CVS-Aetna merger a big deal in Minn., or not?

The CVS pharmacy chain says its $69 billion purchase of the health insurer Aetna will help provide health care more efficiently and at lower cost.

CVS and Aetna have said they expect to cut administrative and patient care costs by steering Aetna customers to walk-in clinics in CVS stores for less expensive medical services.

What that means in Minnesota isn't clear.

Currently, CVS has about 135 pharmacies in Minnesota. That's about a tenth of all pharmacies in the state. CVS also has 25 metro-area MinuteClinics. They treat minor illnesses and injuries and offer physicals, screening, immunizations and other basic services.

But the company could expand the array of care and services available in stores.

The combined CVS-Aetna entity — if it works — could indeed lower the cost of care, said Vishnu Lekraj, an industry analyst with Morningstar.

"The cost of treating their members will be lowered dramatically," he said.

Significant portions of CVS stores would be converted into health care hubs that would act more like a physician's clinic than a drugstore, Lekraj said.

"Not only will they have the ability here to treat them medically but also be able to help them determine which treatments, which tests, which surgeries, which drugs can help the individual get treated for their disease," he said.

The CVS-Aetna union could give consumers one provider for health insurance, medical services and medications, said Harvard University health economist Leemore Dafny.

"That's the goal — to be a one-stop shop and not just to offer you, the patient, convenience but to potentially offer you better care because it is more coordinated," she said.

That's not exactly a new business model. HealthPartners in Minnesota, and Kaiser Permanente, based in California, provide health plans, medical care and pharmacy services. Each dates back decades.

And there would be limits to what can be done in clinics within CVS stores. But Dafny said CVS could add surgery and other specialty centers to its portfolio and catch up to the industry behemoth based in Minnetonka.

"UnitedHealthcare has acquired a huge number of providers including ambulatory surgery centers," Dafny said. "So, don't rule out a strategy of provider acquisition, beyond those pharmacies and retail clinics within them."

Last year, UnitedHealth Group paid $2.3 billion for an Illinois firm that operates 205 surgical facilities and partners with about 3,000 physicians.

Aetna does not have much of a share of the health insurance market in Minnesota. But early last year, Aetna and Twin Cities-based Allina Health formed a joint venture called Allina Health | Aetna. It combines Allina's dozen hospitals and 65 clinics with Aetna's information technology and insurance products. The partnership is selling insurance for next year.

Allina Health | Aetna did not respond to questions about how the CVS buyout of Aetna affects the effort.

But the CVS-Aetna merger has consumer advocates worried. It's part of a trend they fear will harm consumers.

"The CVS-Aetna merger is part of a general consolidation in the health care sector which is going to reduce choices for consumers in Minnesota and across the country and raise prices for consumers in Minnesota and across the country," said Robert Weissman, president of Public Citizen, the nonprofit consumer advocacy organization.

In Minnesota, three non-profit insurers — Blue Cross Blue Shield of Minnesota, Medica and HealthPartners — have captured more than 90 percent of the large group and individual health insurance markets.

Given the market power of the incumbent insurers, and the relatively small footprint of both CVS and Aetna in Minnesota, it may be a while before the state's health insurance landscape changes much.

But Jim Schowalter, CEO of the Minnesota Council of Health Plans which represents nonprofit insurers, isn't offering any predictions.

"It's too soon to tell what the impact is going to be in Minnesota," he said.