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It’s the Kaiser model, but it could be even more
Recently, CVS Health bought Aetna for nearly $70 billion - the biggest deal this year. If approved, it would be the biggest healthcare combination in history and bring us closer to a new-world order in which insurance companies start to think of the “giving” and “preventative” part of care vs just the financing of it.
The combination of one of the country’s leading health insurers with one of the largest drugstores and prescription pharmacy chains with a large retail footprint does, after all, get the insurers closer to the customers--an increasing trend. Andy Kurtzig, CEO of JustAnswer, a Q&A site used by thousands of physicians, wrote a thought-provoking piece on this titled: Your health insurer will be your next doctor.
As Kurtzig mentions in his piece, insurers are faceless paper-pushing middlemen. No longer, says CVS Health President and Chief Executive Officer Larry J. Merlo, who referred to CVS Health as providing the “human touch” to Aetna’s current insurance business.
Now this combination isn’t entirely new. When I asked Dr. Archana Dubey, my co-host of our salon-styled SplashX Invent Health event, what she thought of the deal, she immediately said: Kaiser is a similar combination.
Kaiser is similar in that it is one of the largest health plans in the country, insuring 11.7 million members, plus it has physical locations -- 39 hospitals and 680 medical offices around the country. CVS has more than 1000 Minute Clinics. CVS has been ahead of the curve with its walk-in clinics since 2000. About 70 percent of people live within three miles of a CVS - I’m one of them.
The vertical integration of assets has helped Kaiser become more affordable than other insurance plans. Earlier this year, I switched from Blue Cross/Blue Shield to Kaiser. For a similar plan, Kaiser was 57 percent cheaper with half the co-pay and deductible. Now I go to Kaiser for my physicals, exams, pharmacy medications, shots, etc. About the only things I don’t do at Kaiser when it comes to my health is see a dentist and optometrist, and work out.
While I never thought of Blue Cross as my care provider, I think of Kaiser mainly as the clinic I go to for check-ups and health-related services. I think of my Kaiser physicians and their recommendations to stay healthy. I don’t think of them as my health insurer, which is the right mindset.
How CVS / Aetna could win me over
Still, when I think of healthcare in general, I think of hospitals and insurance. When I think of being healthy, I think of staying fit and working out. Those two should be thought of together. Increasingly, when we think of healthcare, we should ask: “What workout did I do today to stay healthy and what vitamins am I taking vs how much is my deductible?”
CVS / Aetna can play a role in shaping this mindset. Through CVS’ retail reach, Aetna gets closer to the front lines of care, where they can at least see what’s happening at the clinics, and also know what medications or vitamins people are taking.
If a quote is any guide, Aetna seems to believe this as well: “This is the next step in our journey, positioning the combined company to dramatically further empower consumers. Together with CVS Health, we will better understand our members' health goals, guide them through the healthcare system and help them achieve their best health," said Mark T. Bertolini, Aetna chairman and CEO, in a release.
If Bertolini wants consumers to “achieve their best health”, he might also focus on helping consumers stay more fit. You can imagine your local CVS drugstore to increasingly look like a health clinic, and in five years, possibly a wellness and fitness center.
Imagine if there was a CVS / Aetna Fitness center attached to that clinic, I might just be compelled to be a part of it if the company offered incentives to work out. For every day I work out, I get points off my insurance costs. Munjal Shah gets that. He started HealthIQ to convince insurance companies to lower rates for those who take care of themselves, or those who are “health conscious.” By focusing and serving the health conscious, Aetna might have been able to lower costs it incurred by insuring the many unhealthy people who signed up to their Obamacare exchanges, which caused unbalanced risk pools and a loss of $700 million because of them between 2014 and 2016.
Not a new concept, just not a popular one
It may be a stretch to think of hospitals with fitness centers, though this is a concept that dates back to the 80's, and apparently, hospitals are finding them to be money-making ventures. But these combo-centers are not so common.
I certainly enjoy going to my local tennis and pool club, where there’s also a gym, spa, yoga and training rooms. There’s also a lot of healthy people who motivate one another. Maybe fitness centers shouldn’t be part of a hospital where one out of 25 patients get infected and some 200 people die each day from hospital-acquired infections. Why bring healthy people together with the unhealthy and take that risk?
But it’s not a stretch to see smaller health clinics with fitness centers combined. If both Bertolini and Merlo really wanted to achieve their customers “best health” then they’d think more about preventative health, which in turn would bring down the cost of healthcare.
“This [deal] absolutely does have the potential to bring down costs for Aetna's member population -- if they seize this opportunity. You can make great strides in developing coordinated care models with this type of vertical integration. But the merger alone won't do it. To accomplish this, CVS and Aetna will also have to invest in high-quality, evidence-based prevention tools that they can integrate into the lives of their members,” said Sean Duffy, founder and CEO of Omada Health, which runs behavioral programs to reduce the risk of diabetes, by primarily helping consumers lose weight.
Consider this study linking obesity with rising healthcare costs. The answer: “Reducing obesity, improving nutrition and increasing activity can help lower costs through fewer doctor's office visits, tests, prescription drugs, sick days, emergency room visits and admissions to the hospital and lower the risk for a wide range of diseases.” Some 9 percent of hospital admissions are diabetics, some of whom are obese.
Those evidence-based tools Duffy referred to can also be as simple as a fitness center.
CVS /Aetna fitness and wellness center, here I come.
(Image source: active.com)
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