In a recent post, I discussed the CVS purchase of Aetna and speculated on the benefits that might accrue to the merged company (see: Merged CVS and Aetna Will Move Toward a Community-Based Healthcare Model). In an initial press release, CVS executives announced that the diagnosis and treatment of chronic diseases would become a special focus. Below is an excerpt from this statement by the company:
Because the storefront pharmacies and MinuteClinics are embedded in local communities and have become places that Americans frequent,...the combined company will be better able to manage patients with chronic diseases, who may see their primary care doctor only three or four times a year. Patients with chronic diseases represent the lion's share of healthcare spending. According to the Centers for Disease Control and Prevention, 86% of the nation's $2.7 trillion annual healthcare costs go to patients with chronic and mental health conditions.
I can easily understand why this large, vertically integrated healthcare company would want to focus on patients with chronic diseases. They account for a very large percentage of healthcare expenditures in the country. However, I did wonder why the company assumed that it could deliver better and less expensive services to these patients than current health systems and physician practices. I discovered a possible answer to this question in another article commenting on the purchase (see: CVS Health and Aetna bet $69 billion merger on analytics, data, digital transformation). Below is an excerpt from it:
One of the core benefits pitched by CVS CEO Larry Merlo [for the Aetna acquisition] was better use of data and analytics. Aetna has had a solid analytics architecture for years and has focused on reducing fraud. CVS is using its Minute Clinics and pharmacy benefits data and combining it with its retail touch points. By offering more services and personalization, CVS and Aetna are hoping they can better manage chronic conditions, coordinate care and reduce hospital readmissions.
CVS/Aetna seems to be assuming that it can deliver better care at a lower price to patients with chronic diseases, in part, because of its expertise in analytics and big data acquired through its PBM and health insurance units. The core idea here appears to be that the company could proactively, through data analysis, treat chronic diseases at an earlier stage and avoid downstream, more expensive care. By mixing a health insurance business with a healthcare delivery business, there should thus be an incentive to treat diseases earlier.
It would not be hard to outperform most of our current health systems in terms of utilizing population health data (i.e., health analytics). Despite much discussion of the potential of population health by health systems (see: Population Health Management; Software Designed to Support ACOs; Population Health, the "New" Hot Button in Healthcare Software; Cerner Emphasizes Population Health but Pay Attention to the Details), I believe that little practical knowledge has been gained in terms of improving healthcare delivery. It will definitely be worthwhile to keep an eye on the performance of CVS-Aetna going forward.