CVS Is Said to Agree to Buy Aetna
nytimes.com
nytimes.com
More competition in healthcare could be a good thing--many say it's bloated and overpriced. The risk is that poor people get basic care while rich people get full care, widening health disparities.
It's unclear what the new healthcare economics will look like. Currently, minor procedures are profit centers for doctor's offices and hospitals. They subsidize complicated patients (often elderly with multiple chronic diseases like diabetes or COPD) who are riskier and take more time to treat. If CVS is taking that money, then hospitals may need to do some cost-cutting.
I'm not sure what Aetna brings to the table in regard to a future where nurses fill CVSes, either. That seems like it would be a far bigger operation than buying Aetna, and the two would be only tangentially related.
Buying Aetna makes it easier to expand the new Minute Clinic business model. CVS no longer has to worry about getting paid less than a hospital for treating a cough or fever. Aetna could even charge zero copay for nurse visits. It's more competition in the "basic healthcare" space (if it happens).
Amazon is going to buy drugs in major bulk (Walmart, or Mail-order-pharmacy style), and likely will charge low "dispensing fees" (because robots will do most thigs). CVS is looking to be the "other other Walmart" of pharmacies. I have worked (as an intern) in many pharmacies, and I've seen several buyouts. At this point in time, I'm very happy that I made the leap from PharmD to SRE/DevOps about 11 years ago. Pharmacists will be robots in <5 years IMHO.
All pharmacies, electronic and brick-and-mortar, go through one of 3 wholesalers: Cardinal, AmerisourceBergen, or Mckesson. It's, "which retailer can drive distribution?"
We both agreed it would never have been so easy in the states.
Hospitals do this too. In some cases 2-3 pharmacists can cover 10-12 hospitals for off shift dispensing needs.
With the black horse cavalry running the country, we’re going to see lots of M&A activity like this.
The problem with these mergers is they allow health plans that further disadvantage other pharmacies or providers. Once those other options are eliminated we’ll see prices rise. Do people actually want the Home Depot’s of healthcare rather than the equivalent of the local hardware store? We’ll see I guess.
Evidence suggests that they've used their monopoly to artificially inflate prices quite dramatically.
A brick and mortar pharmacy must have a pharmacist on-site to dispense drugs. Not only are they supposed to do a final check on prescriptions filled, but they must be available for patient question and sometimes medicine requires advice from a pharmacist before it can be dispensed. In addition, there are some stricter laws for certain controlled medications and these checks must be done by a pharmacist. If the pharmacist gets sick or in a car accident on the way to work, the pharmacy can't legally open (they can section the pharmacy off with its own locks to keep the convenience store open).
In my experience, that's already the situation. Actually, reality is worse. The rich (meaning, upper middle class and not sick) get full care and even excessive care, while the poor get basic or no care, often emergency only.
If you go to a hospital for an emergency procedure, the level of care and follow up care depends on your insurance. When the hospital thinks they probably won't be paid for services they choose to not offer them. So, the poor get basic care... while rich people get full care.
It's now a system where wealthy, government employees, and the poor (i.e. subsidized) have access to full care, and most of the middle class just goes without.
In the past 5 years, I've gone from a decent $20 copay to a employer-sponsored high deductible to currently a fully out of pocket deductible of $2k before insurance pays a cent.
I've begun rationing my prescriptions and simply skip the doctor unless it's a true life-or-death situation.
The deductible for co-workers with a kid or two is something like $5k. That's on top of probably $10k in premiums a year.
I sometimes think that's one of the things that's kept health care so expensive. Nursing salaries aren't cheap. A lot of the home health and basic clinic stuff could be handled by an LPN/LVN or even a Paramedic in many cases. Not everything needs an RN. There are plenty of available telemedicine options to put a provider in touch with a higher level of care if necessary.
If you've ever had to attend something like Physical Therapy, you'll see the actual PT (a MS/Doctorate level professional aka DPT) about twice. Once for an eval, and once for a discharge. An "aide" will guide you through all the other exercises, and they make very significantly less than a PT.
The savings are mysteriously gone, even adding lower-salaried professional extenders.
