Aetna deal has major implications for retail health, primary care practices

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CVS Health Corp.is also one of the nation's biggest pharmacy benefit managers, processing more than a billion prescriptions a year for clients like large employers and insurers including Aetna Inc. The companies are turning to several banks to provide $49 billion in financing to fund the cash portion of the deal.

CVS would provide a broad range of health services to Aetna's 22 million medical members at its nationwide network of pharmacies and walk-in clinics, and further decrease the drugstore titan's reliance on the retail sales that have faced increasing competition. CVS also processes more than a billion prescriptions annually through CVS Caremark, its pharmacy benefits management business. But they and insurers have long wanted to do more than just process claims and pay bills.

Analysts say the combined company could add more clinics and expand in-store services to include eye care or maybe centers for hearing aids. The idea is to work with patients while they are healthy instead of waiting until they're sick.

CVS's plan to cancel share buybacks likely means lower earnings per share next year and the deal - the biggest merger of 2017 - will increase the company's debt costs. That could stave off more serious complications like a heart attack.

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"We also believe that the Trump administration is more business-friendly" and that regulators may view a CVS-Aetna deal "as a way to continue to put pressure on manufacturers and drug prices", David Larsen, an analyst at Leerink Partners, said in a recent note. The company, which stopped selling tobacco products in 2014 to further burnish its image as a care provider, already runs about 1,100 clinics and has been steadily expanding the health care it offers. Then it could steer people to them by waiving co-payments for those options and charge $500 if they went to an ER instead.

CVS CEO Larry Merlo said on an investor call on Monday that he expects the deal to close in 2018 after an antitrust review, and that he expects $750 million in savings from eliminating duplicate corporate functions at CVS and Aetna and combining some drug health plan and drug benefit management areas.

It's a game of wait-and-see for now, with possible consequences to customer's bottom line.

The second-largest US drugstore chain is buying Aetna, the third-largest health insurer, in order to push much deeper into customer care. The deal is really "driven by the desire to fend off scary new competitors in the healthcare industry, such as Amazon and Wal-Mart", asserted Los Angeles Times columnist Michael Hiltzik.

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The deal comes after Aetna's US$37 billion plan to acquire smaller U.S. health insurance peer Humana was blocked in January by a USA federal judge over antitrust concerns. A clinic visit also can be cheaper than a $100 doctor visit for someone who doesn't have insurance, but they have drawbacks.

CVS can help through its home infusion business, which sends nurses to patients' homes to deliver complex drugs for people with hemophilia among other conditions.

Hartford, Connecticut-based Aetna and Woonsocket, Rhode Island-based CVS both manage Medicare prescription drug coverage.

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