December 4, 2017

Aetna, CVS execs hint at Apple store-like pharmacy of the future

A CVS store.
Flickr Creative Commons | Mike Mozart
A CVS store in Glastonbury

CVS Health's approximately $69 billion proposed acquisition of Aetna will likely mean big changes for the pharmacy giant's vast network of nearly 10,000 brick-and-mortar stores.

While neither company was ready Monday morning to say exactly how different a CVS store is going to look in five years (assuming regulators sign off on the deal), there were hints of what's to come, including new health services and partnerships focused on disease management and value-based care.

Meantime, there were no clear indications on what impact the deal will have on Aetna's Hartford workforce. The health insurer giant, which announced plans earlier this year to move its headquarters to New York City, employs over 5,000 people in the state, mostly in the Capital City.

Aetna CEO Mark Bertolini told analysts and shareholders in a Monday morning conference call that the vision is for consumers to think of a CVS for healthcare services the way that they think of Apple's popular retail stores for technology.

"Think of a Genius Bar at Apple and this ability at the store to walk in and get help," Bertolini said. "I think this is the kind of idea we want to create in the stores."

It's not the first time Bertolini has talked about Apple -- a company that Aetna partnered with recently to provide smart watches to customers.

Combining Aetna's plan-design experience and book of 22 million customers with CVS Health's portfolio of stores and pharmacy offerings, while leveraging each company's deep data troves, will help drive down the cost of health benefits for consumers and payors alike, Bertolini and CVS CEO Larry Merlo said.

The companies are pitching the deal as a way to create a "front door to health care" for consumers, filling gaps in the current healthcare system and creating a better experience for customers.

"The current U.S. healthcare system is failing too many people," Merlo said. "Healthcare costs continue to rise and a paradigm shift is needed to bend the cost curve and put spending back on a sustainable path."

CVS plans to offer more healthcare services in its stores, building on its "minute clinic" business, which generally offer vaccines and treatment for more minor illnesses. There are about 1,100 minute clinics across the country, including two dozen in Connecticut.

Many Americans don't have a regular primary care doctor. Merlo said CVS stores could help spur patients, such as those with diabetes, to follow treatment plans more closely.

"When you think of healthcare interventions, they have always been there, but what they lack is the element of convenience and coordination," he said. "That's really the unmet need that we're filling."

While Aetna's previously proposed merger with Humana was blocked by the courts on antitrust grounds, CVS's Merlo said he is confident about regulatory approvals, and noted that the Medicare program stands to benefit from new efficiencies.

"As far as regulatory process we are pretty confident this transaction is very complementary to the value that can be created for the consumer and the payor," he said. "And keep in mind, one of the big payors is the federal government."

Aetna, along with Travelers and The Hartford, has pledged $50 million in aid to the city of Hartford over a five-year period -- meant to spur the city and state to find a sustainable financial path for Hartford. Mayor Luke Bronin said Sunday that Aetna told him it would keep that pledge.

"I have talked to leaders at Aetna, and they have assured me that the company's commitment to being part of a comprehensive, sustainable solution to Hartford's longstanding fiscal challenges remains in place," Bronin said.

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