I Sold Aetna To Fix A Broken Healthcare System. Here’s Why.

Delivering Data-Driven Healthcare

The FDA has already approved wearable sensors that can continuously monitor all vital signs: blood pressure, heart rate, body temperature, breathing rate, oxygen concentration in the blood and blood sugar. “The cost to do this for weeks would be a tiny fraction of the cost for a day in the hospital,” said Dr. Eric Topol, a cardiologist who is a professor of molecular medicine at the Scripps Research Institute.

We’ve barely scratched the surface of consumer analytics in healthcare, and that data will personalize—and revolutionize—the industry.

The challenge is how we distribute, connect, wear and exploit that information for each person’s health journey, but with the likes of Google, Apple, Amazon and many other companies entering or expanding into this market, those challenges will be met. Patients are sick and tired of being sick and tired, but personalized data will empower them, in concert with their providers and their insurer, to build a health plan that works for them. A consumer revolt is coming, and it’s easy to foresee. In employer-based health plans, workers are now paying for 41 percent of their overall healthcare costs, including premium and benefits. At some point, employees will demand a greater say in how their money is being spent, and they will want coverage that applies to their needs—the curated experience.

In describing what our healthcare system should be, note that I’m not talking about “single payer” or “private payer” or any other kind of payer, nor how we provide coverage for the uninsured. Those issues relate to how we finance care, which is undoubtedly important, but not most important. We can change the financing of healthcare all we want, but if the system is broken, we’ll still be financing poor outcomes at ever-higher costs.

In sum, we need a system that promotes health and wellness, and that system should do the following:

• Enlist the resources of the community, including storefronts and pharmacies, as the first line of defense against disease or sickness.

• Deploy friends, neighbors and relatives in persistent, caring engagement.

• Recognize that social determinants are driving huge disparities in health outcomes across the country and invest accordingly.

• Invest in the prevention of disease, not just the treatment of symptoms.

• When people need care, provide a personal solution aimed at improved quality of life. I had been thinking about these ideas ever since Eric’s illness and had consulted any number of experts. At Aetna, we began implementing a more consumer-oriented journey for our members. (Our new motto was, “You don’t join us, we join you.”) We were making progress, but we needed to make deeper inroads into our communities, which brings me to CVS.

No matter how many individuals we could enlist to reach our members in their homes or apartments, we could never reach enough of them. We needed retail outlets in towns across America that would serve as the front door to our healthcare system. We weren’t going to build them, so we needed a partner.

Partnering for Progress

On July 3, 2015, Aetna announced that it would purchase Humana for $37 billion, combining the country’s third- and fourth-largest insurers. Once the two companies were integrated, we’d have a big enough balance sheet to buy CVS, which would have made us America’s second-largest publicly traded company by revenue, behind Walmart.

But the Department of Justice blocked that merger; and did the same to stop the merger of two other large health insurers, Anthem and Cigna. The ruling was a setback, but it did not deter us from our goal of broadening our footprint and finding new and better ways to engage patients. In that regard, one of the first calls I received after this setback, in February 2017, was from Larry Merlo at CVS.

“Do you still want to talk?” he asked. I did.

Our early conversations envisioned any number of partnerships between CVS and Aetna, including contractual agreements, joint ventures and a merger. My team and I also talked with two other companies about possible combinations, but CVS represented the greatest opportunity. The company now has 9,700 retail locations and 1,100 clinics, and nearly 80 percent of the U.S. population lives within five miles of one of its stores. If our goal was to move healthcare into the community, CVS was the most direct path to get there.

My team and Larry’s team had numerous meetings and conversations about what the two companies could do together. It took time. We didn’t understand their business, they didn’t understand ours. But I told Larry the same thing that I told Apple when we were discussing a partnership with the Apple Watch: every 50 basis points that we reduce healthcare costs is $480 million in underwriting margin; so, in CVS’s case, if we could build a model that reduces costs—in greater patient engagement, increased adherence to medication, preventive care, and early intervention—everyone would win.

Academics talk about “disruption” in the market, and an alliance between CVS and Aetna could certainly be disruptive. But it’s worth remembering that companies don’t disrupt anything. Customers do. Amazon created an online platform, but it was the customers who disrupted the market. They wanted products that were fast, reliable and cheap, and Amazon recognized that need and filled it.

Like every brick-and-mortar retailer, CVS must now compete against Amazon and other low-cost, high-quality online businesses. But as Larry and I talked about this challenge, we agreed that a successful outcome had little to do with Amazon and everything to do with whether we could satisfy the unmet needs of our customers. What exactly did they want?

The healthcare system was the problem: It’s confusing. It’s impersonal. It’s the largest line item in most people’s budgets. And the whole process is horrifying.

I would also add, it doesn’t keep people healthy. Its focus is to fix unhealthy people.
Larry and I gathered our teams and began developing a model that would make healthcare more accessible, more convenient, more intelligible and more affordable. It centered on transforming the role of the stores in the community: They are currently pharmacies that are attached to crowded aisles of potato chips, batteries, deodorant, greeting cards, gift cards, playing cards and a whole lot more. Let’s turn them into community health centers instead.