strategic acquisitions of integrated health systems would challenge peer business models.
Express Scripts’ acquisition of eviCore advances the management of products covered under the medical benefit, an elusive goal for PBMs.
Express Scripts + eviCore:
Advances PBM and MBM services
Specialty disease capabilities
Value proposition: outcomes and quality
The addition of Aetna would allow CVS Health to increase its influence over prescribing and product access across multiple channels.
CVS Health + Aetna
Comprehensive entity with ability to manage patients in practically all healthcare channels
Ability to direct patients to CVS-owned MinuteClinics rather than the ER
Integrated medical and pharmacy benefit management programs and services
Increased appeal to employers, especially self-insured and small employers
Significant presence in Medicare market
Sophisticated data analytics, especially through recent partnership with Epic for EHR systems, to facilitate execution of value-based contracting strategies
Enhanced leverage to negotiate lower prices with providers and biopharmaceutical companies
Ability to compete vigorously with UnitedHealth Group/OptumRx
CVS Health plans to remake itself as a healthcare provider, repurposing 9,700 retail stores and 1,100 MinuteClinic locations as healthcare hubs that improve patient access to healthcare services, particularly preventative care that would reduce unnecessary ER visits.
Following the merger, CVS plans to pilot new health services (e.g., blood work, dietician/nutritionist guidance, services requiring durable medical equipment) at some locations, while increasing the number of clinics and adding clinical staff.
In Health Strategies Group’s 2017 PBM level of control analysis (which did not assume acquisition of Aetna), CVS Caremark’s current and projected control over preferred distribution channels was moderate.
Acquisition of Aetna will provide CVS with greater ability to mandate distribution through its internally owned SP and to direct patients to preferred sites of care.
Note: Enrollment number as of YE2016.
Source: CVS Health and Aetna Inc. Assessed July 2017 from corporate and subsidiary websites and public reports.
Abbreviation: MBM, medical benefit management
Source: Health Strategies Group, Insurance and Benefit Design: Macrotrends, January 2018.