In what is being reported as the "largest health insurance deal in history," Woonsocket-based CVS Health announced Sunday it will buy health insurance giant Aetna for $69 billion.
The decision comes a little over a month after rumors began circulating that the pharmacy company was interested in Aetna for $66 billion.
In late October, when said rumors first broke, analysts predicted that the deal was the result of “so many threats” coming at the company. Those threats included UnitedHealth Group‘s OptumRX, a pharmacy benefit management group, and Amazon. The latter had reportedly been making moves in the pharmacy space, buying wholesale pharmacy licenses in 12 states and hiring a manager in charge of strategy for market entrance.
However, as the deal has moved from "potential" to "actual" status, other analysts are purporting that the acquisition is a bit more than just a reactionary measure.
"Aetna CEO Mark Bertolini and CVS CEO Larry Merlo are both visionary business leaders, who are trying to break out of the traditional confines of their respective businesses," Alan Murray wrote in Fortune's CEO Daily newsletter. "With action in Washington on health care stalled, they believe they can forge a new model for the industry that can both improve health outcomes and reduce health care costs — something the government has repeatedly failed to do."
Now, analysts are penning think pieces on how the acquisition could be a considerable boon for consumers' health care in the long term, with the New York Times arguing that "research shows that coordinating pharmacy and health benefits has value because it removes perverse incentives that arise when drug and nondrug benefits are split across organizations."
Shannon Shallcross, CEO and co-founder of East Greenwich-based BetaXAnalytics, a company that uses data to assist employers, providers and payers make better decisions about their health services, also weighed in on the move in an email to Rhode Island Inno.
"The company has expressed the desire for this move to improve the integration of patient care, and to provide higher quality care at a lower cost in 'communities, homes and through the use of digital tools to support health,'" she said. "Merlo communicated the desire to put customers 'at the center of health care delivery.' The intent would be to leverage CVS's 9,700+ retail stores and 1,100 Minute Clinics to create community-based centers that include resources for wellness, medical, pharmacy, vision, hearing and nutrition services. And the touted benefit of acquiring Aetna is that integrated care and higher negotiation power for pharmaceutical drugs is the key to lowering costs."
She added that the while the deal is projected for the second half of 2018, it's unknown if the move will have to contend with anti-trust opposition.
"While vertical mergers, which combine two companies in different industries, don't traditionally get blamed for stifling competition, CVS's announcement comes on the heels of the Justice Department's block of AT&T's takeover of Time Warner, citing the acquisition would create 'too powerful of a content company,'" she continued. "And with two recent horizontal healthcare deals halted for antitrust reasons (Aetna/Humana and Anthem/Cigna), CVS's Aetna deal will need to pass through close scrutiny in Washington before the deal can be finalized."
