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CVS-Aetna could redefine consumer health care.

NEW YORK -- A new health care experience for consumers could be in the offing with CVS Health's $69 billion deal to acquire health insurance giant Aetna Inc., according to branding specialist CBX.

Industry observers say the acquisition signals a bid by CVS to ramp up the level of care that it offers customers. CVS operates the nation's second-largest drug chain, second-largest pharmacy benefit manager and largest in-store clinic services, while Aetna is the third-largest U.S. health insurer.

Yet the union of the two companies also could yield valuable lessons for others in the health care and drug store sectors as they seek to forge stronger ties with consumers, CBX noted.

"What interests me here is the potential for CVS-Aetna to create new, meaningfully differentiated brand experiences for consumers," explained Brian McDonagh, a Minneapolis-based strategy director for CBX. "CVS has nearly 10,000 stores; Aetna covers 22 million people. If they can combine to better meet the clinical and patient needs of such a large swath of the U.S. population, it will be a game changer."

One key component likely will be MinuteClinic, CVS' retail health clinic operation. The addition of Aetna could ultimately translate into more MinuteClinics --which currently number about 1,100--with expanded menus of medical services, including those for patients with chronic conditions. In turn, this could help CVS further sharpen its focus on its core business and purpose--namely, to be a health care company, according to McDonagh.

"For far too long, U.S. chain drug stores have suffered from a bit of an identity crisis," he said. "Despite the coolers and front-of-the-store merchandise, CVS, for one, has realized that it isn't primarily a food seller, nor is it a discount retailer or c-store. Increasingly, CVS has been trying to act like a health care company."

An even stronger health care push by CVS would create some intriguing possibilities with respect to integrated store design, signage, packaging, naming, logos and other forms of creative marketing, McDonagh said. Still, the actual experience of receiving health care in these locations would likely be the biggest factor in bolstering the brand, he pointed out.

"Potentially, this union is a step away from a disjointed, broken [health care] system toward greater coherence," McDonagh said. "The question is, what philosophy and mission are driving this? Is it pure profit or a true commitment to consumer care? Given that CVS has already demonstrated a commitment to consumer care at a loss to its revenues--namely, by taking tobacco out of its stores--I am glad CVS is doing the acquiring here."

More broadly, other U.S. pharmacy chains and health care-related companies could benefit from thinking creatively about how to better connect with their customers, and they will no doubt be paying close attention to how the CVS-Aetna deal evolves, McDonagh added.

"Connecting is second nature to manufacturers of soda, breakfast cereal or laundry detergent, but the calculus for health care companies is quite a bit more complex," he said. "If CVS and Aetna can put consumer care first and offer greater usability, transparency and value, there will be lessons as other companies seek to follow suit."

At the same time, CBX managing partner Gregg Lipman sounded a note of caution about the U.S. economic trend toward vertical integration. Although this trend could bring such benefits as lower prices, easier access and more convenience, it also could mean significant costs as more consumers live within closed, vertically integrated ecosystems, he explained.

"Consumers will soon be forced to pick their 'team': 'I'm a Walmarter' or 'I'm an Amazoner,'" Lipman said. "All of their info is in the vertical, and so all of the value they can reap--from loyalty rewards to custom and leveraged pricing--is in that vertical. The thing is, the goods and services on offer are just about the same. The danger is a growing sense that Big Brother is truly here. Is that a good thing for consumers? Could it eventually spark a backlash?"

CBX specializes in creative marketing services, including strategy, naming, branding, retail design and packaging design. Among its clients are Walgreens, Saks Fifth Avenue, Lord & Taylor, Shinsegae, Wawa, Hain Celestial, McCormick, General Mills, Kimberly-Clark, Big Heart Pet Brands and AT&T.
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Title Annotation:My Turn
Publication:Chain Drug Review
Date:Jan 1, 2018
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