CVS and Aetna: Some Will Win…And Some Will Lose.

Carolyn Johnson wrote a recent piece for the Washington Post in which she claimed that the $69 billion purchase of Aetna by CVS “could rein in health-care costs.” That may very well be true, but before we all start celebrating we should consider that consolidation in industry isn’t always a good thing. One company’s increase in market share tends to decrease their competition, which can and often does lead to higher prices.

Especially in health care, where decades of behind-the scenes price fixing between health care providers and health insurance payers means that price transparency is virtually non-existent. Where consumers are not made aware of their full financial responsibilities until weeks, or even months, after purchasing a product or service. And where the incentive to lower prices is negated by the fact that the insured patient is looked upon as part of a captive audience.

Which is exactly how the CVS MinuteClinic model already works. Just like a movie theatre with its outrageously overpriced popcorn, snacks, and drinks – once the customer walks through the door, guess what? They are really in the door.

A few years ago a woman brought her 4-year old daughter to my clinic (where I don’t accept any health insurance) for a red, swollen, and teary eye. Her other child had had similar symptoms the week before, but was back to normal after finishing a course of antibiotic eye drops.

After examining the little girl I confirmed the mother’s suspicion that she had the same diagnosis of pinkeye, and that she had most likely caught this from her brother. When I said this called for a course of antibiotic drops as well the mom became skeptical, and was almost in tears herself as she asked, “Isn’t there anything else we can do? I don’t want to have to spend another $160.”

“I’m sorry but no, not really, This is an extremely contagious eye infection that needs to be treated,” I said. Then it was my turn to be incredulous. “Did you really pay $160 for the first prescription of eye drops? Where?”

“At CVS,” mom replied. “I took my son to the MinuteClinic last week and the nurse practitioner told me he had pinkeye. Then she prescribed some drops that ended up costing $160, even with our health insurance.”

Stunned, I replied, “Did you know that there are four different types of antibiotic eye drops on the $4 list at several other local pharmacies?”

They’re how much?” the woman said.

“Only four dollars a bottle. That is, if you pay out-of-pocket instead of putting it on your health insurance card. And I’m going to prescribe one of those medications, so…”

“Then why did I pay $160 at the MinuteClinic?” she interrupted.

A very good question; the possible answers to which are many. It could be that the nurse practitioner was trying to meet some revenue performance standard, as has happened to me (and many other physicians) in the corporate medicine setting. Even worse, perhaps she was worried about actually getting into trouble for prescribing an inexpensive medication. Or maybe she just wasn’t mindful of the pricing at all, and prescribed what she thought to be the latest, supposedly greatest drug available – which often ends up being the most expensive.   

Whatever the case may have been, I can say with certainty one thing – the idea that a nurse practitioner working for a pharmacy that sells $160 eyedrops, would send a patient to another pharmacy which sells $4 eyedrops, is laughable at best.

The potential for bilking patients with this arrangement is already bad enough. But add in a major health insurance network that selectively funnels its millions of customers through this new model of “efficency,” and what could possibly go wrong?

What could possibly go right – at least for Aetna and CVS – might be a transition from the highly inefficient, third party payer claims process that now exists into one where a list of drugs is preauthorized. Which would represent a tremendous cost savings, to be sure. but it would also give the new monster conglomerate an unprecedented ability to influence (if not control) the prescribing habits of over a thousand nurse practitioners, who already lack direct physician supervision.

So Ms. Johnson may very well be proven correct in her claim that the folding of Aetna into CVS could rein in health care costs. But an important question is, just whose health care “costs” are we talking about?

Because I for one doubt very much that few – if any – of the savings that might result from this mega merger will ever trickle down to the level of the consumer.

It’s not the COSTS of health care that are outrageous…it’s the CHARGES.

Physician. Health Insurance Agent. Author. Health care humorist. Medical satirist. Disruptor. At your service.

My name is Kevin Wacasey, and I’ve been practicing medicine since 1994. When I graduated from medical school, I took an oath to do no harm to my patients. To me, that includes financial harm. But since health insurance took over health care over 40 years ago, health care prices have skyrocketed. And despite what we’re told by the media every day, it isn’t the costs of health care that are outrageous; it’s the charges. So if you’ve ever wondered why we spend so much on health insurance and health care, then come along and join me as I explore the crazy world of Healthcareonomics. Health care doesn’t have to be expensive. Let me show you how. For speaking opportunities and to pass along your questions/comments, please email me at drw@healthcareonomics.com.

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