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November 28, 2018

Payers and Pills

I am not sure if today’s post will be loaded with profound brilliance, which means it will be a lot like every other post I send you, but I had a magical, almost lyrical, title that just could not be missed – Payers and Pills.  Even without understanding what that is about, you could stop reading now and your day would be enhanced.

‘That Tim Coan, he is so creative, isn’t he?  Just look at that alliteration.’

Two news stories made today’s title easy and obvious.

First, on Monday Aetna filed a Form 8-K with the Securities and Exchange Commission.  You not sure what Form 8-K is?  Well, here is the explanation from the SEC’s website: 

‘In addition to filing annual reports on Form 10-K and quarterly reports on Form 10-Q, public companies must report certain material corporate events on a more current basis. Form 8-K is the “current report” companies must file with the SEC to announce major events that shareholders should know about.’

Translation: the deal cleared the final regulatory hurdles and CVS is acquiring Aetna…today.  Yep, that seems like something Aetna shareholders should know about.

The second story is still more in the rumor phase than one that requires an SEC filing but is somewhat similar.  News broke recently that Walgreens and Humana, already substantial business partners, are discussing taking joint equity stakes in one another.  That sounds so much more palatable than a complete take-over.

Last month, Walgreens CEO Stefano Pessina said they want to be seen less as a retailer and more as a health and beauty company.  Maybe a different legal structure than his competitor CVS is using, but the same essential game plan.

The take-away here seems fairly obvious.  These two segments that are getting together –retail (sorry Mr. Pessina) and insurance – have never referred to those people you call ‘patients’ as ‘patients.’  They are ‘customers’ and ‘members,’ respectively. That is almost offensive to healthcare providers. 

But they seem to have united (bad pun…UHC was feeling left out of this discussion) around the big trend toward the consumerization of healthcare. This is, I believe, the heart of this risk for independent physician practices. The differences in mindset between thinking of ‘patients’ vs. whatever the rest of the world calls those people who give them money – customers, clients, consumers – is huge and this wave is landing on our industry in ways that we have not yet begun to understand.  For all the flaws we might see, CVS-Aetna and Walgreens-Humana are further down this change in thinking than most physicians or hospitals.

Make no mistake – these folks have very clear intentions to break even more into the relationship between you and your patients.  And they are not necessarily there to help.


We’ll stop there.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.