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CVS and Aetna – A New (and Improved) Healthcare Giant?

Just announced this past Sunday, pharmacy chain giant CVS Health agreed to purchase Aetna, a large, national health insurance company, for about 70 percent of Jeff Bezos (Amazon) net worth – or $69 billion.

CVS is one of the largest providers of pharmacy services in the country, with almost 10,000 retail pharmacy locations and about 1,100 MinuteClinic walk-in clinics, while Aetna is the third-largest U.S. health insurer. By combining, their total annual revenue would be $240 billion. In a joint statement, CVS and Aetna claim this deal will “redefine access to high-quality care in lower cost, local settings – whether in the community, at home, or through digital tools.” Further, according to the CVS Health President and CEO, Larry Merlo, “…With the analytics of Aetna and CVS Health’s human touch, we will create a healthcare platform around individuals.”

Both organizations jointly claim the combined company will “dramatically further empower consumers,” and “better understand our members’ health goals, guide them through the healthcare system and help them achieve their best health.” By having a broader use of data and analytics, the new organization hopes to benefit the entire healthcare system and be able to address the cost of treating patients with chronic diseases. The combined synergy of both organizations lay out a vision to reshape healthcare into a new approach.

This large ‘deal’ has the makings of being a great thing – for both organizations (CVS and Aetna), their shareholders and those covered through their products.

But will it?

Quite often, the American culture is fixated on the belief that “bigger is better,” or that “new and improved” will always serve us best. Perhaps it will. But as I mentioned in my blog, “The Illusion of Getting ‘Bigger‘” – when Aetna was attempting to purchase Humana (a deal that was subsequently blocked by a judge in early 2017 for antitrust purposes) – such deals are not a slam-dunk to fix an ailing and complex $3+ trillion healthcare system. In fact, in some cases, larger integrated delivery networks may make the coordination efforts to serve patients more cumbersome and inefficient.

The twists and turns of organizations finding new approaches and seizing opportunities to make healthcare more affordable, safer and much more efficient is clearly a laudable goal. But, to be so, the patient must always be at the center of these initiatives. The profit and incentive motives are important, but getting it right for the patient should be the primary driver of any meaningful change.

Let’s hope the hype is matched by results.

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Iowa Employer Benefits Study© – An Annual Tradition to take a 1-year Sabbatical

All of us have established traditions in our lives, whether it be family or friend-related holiday plans, vacation travels to a favorite destination, attending or watching sporting events, and so on. Yet, due to circumstances beyond our control, such as time constraints, finances, death and adverse health problems, traditions are made to be altered, or possibly discontinued. After performing the annual Iowa Employer Benefits Study© for the past 18 years, I have decided to give the survey a ‘rest’ for one year. Believe me, this was not an easy decision. But after a great deal of personal and professional reflection, it is the right decision. My ‘tradition’ has now officially been altered.

In today’s world of perpetual political turmoil, healthcare – more specifically – health insurance, has become a political football. Hasty decisions are being made to benefit political promises, usually at the expense of pursuing sound policy practices. What has occurred in our nation’s capital in 2017 is akin to watching a surgeon perform knee surgery with a butter knife. The process has been extremely agonizing to witness and I find myself wincing as this grotesque process evolves.

Now more than ever, it is important to monitor employer-sponsored health insurance costs and components. After all, health insurance costs continue to outpace the Consumer Price Index (CPI) every year. Rising insurance costs have triggered a host of other health plan changes – forcing employers to offer the most competitive health insurance package that they can. I certainly don’t take this fact lightly.

But another fact is very important to me – the ‘value’ of care received. I firmly believe it should ALSO be on the radar screen for employers, their employees and the general public. Similar to how politician’s view our healthcare ‘system,’ employers appear to be mesmerized, rightfully so, by the insurance cost problems. Recently, Warren Buffett described medical costs as “the tapeworm of American economic competitiveness.”