This needs the caveat of “to American consumers”. The NHS seem to be heavily moving in that direction, and I suspect “cheaper” is no small part of that
https://www.cvs.com/minuteclinic/why-choose-us/our-practitio...
To expand their services to all of their stores, they'd be looking at hiring 5 or 10 percent of the NPs and PAs in the country.
The minimum requirements of a RN is an Associates degree and successful completion of the NCLEX -- though, many hospitals require a person to also obtain a BSN after a few years to continue being employed. That's a big educational jump to make.
I don't think pay is a big motivator for nurses. There are so many better paying jobs out there that are easier to get, and don't involve dealing with the figurative and literal shit nurses deal with daily.
While we might cost about the same, our scope of practice is a lot broader than an LPN's...
Nursing unions and trade groups are generally very opposed to the 'paramedic practicioner' or 'community paramedicine' model.
Aetna doesn't add any more to the equation of CVS other than streamlining payments. It's only interesting if you use Aetna I guess, but you can generally use CVS pharmacy + minute clinic with your insurance provider today.
General high level overview of this:
https://www.bcg.com/en-us/industries/health-care-payers-prov...
https://cvshealth.com/about/facts-and-company-information
When I had Aetna, they didn't even cover getting a flu shot at the pharmacy. Maybe they changed that, but it's dumb, they covered it 100% using primary care.
The truth is that everything that a payer pays for is done through contracts. Payers will often default to a specific provider because the contract covers it and they don't have a contract for other providers.
In terms of the cost, back-end rebates often bring it down. Also, this particular contract may cost more for a flu shot, but save them even more for other procedures.
To go to a pharmacy, you can stop by on your way home or do it on the weekend.
By making it inconvenient, you reduce the number of people getting a flu shot... and I would bet that more people drop out from the inconvenience, than the extra amount it costs aetna when you go to the doctors office.
But that said, do you have even the tiniest bit of evidence that insurers actually do what you're saying in order to keep their costs up per ACA requirements??
There's all sorts of shenanigans in the industry, but your speculation sounds far-fetched. Remember Hanlon's Razor…
Yup. Allowing reimports of prescription drugs would be the single easiest way to have a massive effect on the costs of care in the US, with pretty much no negative impact on patients, providers, or pharmaceutical companies in the US.
As lostapathy explained below, US prices are currently high because that's where pharmaceutical companies are capturing their profits. In fact, even European pharmaceutical companies make most of their revenue from sales in the US, not Europe. (This is why the US funds over 50% of R&D for the entire world, even though it only has 300 million people, and many of the largest pharmaceutical companies are based in Europe, not the US).
If reimportation were permitted[0], pharmaceutical companies would adjust the prices of drugs across those countries, which would bring drug prices in the US and Europe in line with one another.
Ultimately, pharmaceutical companies would still be able to make the same amount of money off the drugs, but it would distribute the sources of that money more evenly across the people who are actually using the drugs (and benefiting from the research and development).
[0] it would almost certainly only apply to reimports of drugs from other NATO countries (more or less), because those are the countries that abide by US patent law on drugs (India and China, by contrast, do not recognize US patent law on large classes of drugs),
This just isn't true. Take Norvatis for example, one of the biggest pharmaceutical companies in the world. The US makes 35% of their revenue and Europe another 35%, with the rest of the world sharing the rest. [0]
I wouldn't call that "most of their revenue". In fact, I don't see anything out of the ordinary about revenue gained per customer, given the size and purchasing power of the US.
There's little evidence to suggest that higher drug prices actually help the drug companies.
[0] https://www.statista.com/statistics/294631/novartis-revenue-...
Not sure exactly what numbers you're basing that on, but I believe a significant portion of that research (especially basic level stuff) is government funded, which is not a good argument for allowing pharma companies to keep prices high.
Nope, government funding is tracked separately.
Yes. If consumers and/or pharmacies in the US could easily and reliably source cheaper brand-name drugs from international markets where price ceilings are in effect, it would ruin many drug companies, especially smaller ones.
Those price ceilings only exist because of the artificial trade barrier between the US and those other countries. Without that trade barrier, pharmaceutical companies would charge roughly equivalent prices in the US and other countries. It wouldn't ruin drug companies at all.
You do know that many nations impose price controls on pharmaceutical products inside their own borders, right?
