5 key points about the CVS-Aetna merger for insurance agents

The insurance part might be 'kind of in the background'

CVS said in the deal announcement that it intends to run Aetna as a stand-alone company. (AP Photo/Alan Diaz)
CVS said in the deal announcement that it intends to run Aetna as a stand-alone company. (AP Photo/Alan Diaz)

Executives at CVS Health Corp. are trying to acquire Aetna Inc. at least partly because they see the opportunity to serve enrollees in government-run health plan programs, such as Medicare and Medicaid, continuing to grow.

Larry Merlo, the president of the Woonsocket, Rhode Island-based drug store and pharmacy benefit management (PBM) company, and Mark Bertolini, the chief executive officer of Hartford, Connecticut-based Aetna, talked about their vision for the U.S. health care system today during a conference call with securities analysts.

Related: The logical connection between selling P&C insurance and health benefits

CVS and Aetna held the call to talk about the $69 billion offer CVS has made for Aetna.

The companies hope to complete the deal by the end of 2018.

The companies note that they must first get through an antitrust review process, and that note is not just a piece of boilerplate required by the lawyers. Antitrust review problems contributed to the decision Aetna made, earlier this year, to walk away from efforts to acquire Humana Inc.

CVS said in the deal announcement that it intends to run Aetna as a stand-alone company, and that the Aetna unit employees "will be led by members of their current management team."

CVS and Aetna have posted links to a number of deal-related resources. Agents who want to listen to the call themselves can use a link on that page to hear an audio recording of the call.

Here are five points about the proposed deal drawn from the call.

1. Mark Bertolini would not be overseeing day-to-day Aetna operations.


If the deal is completed, Bertolini will join the CVS board, but it's not clear what other role, if any, he would have at the combined company.

2. CVS executives do not seem to talk much about serving individual commercial major medical customers, or about the large employer group market.


One analyst asked Merlo about the opportunities he sees the Aetna deal creating.

"I think the real opportunity lies in the government plan businesses," Merlo said.

He said he thinks CVS could do more for enrollees in Medicaid and Medicare plans.

3. Insurance agents may not love the Affordable Care Act public exchange system "navigators," but the navigation concept is hot.


CVS and Aetna executives mentioned insurance agents only once, in passing, during their call.

They talked, several times, about opportunities to provide patient navigation services.

CVS and Aetna could set up "health care hubs" at the front of CVS stores that could, for example, help patients navigate the health care system by setting up physician appointments for patients with chronic health problems, Bertolini said.

4. CVS and Aetna are not all that interested in emphasizing the insurance angle.


One analyst said that he believes that, in many cases, health care providers that get involved with insurance do better when they emphasize the importance of the insurance operations.

Merlo and Bertolini said they are more interested in creating patient-centered medical homes.

"The insurance component of this is kind of in the background," Merlo said.

"It's not about buying insurance," Bertolini said. "It's about getting the best possible health care experience for you in the most affordable way."

5. Agents could see a flurry of small-scale experiments at CVS.


Merlo said CVS wants to introduce pilot projects embodying the health care hub idea as quickly as possible.

"We have a lot of work to do," Merlo said. 

Related: Can healthcare be saved?

Allison Bell is the insurance editor for ThinkAdvisor. She can be reached at abell@alm.com or on Twitter at @Think_Allison.

Originally published on ThinkAdvisor. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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