Dive Brief:
- CVS Health CEO Larry Merlo said Monday the healthcare industry should be improved and transformed from within, not by outsiders like Amazon and its cost-cutting venture with J.P. Morgan and Berkshire Hathaway.
- Speaking at a National Press Club luncheon in Washington D.C., Merlo announced that following completion of the CVS acquisition of Aetna, the company will launch a five-year $100 million initiative focused on strengthening the healthcare resources of local communities.
- Merlo said the combined CVS-Aetna has no intention of replacing patients' primary care providers, but seeks to give people affordable access for lower-acuity needs like a sore throat. "I believe that we can do a better job of matching up the site of care with cost," he said.
Dive Insight:
Merlo's talk came at the heels of a judge's order Friday that the Department of Justice must continue to review comments on the nearly $70 billion merger despite the ongoing government shutdown. D.C. District Court Judge Richard Leon has questioned the department's settlement agreement with the two companies, citing antitrust concerns. Despite the judge's wariness, Merlo told investors last week he wanted to "unequivocally state that CVS Health and Aetna are one company and our transformation work is already underway."
The CVS CEO did not discuss the court proceedings at the luncheon Monday, but did say he believes the market has space for a company the size of CVS-Aetna without stifling competition. Patients are making important decisions long before and after they visit a doctor's office or hospital, and they need help understanding what's best for them, he said. "I actually believe that this combination is going to create more consumer choice," he added.
Merlo spent much of his time discussing a consumer-centric business approach to healthcare, and said listening to what customers say they need will be key to staying ahead of companies like Amazon, which has shown interest in drug distribution. "If we do that we won't leave any white space to be disrupted by Amazon or any other company for that matter," he said.
He did not argue that fundamental change isn't necessary. "The current system isn't working — and worse — it's not sustainable," he said. Health IT is a part of the solution, but can't work in a vacuum. "Many people don't really know how to use the tools and information available to be better consumers of healthcare," he said. "Technology here is critical but technology alone is not enough. Consumers rely on professionals they trust in their communities."
The Building Healthier Communities initiative announced Monday aims to improve the situation with a local focus. It will include investments in wraparound services like food banks and free clinics as well as blood pressure kiosks in high-traffic spaces. "Communities all across the country — they're not all the same," Merlo said. "How we strengthen healthcare at the community level shouldn't be either."