CVS announced the completion of its purchase of Aetna on Wednesday, promising the new combined company would led to “improved health outcomes and lower medical costs.”
The purchase of Aetna by CVS, at a price of about $78 billion, follows a trend of consolidation in the health care industry that is decried by doctors, hospitals and consumer groups who say fewer choices will lead to higher costs and poorer care.
“Today marks the start of a new day in health care and a transformative moment for our company and our industry,” said CVS Health President Larry J. Merlo in the statement announcing the completion of the deal. “By delivering the combined capabilities of our two leading organizations, we will transform the consumer health experience and build healthier communities through a new innovative health care model that is local, easier to use, less expensive and puts consumers at the center of their care.”
Merlo said integrating Aetna’s medical information with CVS’s pharmacy data will allow the company to “develop new ways to engage consumers in their total health and wellness through personal contacts and deeper collaboration with their primary care physicians.”
“As a result, we expect patients will benefit from earlier interventions and better-connected care, leading to improved health outcomes and lower medical costs,” Merlo said.
CVS’s efforts to merge with Aetna also raised concerns that the insurer might abandon its long-established headquarters in Hartford. CVS, which has its headquarters in Rhode Island, has committed to keep Aetna’s headquarters in Hartford for at least 10 years.
The two companies announced their intent to merge nearly a year ago and received preliminary approval from the Department of Justice in October. But CVS needed final approval from state insurance regulators where Aetna sells its coverage. Connecticut approved the merger, but California and a handful of states had objections that needed to be overcome.
To win approval from California, for instance, CVS agreed to refrain from raising premiums as a result of acquisition costs and keep premium increases to a minimum.
To complete the sale, Aetna was also required to agree to the Justice Department’s demand that it divest itself of its stand-alone Medicare Part D prescription drug plans, which have been sold to approximately 2.2 million customers. Aetna said it will continue to manage those plans through 2019.
Most consumers won’t see an immediate impact of the merger. Early next year, CVS plans to start testing added health services at certain stores. Those stores will focus on primary care services and managing chronic conditions.