This cost concern, however, tends to suck the necessary oxygen out of the room, crowding out badly-needed, laser-like attention and focus on key cost drivers that impact costs in the first place. This is ‘downstream’ thinking, the actions we take about fixing the symptoms of problems rather than concentrating on the issues that actually CAUSE the cost ‘pollution’ we find so objectionable. Being distracted with downstream symptoms has lulled us into believing that we simply need to fix the “insurance problem” and the ‘upstream’ pollution will miraculously go away. Inflated health costs are actually more harmful to us because we refuse to look beyond the insurance component to help address the cost conundrum.

This serves as the backdrop on why I decided to place the Iowa Employer Benefits Study© on a one-year sabbatical. It’s time to move ‘upstream‘ and disregard the naysayers who believe the status quo is much too difficult to confront. It is just too easy and expedient to continue the work downstream – making the appearance that something is being done to confront the cost issue. But if ‘optics’ matter, I’m in the wrong business.

In the next few weeks, I will reveal research I’ve wanted to conduct for the last number of years, but did not have the opportunity to pursue – until now. This work will be found under my companion organization, Heartland Health Research Institute. If you haven’t signed up to receive my HHRI posts, you may do so here.

Poet Robert Frost famously wrote, “Two roads diverged in a wood, and I – I took the one less traveled by, and that has made all the difference.”

This road may be lonely, but well worth the effort.

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Creating DO-CH-FOs in Your World

Do Ch FoEdward Royse created something unusual. To this day, I still consider his efforts to be memorable.

In the spring of 1972, my parents purchased a greenhouse in Centerville, IA. During that summer, eight family members packed our belongings in Fargo, ND and moved to Southern Iowa to begin a new life of work, school and forging great memories.

Shortly after arriving in Centerville, we met the Ed Royse family, wonderful folks who lived across the street from the greenhouse. Ed and his wife had three sons, who were instantly tagged as new friends. Ed was both witty and clever and always had something funny to contribute in his conversations. He taught automotive mechanics at Indian Hills Community College in Centerville. His students surely loved him.

As a student of the automotive world, Ed proved to be a disciple of four automotive innovators: brothers John and Horace Dodge, Louis-Joseph Chevrolet and Henry Ford.

You see, a few years before we arrived in Centerville, Ed had built the first ‘DO-CH-FO’ pickup truck (pronounced Doe-Chi-Foe) – a hybrid vehicle built from the ground up using old parts from Dodge, Chevrolet and Ford vehicles. The cab was from a ’48 or ’49 Dodge, the engine and transmission from a Chevrolet, and the bed from a Ford. This red and black pickup could haul assorted junk and treasure like all other pickup trucks during that era. The appearance and sound of this truck was oddly beautiful – and yet, difficult to describe.

Royse DoChFo

The DO-CH-FO represented the best parts taken from other assorted vehicles from yesteryear. At Indian Hills, Ed used the DO-CH-FO as a vivid reminder to his students that being creative can be both enjoyable and rewarding. Ed generously allowed my family to use his DO-CH-FO to take numerous loads of greenhouse junk to the local landfill.

Like Ed, each of us has unique talents and passions that, when unleashed, can become a whole new idea or product for others to enjoy and possibly benefit. If desired, we can take past logic, assumptions, research and other legally-allowed intelligence to manufacture new concepts, initiatives and innovations that can be fresh and consumable by others.

Steve Jobs did not invent the computer, camera, global positioning system (GPS), voice recorder, phone or the music we routinely listen to throughout our daily lives while on the go. Yet, he innovated these previous ideas and products and cleverly repackaged them into consumable goods that we all enjoy today – and now take for granted. His approach to reinvigorating existing products began with three simple questions to help define innovation:

  1. Why we need it
  2. What it is
  3. How it works

Jobs came up with his own DO-CH-FOs, and found ways to make them available for the world to buy, use and benefit from.

And here’s the good news – you don’t need to be a Steve Jobs to innovate value-added services or products. Leveraging what we know today and extrapolating this knowledge into the future merely takes a vision, initiative, creativity, and yes, a great deal of perseverance and guts. The products or services that come from this innovation will eventually serve as stepping stones to be used by future innovators – somewhat like ‘paying it forward.’

Royse DoChFo 2Look around. Does your organization’s culture allow employees to think differently in the ever-changing industry in which your organization/company operates?

Who knows, perhaps you and/or a co-worker will create the world’s next DO-CH-FO!

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