Employers are also optimistic that the CVS-Aetna combination, which still must be approved by shareholders and regulators, will shake out in their favor. "There's potentially a lot of upside in this for both patients and for employer plans," said Steve Wojcik, vice president of public policy at the National Business Group on Health. "Some of the stand-alone retail clinics have not been very much integrated into overall healthcare delivery, and this could spur that and lead to lower health plan costs."
The response to the CVS-Aetna deal so far stands in stark contrast to the uproar from hospitals, doctors, consumer advocates and employers prompted by the attempted merger between Aetna and rival Humana, which was abandoned in February after being successfully challenged by the U.S. Justice Department. The provider industry fought hard against that merger, as well as another between Anthem and Cigna Corp., over concerns about the power the combined insurers would have over reimbursement.
The American Medical Association hasn't come out against the CVS-Aetna deal, though in a statement President Dr. David Barbe did say the AMA is reviewing "all issues triggered by this proposed merger." The American Hospital Association declined to comment.
The threat to providers isn't as overt this time around, but it's there. The CVS-Aetna combination "takes away from the centrality of hospitals providing the most care," said David Jarrard, CEO of healthcare consulting firm Jarrard Phillips Cate & Hancock. Of course, the type of care they're focused on is low-acuity care and maintenance care for chronic conditions. A patient with cancer would still rely on the hospital.
UnitedHealth has a similar end-game in mind with its proposed $4.9 billion takeover of dialysis giant DaVita's physician group. DaVita Medical Group, which will become part of the UnitedHealth's healthcare services subsidiary Optum, serves about 1.7 million patients annually through 300 medical clinics. It also operates 35 urgent-care centers and six outpatient surgery centers.
The deal will advance UnitedHealth's strategy of shifting patient care to lower-cost outpatient facilities and away from hospitals. Earlier this year, UnitedHealth's Optum bought Surgical Care Affiliates, a chain of outpatient surgery centers, for $2.3 billion. Optum also bought MedExpress, an operator of urgent-care centers, in 2015 for the same reason.
Hospitals have already started responding to the patient demand for lower-cost care and convenience. While inpatient admissions have dropped, hospitals have been investing more in outpatient care and opening urgent-care centers and retail clinics or partnering with established ones to capture patients and pull them into their systems. The cost of care at a retail clinic is much lower than in a doctor's office, and evidence has shown that the care quality is equal to care delivered in an ED.
Sacramento, Calif.-based Sutter Health, Downers Grove, Ill.-based Advocate Health Care, and Dallas-based Tenet Healthcare Corp. are just a few health systems that have invested heavily in outpatient clinics.
Questions remain about the bargaining power a combined CVS-Aetna, together with roughly $240 billion in annual revenue, would have over other industry stakeholders. Industry analysts anticipate fewer antitrust hurdles than were present when Aetna tried to buy Humana. However, both companies operate Medicare Part D prescription drug plans and may have to divest customers to seal the deal.
Aetna had to pay Humana a $1 billion breakup fee after the deal went south. If the CVS-Aetna deal fails, CVS could owe Aetna $2.1 billion, according to the companies' merger agreement.
The takeover also could spark further consolidation among insurers and pharmacy services providers, which could be detrimental to competition in the healthcare industry as a whole.
If CVS and Aetna close the deal, "that's going to make it harder for a new entrant to come into insurance market, and the only way customers benefit from lower premiums is if we end up with competition among the insurers," Garthwaite said. "We might be worried that CVS and UnitedHealth are successful in their efforts to lower spending, but the result of that is greater profits for the insurer, and not lower premiums."