> That it was the spirit of monopoly which originally both invented and propagated this doctrine cannot be doubted; and they who first taught it were by no means such fools as they who believed it. In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest. The proposition is so very manifest that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question had not the interested sophistry of merchants and manufacturers confounded the common sense of mankind.
Not really - countries like China and India don't recognize US (or European) pharmaceutical patents to begin with, so they're not bound to purchasing brand-name drugs from the original manufacturer.
In order for anti trust flag to be raised through vertical integration like this, the combined entity would need to start buying up other entities in the vertical chain.
I'm actually interested in how this plays out.
If Amazon is going to get into the pharmacy business they'll probably become a distributor as well since it's an outgrowth of the logistics they already do.
Are you sure about this? Hospital and provider networks are probably the most fragmented layer in the healthcare vertical stack, by far.
In the For Profit space, I would agree with you, top 3 dominates. But if you throw in non-profit into mix, their power gets really diluted.
https://www.compassphs.com/blog/healthcare-trends/healthcare...
[1] https://www.bostonglobe.com/business/2015/01/29/partners/s9T...
Basically every other developed country has shown that the government can do as good of a job at half the cost. Socialize it all.
Our tax dollars are already paying out as much as other countries do but their citizens get a lot more for their money.
The solution to lowering the cost of medicine in the US has not a single solution but lies at every level of the system.
[1] https://www.oecd.org/health/health-systems/Focus-Health-Spen... - it's the second chart.
Part of the problem with health insurance tied to a job in the US is the fixed market that is shrouded from consumers leading to horrible pricing and service. Employment handling healthcare, in addition to a fixed pricing market, also harms the individual market due to horrible grouping, invades privacy, makes it harder to change jobs or start a company, and on top of that fuels ageism as costs go up with age in health. Employers should have no part in your healthcare, pay people more to go get it is all that should be allowed.
All other insurance types are consumer focused for auto, life, home and more. CVS taking over Aetna could be a great force in the market to make other companies get competitive on the consumer front. Aetna and BCBS are two of the worse non consumer friendly insurers around, they really hate dealing with individuals and small companies.
The trend of corporate consolidation is concerning, we need more monopoly busting, and anti-trust investigations.
I realize that most people going to an expanded minute clinic aren't going to be some sort of walking dead, but it seems that if CVS tries to make its stores too much like primary care with ill people going to get prescriptions from a doctor, then people will avoid buying things at its stores to avoid getting sick.
Allergies? Pharmacy. Long-term disease? Pharmacy. Cold or flu or want to try the natural meds for pinkeye? Pharmacy. And a slew of other infectious and non-infectious diseases, maladies, and injuries.
I share your concern. Maybe they could service people out of Tesla Semis in the parking lot? Only half joking.
What's the causality here? Why does a lower chance of being blocked imply a lower fee if blocked?
Since I mostly hate my insurer and want to help them towards bankruptcy by extracting as much coverage from my fixed premium as possible, I have no objection to using these coupons if they'd help me and I felt like an expensive drug choice was better for me, though it's not come up for almost any drug I've needed.
Though I do need new epi-pens; maybe I should look for one while I still can!
[1] https://www.propublica.org/article/are-copay-coupons-actuall...
For example, some simply won't cover the brand name if the generic works for you. Others will let you get the brand name, but will only cover the amount they would pay for the generic. In either of these situations, the coupon wouldn't matter to the insurance company.
With other plans, though, the insurer pays more with the coupon. And if yours does, you can "stick it to the man" using coupons.
This merger may create value but I'm sure Aetna / CVs will capture as much as possible themselves and consumers will see little of it
Ex: A knee brace went over the $500 requirement to have a prior approval before issuance. No one knew this at the time so the doctor gave a cost price of $100 for the brace to avoid phone calls, letters, and time.
Can we please eliminate medical bills if not sent to the patient within 90 days? 2-5 years late is just pathetic.
Every other avenue of runaway consumerism and overconsumption can obviously be pointed to as either indulgent or unnecessary.
But not healthcare: it's your health, after all - your wellbeing. It's a fundamental right, right ?
...
The received wisdom is that the aging of the baby boomer generation is driving expanded healthcare expenses as this large sect gets older. It's obvious that they need all of this "healthcare".
