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Interview: Will CVS/Aetna Merger Change the Healthcare Reimbursement Landscape?

Earlier this month, CVS announced their plans to open concept stores intended to reduce healthcare costs for its combined company with Aetna. These stores will focus on providing primary care and serving members with chronic diseases.

In the following interview, we sat down with Michael High, Director of Reimbursement Services at SE Healthcare, to discuss how these pilot stores will influence the healthcare industry. Michael is a healthcare professional with over 20 years of experience in reimbursement, strategic planning, cost savings analysis, claims analysis, pricing, contract negotiations, value-based healthcare, budgeting, accounting, and building financial models in the healthcare insurance industry.

SE Healthcare: Do you think these new stores will hurt a traditional provider’s ability to attract and retain patients for those services?

Michael High: Existing patients may begin to use these new healthcare stores when they have a pretty good idea of what is wrong with them, such as flu like symptoms, etc. Providers could see a shift in patients utilizing these types of services when they provide a more convenient, timely alternative.

For new patients, especially millennials, this will be a substitute to seeing traditional providers. In this instance, there could be competition for primary care and chronic disease services.

SE Healthcare: The article mentions that treatment of chronic diseases accounts for 90% of the $3.3 trillion the US spends on healthcare annually. If CVS’s system proves to significantly reduce costs in that sector, how will it affect other healthcare providers/insurers?

Michael High: The biggest hurdle for providers and insurers treating chronic diseases is making sure patients stay engaged in their care. In other words, patients are doing their part to treat the condition, such as taking medication regularly. A patient taking their medication is an important part of controlling the chronic disease.

If there are in fact cost-savings and better access to these prescriptions, it will ultimately benefit patients with chronic diseases. If that is the case, we could potentially see more acquisitions and mergers like this. These centers may eventually compete with traditional primary care providers for chronic disease monitoring.

SE Healthcare: CVS and Aetna are both established organizations. Will their new stores change the way independent practices in surrounding areas are reimbursed?

Michael High: No, I don’t see a change in the current reimbursement for independent practices. The pressure to give quality, cost-effective healthcare will be there regardless of this type of merger.

SE Healthcare: The article also mentions that millennials are more likely to visit a walk-in clinic than older consumers, as nearly half of them don’t have a primary care physician. In the years to come, do you see this cost-savings model CVS and Aetna created becoming the norm throughout the industry?

Michael High: There will be cost savings related to medications and shifting ER visits to Urgent Care visits, but some would argue that over-utilization of Urgent Care centers will occur due to their accessibility.

Also, primary care practices are not the cost problem in healthcare. So, big savings are not achieved by having primary care practices in a retail location.

The large savings opportunities lie within specialist and inpatient and outpatient costs. I don’t see how this model will address those areas.  With that said, it doesn’t mean there won’t be more acquisitions and models developed similar to this. Retail stores looking to drive traffic to existing locations will have an incentive to do this type of acquisition if it is successful.

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About Author

Michael High

Michael High is the Director of Reimbursement Services at SE Healthcare. He is a healthcare professional with over 20 years of experience in reimbursement, strategic planning, cost savings analysis, claims analysis, pricing, contract negotiations, value-based healthcare, budgeting, accounting, and building financial models in the healthcare insurance industry.

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