Are we playing medical Monopoly?
Monday, December 11, 2017
Mergers and acquisitions are the name of the game in healthcare these days. It feels like we are watching a giant game of medical Monopoly being played out before our very eyes. Just a few big players are rapidly rolling the dice and plucking up properties as they move their pieces around board.
One of the latest deals is UnitedHealth buying up a physician group from Denver-based DaVita, which includes their primary and urgent care centers and 1.7 million patients. For the princely sum of $4.9 billion, they are betting those extra 2,200 prescribers are going to help cut costs for them down the road. If they don't, I wonder how many providers will hear "do not pass go, do not collect $200."
But another big deal that recently hit the news makes the UHG deal look like play money. I'm talking about the proposed acquisition of Aetna by CVS Health for $69 billion. According to CNN Money, "it would also go down as the largest health insurance deal in history, far exceeding Express Scripts' $29 billion acquisition of Medco in 2012, the last record-holder."
What does all this M&A activity mean for retail community pharmacy? It depends who you ask.
Independent pharmacy owners are likely to shudder at the CVS/Aetna deal and what it will mean to their business.
"It means a lot of pharmacies that are just on the fringe of shutting down right now will shut down," said Thomas D'Angelo, an owner and regional representative to the Pharmacists Society of the State of New York (PSSNY).
And the NCPA wasted no time coming out with their thoughts on the matter:
"For all of the talk about cost savings, prescription drug costs have clearly continued to rise despite previous vertical mergers like UnitedHealth's 2015 acquisition of Catamaran. Moreover, the anticipated efficiencies CVS and Aetna tout may benefit the merged company more than the consumer, who is likelier to be driven to use healthcare resources chosen by the health plan rather than those of his or her own choosing."
But proponents of the Aetna purchase believe the deal is good for patients.
"Aetna customers would be able to walk into a local CVS pharmacy to discuss primary care treatment options and get their prescription drugs without having to trudge through the various middlemen that pepper America's fragmented medical system," Sy Mukherjee, writing for Fortune, says optimistically.
The Wall Street Journal agreed: "The logic of the deal centers on a plan to use CVS's nearly 10,000 U.S. pharmacy locations to provide consumers with more local care options."
Well, it sounds good on paper at least.
As a pharmacist, I'm beginning to get used to the acquisition game. We, like many professionals in healthcare, don't know from day to day who our employer will be tomorrow.
I sometimes wonder if, when the dust settles, we will find that America has evolved into a single-payer healthcare system after all. Not by design, but by default. One player will be left holding all the pieces in this game. Then I suppose we can expect all the friendliness, efficiency and excellence that monopolies always deliver (yes, read that with tongue firmly planted in cheek).
What will this mean for the future of the community pharmacy profession? I don't have a crystal ball. But, in my humble opinion, we can expect to see a continual streamlining of the prescription fulfillment process, declining profit, more technology and automation and, I'm afraid, less personal care.
In the meantime, I guess we can just wait and see who rolls the dice next.
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