5 things to know about CVS buying Aetna for $69B

The future of health care as we know it could be changing now that CVS has announced plans to buy Aetna in a transaction valued at $69 billion.

But what exactly does the CVS/Aetna deal mean for consumers? Here’s what you need to know…

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A look at the proposed CVS takeover of Aetna

1. The deal will be financed with cash and stock

Early reaction on Wall Street to the financing behind this deal has been less than inspiring. That’s probably because CVS mostly plans on issuing new debt to make this transaction happen.

According to an investor presentation, the pharmacy chain will issue $44.8 billion in new debt and $21 billion in new equity — while only using $4.1 billion in cash on hand as "skin in the game" — to finance the deal.

Meanwhile, it still remains to be seen whether or not federal regulators OK the takeover. If approved, the deal is expected to close in the second half of 2018.

2. Your local pharmacy store will be in for an expansion

CVS has more than 9,700 pharmacy locations and 1,100 MinuteClinic walk-in clinics in its portfolio.

But the amount of services and products they provide may grow tremendously if CVS gets married to Aetna — think more durable medical equipment for sale, a wider range of vision and hearing services on offer and other new developments to be announced.

"CVS Pharmacy locations will include space for wellness, clinical and pharmacy services, vision, hearing, nutrition, beauty, and medical equipment, in addition to the products and services our customers currently enjoy," the company notes in a press release announcing the Aetna deal.

3. Big data will drive the future of your health care

Aetna brings a deep treasure trove of data to the table in this deal. The insurer’s client data will help address one of the biggest and most expensive pain points in health care — readmission rates.

Right now, the two players say that together they can reduce readmission rates by 50%.

“Readmission rates can be cut in half if patients have a complete review of their medications after discharge from the hospital to help them manage their care at home. In addition, home devices to monitor activity levels, pulse, and respiratory rates can be used to prevent readmissions,” CVS notes.

“Rather than feeling lost and confused, selected high risk patients discharged from the hospital, or their caregivers, will be able to stop at a health hub location to access services such as medication evaluations, home monitoring and use of durable medical equipment, as needed.”

4. Expect more continuity of care between doctor visits

The proposed merger will also offer some new ways to tackle chronic disease.

Citing the example of someone with diabetes, CVS notes that care management via “face-to-face counseling at a store-based health hub and remote monitoring of key indicators such as blood glucose levels” will become the norm.

This approach could potentially help fill in the treatment gaps for 30 million Americans who suffer with diabetes at a cost of some $245 billion annually to the health care system.

The combined health entity of CVS and Aetna also plans to offer text alerts when a patient’s glucose level goes out of range; counseling on medication adherence; weight-loss counseling; nutritional counseling to reverse diabetes naturally and more.

4. Here’s Clark’s take…

Money expert Clark Howard likens the proposed union of CVS and Aetna to two things — a specialized insurance model pioneered by a niche insurer and…wait for it…socialized medicine!

First up, the specialized insurance model. If you’re familiar with Kaiser Permanente, the dominant health insurer in California, you know the insurer has both its detractors and its fans.

When you’re a Kaiser customer, you go to their facilities and all services are provided by their doctors. You pay your premium and your out-of-pocket for care is near zero.

“You go to their facilities, their hospitals, their doctors, their physicians assistants, their physical therapists, their pharmacies, their everything,” Clark says.

“You as a consumer pay an office visit charge and typically that’s it — no balance billing and no shock bills. But you give up your choice to go outside their system. If the care is good, great — everything is fine. If not, you’re in their system for at least that year before you can get out of it.”

Taking a cue from Kaiser, Clark believes CVS is likely to operate a large number of retail clinics that are fully integrated with Aetna. This would be in addition to the more than the 1,100 MinuteClinic walk-in clinics that CVS currently has. And these facilities will likely be open around the clock.

“You will be expected to go to their off-hours place — not to the emergency room at your local hospital — if you want to get the cost benefit of being a CVS and Aetna member,” the consumer champ predicts.

“This is about cost containment, cost control, limiting the choice to you and limiting access to you in an effort to crush health care costs and bring them in line with the rest of the developed world.”

“It won’t always be pretty, no matter whether the government socializes medicine or these behemoths like CVS and Aetna socialize medicine.”

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