Can CVS Health + Aetna win consumer trust through data?

Aetna, one of the largest health insurance companies in the U.S. and CVS Health, the retail pharmacy and healthcare company, have just been given the green light by the Department of Justice to merge in the largest healthcare-related transaction in history. Aetna will sell its Medicare Part D drug plan business as part of the agreement.

The merger, announced in December 2017, combines CVS’ pharmacies with Aetna’s insurance business in hopes of lowering costs for consumers. In a September 20 speech, Larry Merlo, CVS Chief Executive Officer, outlined the company’s plan for a new data-driven healthcare model, making care more personal and tailored to the individual.

As one of the largest integrated pharmacies and insurance providers, CVS and Aetna have the potential to change the way patients receive and manage their care. This merger recognizes the need for better, more transparent, individualized and convenient care.

Why It Matters

• This merger envisions a new approach to care, in which CVS and Aetna seek to become agents in delivering healthcare outside of the doctors office. CVS owns more than 9,700 pharmacies and 1,100 MinuteClinics — this existing infrastructure provides everyday healthcare assistance and can help prevent problems before they occur.
• Plans for CVS after the merger are transformational — turning walk-in MinuteClincs into care facilities with experts capable of providing reliable healthcare knowledge. The goal is for patients to visit walk-in locations between regular doctor visits for counseling on correct use of medication, dietary advice, glucose level monitoring and more.
• The merger’s momentum and success will be driven by massive amounts of patient data collected not only by CVS’s retail storefronts and MinuteClinics, but from the 22 million members of Aetna’s medical programs.
• It’s clear this merger is a response to market pressures and tech industry expansion into the healthcare space. Healthcare mergers are becoming more and more common as traditional companies must adapt to compete with tech companies like Amazon who spot an opportunity to expand into the health space. Additionally, public response to tech’s increasing presence has been positive — many people believe these companies can effectively cut costs and make it easier to access patient data in ways that traditional companies have not.
• Overall, proponents of the merger argue that it has the potential to lower healthcare costs and improve quality of care.

Clyde Insights

More and more Americans are increasingly frustrated with the rising costs of healthcare and prescriptions and the many challenges to accessing quality healthcare services. Individual patient care is not always holistic or integrated, treatment is delivered without taking into account a patient’s complete medical history. In a world where data is king, CVS and Aetna will have an advantage and can play a crucial role in promoting individualized patient care. Their ability to track patient health by becoming a “one stop shop” for healthcare needs will allow for greater attention to individual patient needs and personalization of care in a way that multiple providers treating one patient for the same or various issues often do not.

The most interesting piece of this merger is CVS Chief Executive Larry Merlo’s positioning of its focus. He believes it will be most impactful at the “local and community level to intervene with consumers to help predict and prevent potential health problems before they occur.” As with most major mergers and acquisitions, the CVS-Aetna announcement has received stark criticism. In a market that is already dominated by so few private companies, critics are suggesting that consumer choice will be limited by a reduction in competition. But the merger’s positioning suggests that CVS and Aetna are working harder to be allies to communities (as opposed to corporate monopolists that threaten the existence of independent local pharmacies).

The new, holistic healthcare model that the merger suggests, with all the data to back it up, also hopes to earn consumer trust. As healthcare becomes more and more complicated and disparate, a single, convenient and data-backed solution will ultimately win consumers’ favor.