CVS-Aetna Deal Faces Huge IT, Data Challenges

There’s that huge pharmacy chain and the behemoth insurance company, inching toward a partnership that they say will change how we get our drugs and are covered for our care.

Many of the headlines are gone – for now – but it is only the iceberg that we cannot see, of the proposal by CVS, the giant pharmacy, to buy Aetna, one of the nation’s largest insurers, for $69 billion that many say will drastically reshape healthcare, if approved. The proposed merger is designed, the companies say, to “redefine access” to healthcare, provide lower costs to consumers, with a “human touch.” It would combine CVS retail pharmacy services with Aetna’s health insurance business, resulting in a company with an annual revenue of $240 billion – second only to Wal-Mart in the U.S, according to news reports.

Much of the talk, and rightfully so, focuses on the pros and cons related to cost savings to consumers, (still unknown) but below the surface there’s this digital transformation proposed that may touch consumers in a big way: And with plenty of questions expected from regulators that will make change – if it happens at all– come very slowly.

Ankur Laroia, solutions strategy leader at Alfresco Software, says the CVS-Aetna plan has a long journey ahead, but portends potentially exciting but also intriguing and unknown possibilities, fraught with roadblocks. Alfresco is an enterprise open-source software company that focuses on digital transformation.

At the outset, the proposal involves “creation of new computer solutions that leverage big data around the patient/consumer concept and apply AI/ML (artificial intelligence/machine learning) to provide both better quality of life and quality of care,” Laroia says.

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Ankur Laroia of Alfresco Software

Such a merger could open up “a whole new segment that can be marketed to try by both technology and services providers,” Laroia adds.

In the meantime, there is the nitty-gritty of working out the details, and some confusion from the consumer perspective, and even among the parties themselves, with the prospect for better consumer quality uncertain at best. The process has to be “well-thought-out and well-orchestrated,” Laroia says. “ “This deal is unprecedented,” Laroia says. “We’ve never had retail and insurance come together. The digital transformation journey for both companies, even if they are under one umbrella, will likely still look very different. You are talking about remapping healthcare.”

Many, Many Questions

There are so many questions within questions, says Laroia, that it may take five to seven years to iron it all out, in his view, and for any final approvals even if it is given the preliminary OK by the Trump administration, which isn’t crazy about tightened regulations.

“A snail’s pace,” he says.

“In the case of CVS and Aetna, they both have digital transformation initiatives underway, with end goals that are very different,” Laroia says. “Aetna is all about the traditional homegrown IT shop. They are very big on IBM, which most insurance companies are. Contrast that with CVS, which has a knockdown drag-out with Walgreens. It’s all about the customer and effective marketing up-selling. They are both leveraging their IT computer frameworks and go about reinventing themselves but for different reasons.”

Not only are they obviously different organizations with a differing customer base, but HIPAA and privacy laws are tough hurdles to overcome for complete integration, never mind what Laroia calls “back office functions” such as HR, finance, and procurement issues.

The data stream possibilities – and question marks – are huge, Laroia says.

“You can’t just take somebody’s retail data and just share it with an insurance company,” Laroia says of the possible roadblocks. “They aren’t insurmountable, but there are also a lot of cultural issues to overcome. And these guys are attached to their own data. Who owns the data, and how is it going to be secure and protected? Aside from the federal requirements, there are stringent state regulations.”

Also, the parties have to be sure of “no leakage of information” – when a consumer goes to CVS and has Cigna or Blue Cross Blue Shield as their insurance providers, for instance, not Aetna, Laroia says.

Once the glitches are – if they can be – worked out, Laroia says, there might be “new, novel ways in which digital transformation concepts and techniques will be applied to create (a) better picture of consumer habits.”

And the floodgates may open about other possible mergers like the one CVS and Aetna want to have – but don’t hold your breath for it happening anytime soon. – Joe Cantlupe

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