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The CVS-Aetna Deal: a road map for the HME Provider?


The announcement of the pending merger between CVS and Aetna has garnered much attention in the health care world. One aspect driving the intrigue over this deal has been whether the combination of Aetna and CVS can stave off the threat of Amazon entering the drug business.  A second question hanging in the balance is whether the merger can compete with the prescription filling power of United Health Group and its Optum unit. Needless to say, combining insurance and distribution appears to be a growing strategy for the pharmaceutical market.

Since its inception, the home medical equipment industry has enjoyed a significant revenue stream for fulfillment programs with insurance companies. However, the relationships for the most part, have been exclusive, where by the insurer and drop ship provider maintain their separate identities, and priorities. As margins continue to erode for drop ship providers due to declining reimbursements and increasing operational costs, the continued viability of the traditional medical fulfillment process is becoming questionable.  The argument can be made that vertical integration of insurance and distribution provider networks, similar to what is happening in the pharmaceutical market, could present a cure for this situation.

Would integration motivate insurance companies to examine product delivery scenarios from an efficient and cost-effective perspective rather than demanding the lower reimbursements and unrealistic delivery requirements?    DDP Medical Supply constantly examines product distribution and we continue to refine how we can best support our customers during the next phase of our industry’s evolution.