CVS Health to Separate Pharmacy Chain From Insurance and Benefits Business
Plans to separate its 9,000 pharmacies from its insurance and benefits operations, reshaping a $117 billion US healthcare group whose businesses r...
CVS Health plans to separate its 9,000 pharmacies from its insurance and benefits operations, reshaping a $117 billion US healthcare group whose businesses reach from prescription counters to medical coverage.
Announced Wednesday, the split would create a standalone company called CVS Pharmacy, taking with it the chain’s in-store clinics and mail-order prescription business. The remaining company would retain the CVS Health name and house insurer Aetna, pharmacy benefits manager Caremark and businesses providing home visits and primary care to older people.
A different structure for the group
The plan divides businesses that have operated under one corporate umbrella. After the separation, CVS Pharmacy would focus on retail and prescription services, while CVS Health would keep its insurance, benefits-management and other care operations.
That could change how the units coordinate, but the announcement details provided no terms describing how they would work together after the split. The practical effects for customers, including whether pharmacy access or insurance arrangements would change, were also not specified.
The scale is substantial. CVS Health generated more than $400 billion in revenue last year, and its operations span businesses that can intersect in the healthcare system: pharmacies dispense medicines, while insurers and benefits managers shape coverage and prescription benefits.
Pressure on healthcare conglomerates
The restructuring comes as lawmakers and regulators scrutinize the influence of large healthcare companies. CVS Health, UnitedHealth Group and Cigna together control roughly 80% of the market, according to the supplied figures, and critics have raised concerns that such concentration contributes to higher medical costs.
Political resistance to large healthcare conglomerates has also prompted Arkansas and Tennessee to pass laws aimed at the sector. The details of those laws were not provided, but their passage adds to the pressure surrounding companies that combine multiple parts of healthcare under one roof.
For CVS, separating its pharmacy chain would give the retail business a distinct corporate identity from Aetna and Caremark. The move could sharpen the focus of each company, while leaving questions about the financial terms, timing and day-to-day relationship between the separated businesses unanswered in the announcement details.
The group’s reported annual revenue topped $400 billion last year.
