In October, something fairly normal happened: CNBC reported that Amazon might disrupt yet another industry, pharmaceuticals. The tech giant was considering selling prescription drugs online.
“Since then, the market’s really kind of gone crazy. There’s been kind of mass freak-out,” said Christina Farr, CNBC’s health and technology journalist, who first reported on Amazon’s interest in pharmaceuticals.
Companies across the healthcare industry started scrambling, trying to figure out how they could compete with the pure market force of Amazon. This week, one company showed us how they're planning to fight back: CVS, the largest pharmacy chain in the U.S., reached a deal to buy insurance giant Aetna for $69 billion.
That deal and the trends behind it are a case study in how technology giants like Amazon '” and technology itself '” are changing healthcare in the United States. While companies argue those changes will be a boon to patients, there are still serious concerns about how they are happening.
We explore those issues on this episode of GeekWire’s Health Tech Podcast. Listen below, follow the series here, and continue reading for the full story.
A main focus of the CVS/Aetna deal is creating community care hubs in CVS stores and other CVS locations, where customers can see a doctor, ask questions about their insurance, pick up their prescription '” and maybe buy a Diet Pepsi while they're there. The companies are also planning to start new digital health initiatives, like in-home health monitoring.
The hubs are an extension of the walk-in clinics that have been sprouting in drugstores and on street corners for years. Aaron Katz, a professor in the University of Washington Public School of Health, says these clinics have come and gone in the healthcare market.
He also says there are a few reasons these community clinics are attractive to companies.
“One of them is an attempt to capture patients '” to capture a market of patients '” and then to be able to funnel them to, for example, hospitals,” he said.
CVS doesn't own any hospitals, but they have another reason to want people walking through the door: Amazon.
Drug stores have been losing customers to online stores like Amazon for years, and that trend will only speed up if customers start turning to the web for their perscriptions. The community care hubs might attract more people who will buy more of their goods and perscriptions at a CVS store.
“It’s always great for a consumer to know that they can go to one location and they can have more more information about themselves, and the person that’s caring for them has the the information that they need at the right time. The right information, the right time, in the right place is what’s really key,” she said.
So how will the change actually impact patients? And what can we expect from the health industry as tech continues to leave its mark?
CVS and Aetna, along with other companies, have argued that vertical integration in health will help make the system more efficient and lower costs for patients. That reasoning makes some sense, but Katz says we should be skeptical.
“Our experience to date with all kinds of mergers and consolidations is that’s almost never the case. One reason is that larger, bulked up provider systems are better able to negotiate higher prices,” he said. “It’s somewhat counterintuitive, but that’s the way it works in the health care system.”
The consolidation also gives the companies immense power over how people get care.
“I think a possibility would be that people who have Aetna insurance may be restricted to CVS pharmacies, so that reduces the choice that patients have,” Katz said.
A third, and even bigger concern, has to do with the quality of care at the community hubs CVS is planning.
As patients have started to use new neighborhood clinics and telemedicine services, there’s been a rise in transactional medicine: A patient seeing a doctor for a one-time consultation, without any established relationship or history.
“Transactional relationships with health care pr