Healthcare spending in the United States remains exorbitant—in 2017, the U.S. spent twice as much per capita on healthcare than similar Western nations. This spending is putting stress on all stakeholders, including pharmaceutical companies, pharmacy benefit managers, payers, providers, and patients.
Among all stakeholders, PBMs currently face the most pressure. Their notoriety for not passing drug discounts down to patients and the shift to a value-based system has forced them to reinvent their services. One of the ways they are doing so is forming vertically-integrated conglomerates by merging with managed care networks in an effort to tap into other parts of the healthcare value chain and reduce costs. In 2018, two of America’s top three PBMs—CVS Health and Optum—announced their acquisition of managed care providers, with Optum purchasing Davita Medical Group for $4.9 billion and CVS obtaining Aetna for $69 billion. DRG’s report—“Beyond the PBM: A New Order of Healthcare Delivery”—examined the effects of these mergers on a variety of stakeholders and identified benefits and drawbacks for providers that are highlighted below.
These vertical integrations could help providers in many ways, including promoting better care coordination via stakeholder alignment. This means less out-of-network referrals, a reduction in prescriptions for non-covered drugs, and better workload management. For instance, patients with the common cold and other minor ailments can now be diverted to retail clinics, reducing the workloads of primary care physicians.
An integrated system also mitigates several elements that negatively impact treatment adherence and outcomes. A provider who is well-informed about their patient’s out-of-pocket costs can now prescribe affordable and effective drugs, reducing pharmacy abandonment. Retail clinics can also provide medication therapy management to improve treatment adherence via patient education and follow-up. This robust care model could not only improve patient outcomes, but also reduce costs by preventing recurring hospitalizations.
Additionally, when payers, PBMs, and providers are part of one corporation, they are in a better position to work toward the common goal of providing the best and most affordable healthcare. This also enhances value-based contracting pull-through by aligning stakeholders’ incentives and system capabilities.
While these acquisitions bring new opportunities to the provider sector, they also pose threats that are difficult to ignore. The leverage they give to insurers is especially troubling, as insurers can now not only control which provider they can divert their patients to, but also regulate how care is given based on incentives and performance measures. These mergers also leave standalone providers in a vulnerable position, as they could face negotiations with larger organizations for network inclusion and still have a hard time competing with network-owned providers. Lastly, it has been speculated that the retail clinic industry could increase operating costs for primary care providers, as they would be left with the most complex and high-cost patients.
The actual impact of these mergers is yet to be seen, but they have the potential to profoundly impact how patients receive care.