Aetna’s board has accepted a $69 billion acquisition offer from CVS, a cross-category integration play that, if completed, will fundamentally reshape the healthcare industry. It’s hard to believe that only a couple of years ago, insurance M&A was simply playing for scale, with both Aetna and Anthem lining up big insurance acquisitions that ultimately failed to clear regulatory hurdles.
Now the health insurance mega-deal M&A is back, but it’s not purely a scale play. This time around the M&A moves (what we are calling “insurance integration” plays) will be much bigger in scope, promising to reconfigure the complex and fragile healthcare payer/provider/patient ecosystem.
While massive in scale and ambition, CVS/Aetna wasn’t a complete surprise. CVS has been in the benefits management business for over a decade, having acquired Caremark, the PBM, in 2006. Integrating insurance via Aetna closes this loop, creating a seamless connection between buying the drug (retail), paying for the drug (Aetna) and managing the process (PBM).