What are the BIG questions a BIG healthcare company like CVS Health is trying to answer when it comes to virtual care and creating the healthcare business model of the future? I’ve got Dr. Creagh Milford, CVS Health’s Head of Enterprise Virtual Health, who’s purview covers both CVS Pharmacy (9,000+ stores including 1,100 Minute Clinics) and Aetna, which provides health insurance to 39 million people.
Creagh’s big concern right now: how to weave together existing care models with virtual so 1) the consumer has a single front door and 2) the provider workforce – which includes everyone from pharmacists to primary care docs and beyond – is coordinated and working together. As you’ll hear, there’s a lot of thinking about “pivot points,” or where the patient and provider meet in the virtual-and-in-person ecosystem. The goal is to make those interactions easy and seamless – for both patient and provider alike – and we get into the strategic thinking, clinical operations, and tech underpinnings that are evolving to make those transitions possible.
Long-term, Creagh believes that healthcare consumers have “voted with their fingertips” and that virtual care is here to stay, but as part of a hybrid model in which questions about quality and cost are still being worked out. Will incentives ultimately realign to make virtual care more enticing across the healthcare system? What types of technology will be next to augment the hundreds of thousands of virtual visits a year coming out of Minute Clinic, or happening as part of an Aetna plan benefit? Here’s how one of the biggest healthcare companies in the country is driving virtual care forward. Watch now!
Last week General Electric announced it was breaking itself up. GE is an American icon, part of America’s industrial landscape for the last 129 years, but the 21st century has not been kind to it. The breakup didn’t come as a complete surprise. Then later in the week Johnson and Johnson, another longtime American icon, also announced it would split itself up, and I thought, well, that’s interesting. When on the same day Toshiba said it was splitting itself up, I thought, hmm, I may have to write about this.
Healthcare is still in the consolidation phase, but there may be some lessons here for it.
For most of its existence, GE was an acquirer, gobbling up companies with the belief that its vaunted management structure could provide value no matter what the industry. This was most famously true in the Jack Welch days, but since those days it has been gradually shrinking itself, spinning off some of its more problematic divisions, like appliances, locomotives, and much of its once-huge financial services business. It will spin off its healthcare business in early 2023 and its renewable energy and power business in early 2024; its aviation business will keep the GE name.
“A healthcare investor wants to invest in healthcare,” CEO Larry Culp explained. “We know we are under-owned in each of those three sectors, in part because of our structure.”
Potential digital health trend for 2021? Weight loss and weight management. Not only has obesity been an “epidemic” of its own for a number of years (40% of U.S. adults are obese, another 32% are overweight) BUT it’s also considered a risk-factor if infected with covid-19 and is a common co-morbidity for a number of chronic conditions. Add to that all the banana bread we’ve been seeing on Instagram and the “quarantine 15” memes that sum up the weight gain brought about by our increasingly sedentary, baked-goods-filled shelter-in-place lifestyles, and you can see where this is likely to go. So, how can health tech help? As healthcare payers and employers look toward weight management as a way to help prevent adverse health outcomes (covid-related or otherwise), we get some advice from Dr. Greg Steinberg, a clinical innovation expert who gained experience piloting novel, health tech solutions for weight management at Aetna. We demystify the relationship between healthcare payers and weight loss solutions, talk about what matters from a cost/value perspective, and, of course, find out what makes for optimal end-user success.
Today on Health in 2 Point 00, Jess and I power through a whopping six questions. In this episode, Jess asks me about the merger between Cambia Health Solutions and Blue Cross NC, Alex Azar getting grilled by Rep. Joe Kennedy on Medicaid work requirements, Omada Health adding connected blood pressure and glucose monitors, 23andMe’s new Type 2 Diabetes predisposition test, and raises by Akili Interactive and MAP Health Management. —Matthew Holt
Last week’s announcement by Aetna and Apple of their Attain “experience” designed to enable Aetna members to achieve better health using the Apple watch was the latest in a series of partnerships vying to shake up healthcare from an unconventional angle. Others include Amazon-Berkshire Hathaway-JP Morgan’s collaboration to reshape health insurance, and Uber and Lyft’s numerous partnerships with Sutter, CareMore Health, and other healthcare systems to address transportation challenges for patients.
The Heat is On
Big changes in healthcare—including the shift to value-based care, the growing influence of consumerism, and a recognition that health outcomes depend on a wide array of everyday life factors ranging from foods to moods—are forcing the old guard in healthcare to recalibrate. Healthcare provider organizations alone engaged in a record-breaking 115 mergers and acquisitions in 2017, and continued apace until now, with deals already announced in 2019 between Dignity Health and Catholic Health Initiatives (CHI), among others.
The most interesting partnerships, from my perspective, pair traditional healthcare players with non-traditional ones: it’s a recognition that something fundamental has to change, a point which hasn’t been lost on the 84% of the Fortune 50 companiesthat are already in healthcare, up from 76% in 2013. Everyone from tech giants to car manufacturers seems to gambling to some extent on healthcare. And why not, when the potential jackpot just keeps growing?
A few weeks ago, I saw a young patient who was suffering from an ear infection. It was his fourth visit in eight weeks, as the infection had proven resistant to an escalating series of antibiotics prescribed so far. It was time to bring out a heavier hitter. I prescribed Ciprofloxacin, an antibiotic rarely used in pediatrics, yet effective for some drug-resistant pediatric infections.
The patient was on the state Medicaid insurance and required a so-called prior authorization, or PA, for Ciprofloxacin. Consisting of additional paperwork that physicians are required to fill out before pharmacists can fill prescriptions for certain drugs, PAs boil down to yet another cost-cutting measure implemented by insurers to stand between patients and certain costly drugs.
