CVS Health and Aetna merger closes
Combined company to generate revenue-enhancing initiatives, though Moody's has downgraded CVS's rating based on debt from $69 billion merger.
CVS Health completed its acquisition of Aetna Wednesday.
Aetna's medical information and analytics will become fully integrated with CVS Health's pharmacy data for a new model of care delivery.
The first phase is getting underway, CVS Health said.
In the coming months, CVS will introduce new programs to target more efficient management of chronic disease using the networks, technology and the people of the combined company.
Services will focus on self-management for patients with chronic conditions, expansion of chronic care management services at MinuteClinic, nutritional and behavioral counseling and benefit navigation support, as well as assistance with durable medical equipment, digital health apps and connected devices.
Select MinuteClinic locations will have expanded services and hours to reduce inappropriate emergency room use.
CVS Health will build on Project Health screening events at CVS Pharmacy through expanded preventive health screenings that will support the management of chronic diseases that can be effectively treated with prescription drugs, including high cholesterol, high blood pressure and diabetes.
Through expanded health screenings and advanced connected devices, the combined company can help providers predict and prevent major health events before they occur by, for example, identifying pre-diabetes symptoms or the warning signs of a heart attack.
This will be done by remotely monitoring key health vitals or helping to ensure patients with chronic diseases take their medications as prescribed, CVS said.
With a physical presence in almost every community across the country, CVS has the unmatched ability to meet consumers where they are, said CVS Health CEO and President Larry Merlo.
WHY THIS IS IMPORTANT
The bottom line is that as patients benefit from earlier interventions and better-connected care, their improved health outcomes will lower medical costs.
Over the longer term, the development of products and services provides the opportunity to generate significant new growth opportunities aimed at reducing medical costs, growing membership and enhancing revenues.
The combined company will challenge the status quo with new technologies, business models and partnerships, Merlo said.
CVS can connect to Aetna's network of providers to make it easier for consumers to access the information, resources and services they need for better health.
The company is expected to have more than $750 million in synergies in 2020 and a platform from which to accelerate growth.
WHAT ELSE YOU NEED TO KNOW
New products and services developed by the combined company will be broadly available to the healthcare marketplace, regardless of one's insurer, pharmacy benefit manager or pharmacy of choice, CVS said.
Additionally, CVS Health offerings, including retail pharmacy services, specialty pharmacy and long-term care, walk-in clinical services and PBM services, will continue to be fully accessible to other health plans.
Aetna members will also continue to have a broad network of pharmacies, including community-based independent pharmacies, available to fill their prescriptions. CVS Pharmacy will continue to participate within the pharmacy networks for other PBMs and health plans.
Moody's downgraded CVS Health's rating based on the debt of the $69 billion merger. The downgrade was from Baa1 to Baa2, with a ratings outlook of negative.
Including the assumption of Aetna's debt, the total value of the transaction is $78 billion, CVS Health said.
The Aetna brand name will continue to be used in reference to the health insurance products. Going forward, Aetna will operate as a standalone business within the CVS Health enterprise and will be led by members of its current management team.
THE TREND
In connection with the acquisition, on October 10, CVS Health announced that it had entered into an agreement with the U.S. Department of Justice that allowed it to proceed with the acquisition of Aetna.
As part of the agreement, Aetna is divesting its Medicare Part D business to WellCare Health Plans. The divestiture transaction is expected to close within the next few business days.
Aetna will provide administrative services to and will retain the financial results of the divested plans through 2019.
CVS Health has more than 9,800 retail locations, approximately 1,100 walk-in medical clinics, a pharmacy benefits manager with approximately 93 million plan members, a senior pharmacy care business serving more than one million patients per year, expanding specialty pharmacy services, and a stand-alone Medicare Part D prescription drug plan.
CVS Health serves an estimated 39 million people through its health insurance products and related services, including a rapidly expanding Medicare Advantage offering.
ON THE RECORD
"By delivering the combined capabilities of our two leading organizations, we will transform the consumer health experience and build healthier communities through a new innovative health care model that is local, easier to use, less expensive and puts consumers at the center of their care," Merlo said.
"The combination of CVS and Aetna will create a one of a kind vertically integrated healthcare company with huge scale and mark an industry shift towards a more seamless approach to managing healthcare costs as it brings together the overall management of a patient's medical bills and prescription drugs under one umbrella," Moody's Vice President Mickey Chadha said. "However, the large increase in debt resulting in weaker credit metrics coupled with increased competition, reimbursement rate pressure, regulatory and political uncertainty especially pertaining to drug pricing, the high execution and integration risk and the changing landscape of the healthcare sector are key risks leading to our one notch ratings downgrade for CVS to Baa2 with a negative outlook."
Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com
