November 30, 2018
The CVS-Aetna megamerger that officially closed Wednesday morning is slated to have a transformative effect on the healthcare industry as the pharmacy chain and health insurer unite.
Through a vertical integration without significant precedence in healthcare, CVS and Aetna have the opportunity to use their increased scale to pursue several innovative business strategies going forward. Many industry players are interested in what the newly merged company could accomplish to further assist consumers at multiple points along the healthcare experience.
However, the combination of two separate healthcare populations has also raised questions about potential issues surrounding consumer privacy and how effectively CVS and Aetna will utilize the data.
John Sculley, former CEO of Apple and current CMO of RxAdvance, a cloud-based pharmacy benefit manager told HealthLeaders that the deal is a great accomplishment for CVS CEO Larry Merlo as the healthcare industry pivots from a hierarchical structure to focusing primarily on consumer needs.
"The big opportunity with data is how do we move from an industry that has always been siloed to an industry that wants to have data flows across the entire system of care," Sculley said.
Sculley says that Merlo's plan to reformat CVS' stores away from selling products and emphasizing the delivery of healthcare to services based on health, such as nutrition or social determinants, is an innovative move. He also believes that the CVS-Aetna merger will open the doors for widespread M&A activity across the healthcare sphere in addition to the potential mergers on the table currently.
Bill Fox, global chief strategy officer of Healthcare and Life Sciences at MarkLogic, an enterprise database company, told HealthLeaders that the entire merger will rely on what the new company does with its data operations.
"A lot of the assumption around this that it will be good for patients is built around leveraging that data," Fox said. "The question is, will they do the right things from a technology and IT standpoint to get that data integrated into an operational data hub where they can appropriate, timely action on this new information that they have to improve outcomes."
Fox cautioned that many mergers are undone by inaction on integrating data between the companies, which is an obstacle CVS and Aetna will have to overcome to ensure the deal is a success.
Sloan Gaon, CEO of PulsePoint, told HealthLeaders that data does not transform industries, but rather how healthcare companies analyze and utilize their data for actionable items is what transforms industries like healthcare.
Gaon said Aetna and CVS are likely to drive down prices for consumers and increase shareholder value but remained skeptical about whether the deal would improve patient care quality. He also expressed concern about how CVS and Aetna will ensure consumer data remains private and secure from potential hacks or misuse outside the organization.
"Is the average American willing to trust Aetna and CVS with their private data and information?" Gaon said. "Regulatory constraints may inhibit the sharing of that data in a way that patients have more control going forward than less because of those regulatory constraints."
This article has been updated to include commentary from John Sculley, former CEO of Apple.
Jack O'Brien is the finance editor at HealthLeaders.