The PA process usually takes from 48-72 hours, and it’s not infrequent for requests to be denied, even when the physician has demonstrated an undeniable medical need for the drug in question.
The recent news that U.S. retail giant CVS Health will purchase insurance giant Aetna, in part to gain millions of new customers for its prescription drug and primary care businesses, is another ominous sign for patients. Patients should worry about all the continued consolidation in the health care industry, whether it is Walgreens buying Rite-Aid to increase their pharmacy clout; Anthem’s ill-fated attempt to purchase Cigna to become an insurance monopoly; or hospital systems like Partners Healthcare in Boston trying to buy the hospitals and physician networks in and around its service area to control patient flow and increase market share. Consolidation often limits competition, and when that happens in market-based systems especially the result, says good research, is often that the cost of health care goes up. This does not benefit patients, who increasingly are paying more out of pocket for their insurance and for the services they receive from doctors, hospitals, labs, and drug companies.
The Affordable Care Act did little to encourage greater competition in the health care marketplace. That was probably by design, since those creating the legislation held an implicit assumption that the bigger players in each of the different industry areas like insurance, pharmacy, and hospital care could deliver given the size of the insurance expansion the ACA would promote. As we see from the existing premium inflation on the exchanges across the country and with prescription drugs, and the continued long delays in people’s ability to access care, this assumption was not accurate. To the contrary, the ACA’s focus on new and unproven structures like accountable care organizations; new payment models that reward scale and resource investment in things like information technology; and rewarding those organizations that have the most comprehensive performance measurement infrastructures has encouraged the kind of profit-oriented consolidation in the industry that does less to improve the overall system. Also, given the increased squeeze by payers like Medicare on payments to hospitals, for example, mergers and acquisitions are a natural yet dysfunctional corporate response to higher levels of uncertainty in the external health care environment.
Who will be the first to take integrated health care delivery national?
A few years ago, the best bet might have been an established provider with a nationally compelling brand and a growing affiliate federation such as Cleveland Clinic or Mayo. Instead, Optum – just a decade ago three separate services largely focused on serving United’s health benefits business – has entered care delivery and — by a constant stream of acquisitions big and small — built up beachheads in a majority of markets and is – via ongoing big acquisitions, tuck-ins and greenfield expansions – laying the foundations of a national integrated ambulatory system.
Particularly in light of the latest rumors about the role of clinics in driving the value of a potential AET-CVS combination, it is timely to take a look at what Optum has put together, size its geographic reach and discuss some strategic implications.
Last week, pharmacy giant CVS agreed to purchase Aetna this week for an astounding $69 billion dollar sum. The company allegedly plans to reduce health spending by developing an integrated system touted as “a new front door for health care in America.” This merger is actually an acquisition, entailing transfer of ownership. The central aim of an acquisition is to increase market share, expand the scope of services provided, and improve financial stability. CVS hit the jackpot on all three objectives. While Wall Street investors celebrate, many of us knowledgeable in the delivery of healthcare services are wondering who will bear the responsibility for the patients harmed by this experiment?
Aetna has compiled vast amounts of data from 22 million health plan members. CVS provides pharmacy benefits management to nearly 90 million consumers. Together, with 10,000 stores and 1,100-minute clinics already in the CVS network, this acquisition will create a ‘Walmart for Healthcare’. Applying bulk-purchase business strategies to the sale of merchandise is one thing, while providing healthcare services by ‘trial and error’ to human beings is another matter entirely. Bypassing physicians to deliver healthcare by protocol categorically jeopardizes patient safety.
Executives at Aetna-CVS plan to utilize pharmacists and nurses in the evaluation of acute illness and management of chronic disease. If an insurer, drugstore, and pharmacy benefit manager unite as one, it will usher in an era of medical “segregation,” with segregation defined as the isolation or separation of a race, class, or group by enforced or voluntary restriction, by barriers to social intercourse, by separate educational facilities, or by other discriminatory means.
It looked like a great idea when you started to build a team of healthcare specialists back in the summer. Despite — or perhaps because of — endless attempts to control costs and improve quality, American healthcare remains (in the words of a recent THCB post) “a version of Afghanistan…replete with tribal conflicts, warlords, corruption, a bad communication system, [and] language problems.” Surely, there must be opportunities for Amazon.
Healthcare reporters were quick to pick up on rumors of your company entering the pharmacy business. If Amazon’s purchasing, distribution, delivery and marketing skills could be applied to the Whole Foods grocery business, imagine what might be achieved in the $500 billion pharmacy market. And imagine how this base could be used to transform the entire healthcare industry. No wonder drugstore chains and drug manufacturers saw their stocks swoon as the rumors spread.
Now it seems Amazon may have been aced out.
CVS Health, the largest retail pharmacy chain and a major pharmacy benefits manager, is in talks to buy Aetna, the third largest US health insurer, for more than $66 billion. While some analysts see this as primarily a defensive maneuver to thwart Amazon, it has the potential to dramatically change the healthcare playing field.
In the short run, both CVS and Aetna would be better protected against their current weaknesses. CVS’ PBM business is increasingly vulnerable as major insurers bring drug negotiations in-house, while its retail stores face growing competition from on-line pharmacies and – more recently – from federal approval of Walgreens’ acquisition of Rite-Aid. Aetna has its own weaknesses: it lost money on the Obamacare exchanges, and the continuing move of large groups to ASO contracts means less profitable underwritten business.