That giant CVS-Aetna deal might not just be good business.
Just a day after announcing that CVS (CVS) will acquire Aetna (AET) for approximately $69 billion, the CEOs of the two companies told CNBC’s “Squawk Box” that the merger will reduce healthcare costs for consumers “immediately.”
CVS Health CEO Larry Merlo said that, “[I]t’s really the perfect time to bring these two companies together, to create a new healthcare platform that can be easier to use and less expensive for consumers, and really create a new front door to healthcare in our country.”
Aetna Chairman and CEO Mark Bertolini echoed Merlo’s sentiment, saying that healthcare is the “single highest line item budget” in a household’s budget today and “it’s the most confusing system that anyone could use.” The merger will create a situation in which the combined company will have “10,000 new front doors to the healthcare system” where people can walk in and get the help and guidance they need. This in turn will allow people to “use the system in a way that’s more effective” and “reduce costs.”
Merlo noted that the healthcare economy is currently valued at $3.5 trillion, and is continuing to grow at an “unsustainable pace.” (The Department of Health and Human Services estimated healthcare spending at $3.2 trillion in 2015 and predicted it would grow by 5.6% a year over the next decade.) Meanwhile, about half of all Americans have at least one chronic disease, which is accounting for 80% of the healthcare costs. This in turn means that billions of dollars of “unnecessary and avoidable spending” takes place, as people are not following their healthcare plans.
The two CEOs hope that the changes resulting from the merger will be implemented over the next couple of years, creating a “dramatic change” for consumers in which the store will be “not just about products, but also service offerings that can help people on their path to better health.”