But what if there were an alternative, more insidious explanation:
The boomers represent an irresistible pile of money. But they don't smoke. They don't have new households to start. They're getting wise to the whole sugar thing. What is left to tempt them with ?
What if there were a clear imperative on the part of a variety of industries to keep this population as unhealthy as possible - so they can stripmine their assets for "healthcare" ?
> What if there were a clear imperative on the part of a variety of industries to keep this population as unhealthy as possible - so they can stripmine their assets for "healthcare" ?
It's not clear that living a healthy lifestyle reduces healthcare costs, it can actually make you more expensive to care for.[1][2][3]
Diabetes medications and death from sudden heart attacks are cheap. Healthy people who live into their 80s/90s are the biggest drag on the healthcare system. They spend more of their lives as retirees. They end up needing 24-hour care. And then they still incur the same end-of-life causes as the obese/smokers... they get cancer, they get heart disease, alzheimers, etc.
Smokers and obese are inexpensive to care for in terms of lifetime cost. The best-case scenario for an insurance company is that you get hit by a bus or something. Barring that, I think they might actually prefer that you be a smoker or become obese.
[1] http://www.telegraph.co.uk/news/health/news/9359212/Obese-an...
[2] http://www.nytimes.com/2008/02/05/health/05iht-obese.1.97488...
[3] https://www.forbes.com/sites/timworstall/2012/03/22/alcohol-...
Diabetes can represent a massive chunk of healthcare spending, and also be an inexpensive patient outcome relative to many alternatives. Both can be true at the same time.
Healthcare is not worth infinite, we make decisions everyday to sacrifice our own health for other benefits, from taking the bus to work instead of a bike, from not eating what is best for us, from taking unnecessary risks in pursuit of pleasure, etc.
Healthcare is first a necessity service like any other, like food, clothing and shelter, and that doesnt mean all the other services extract the most out of people.
I get it, the U.S. healthcare system is broken beyond recognition and a fully state-sponsored solution looks like tempting next step. But lets not go overboard with patently false ideas and abstractions.
Seems like it’s going to take Jeff Bezos to fix healthcare in America.
> ...used to describe engineers and other technical folks assuming their technical knowledge of systems (usually computer, mechanical/electrical) gives them expertise in solving other complex issues.
Most of health care is a power/influence and social problem: Who gets to control things, who gets the money, who gets influence over the streams of money through the system? That's not an engineering problem but power play. Even if you _could_ show, using science, that you would get better outcomes with other methods, I don't think the people struggling for the honey pot care.
That's why thinking an engineer could build a better health care system seems misguided to me. Better machines to be used as part of the system, sure, but not the system itself. That's politics and hard-core power struggle for the money first of all. If the currently relevant people cared about the health outcomes they would already have changed the system. After all, that "U.S. Spends More on Health Care Than Other High-Income Nations But Has Lower Life Expectancy, Worse Health" (Americans Get Less Health Care, Spend More for It) [0] is not exactly news.
[0] http://www.commonwealthfund.org/publications/press-releases/...
[0] http://www.geraldmweinberg.com/, @JerryWeinberg
[1] https://blogs.msdn.microsoft.com/alikl/2008/11/12/three-laws...
[2] "The Secrets of Consulting", Weinberg
The shit-show that is my current engineering-built system would beg to differ.
A lot of times the "care" people get is really crappy also, in spite of expensive insurance. Oh, but they'll be sure to offer you a $30 orange juice. Then you'll be getting bills for months/years afterwords and not be completely sure what they are for.
I realize medicine is a specialty. I realize it takes a lot of training to be a doctor. But I've always believed that a lot of what medicine solves isn't unknowably esoteric. A lot of it can be solved by a person with some hands on experience and good observational powers and base knowledge (not brain surgery obviously but things like yeast infections, simple broken bones, etc.).
The whole thing really is more ripe for disruption than any other area I can think of.
Also countries that have reasonable policies don't have them because of Jeff Bezos or any single "savior" (industrial or political maven), outside of a few (but well known) exceptions; in many ways, our "faith in science" (lol) and the next high tech tweak is preventing us from delivering pragmatic, proven, reasonable solutions today