Is Bigger Really Better in Healthcare?

Why Bigger Isn’t Better in Healthcare: Protecting Physician Autonomy and Quality Care

In an era of rapid change in healthcare, a crucial question arises: is bigger truly better? The rise of corporate consolidations, epitomized by the CVS-Aetna merger, suggests the answer is a resounding "no."

Far from delivering on promises of improved care, these mergers often prioritize profit over patients and weaken the foundation of the healthcare system: the physician-patient relationship.

Indeed, consolidation on the CVS-Aetna merger scale highlights a troubling trend, the shift away from patient-centered care to the service of corporate interests. This pattern threatens to erode the autonomy of physicians and the quality of care patients receive by influencing how healthcare professionals operate within increasingly restrictive corporate frameworks.

Put simply, the? “bigger” in healthcare consolidation more aptly describes its harm than its size.

The CVS-Aetna Merger: A Cautionary Tale

Initially touted as a groundbreaking move, CVS Health's $69 billion acquisition of Aetna in 2018 has become a cautionary tale of overreach in the healthcare sector. The deal, which merged a major insurer with a retail pharmacy chain and a pharmacy benefits manager (PBM), was intended to create efficiencies and drive down healthcare costs.

Instead, it highlighted the inherent challenges of placing such a broad spectrum of services under one corporate umbrella.

The complexities of merging insurance, pharmacy benefits, and retail healthcare have not yielded the benefits proponents claimed. This merger has led, conversely, to operational difficulties, a lack of transparency in pricing, diminished physician independence, and fewer choices for patients.

As CVS contemplates breaking apart its healthcare empire, it becomes increasingly clear that such vast consolidations may be destined for failure, revealing the structural faults that make it difficult, if not impossible, for these merged entities to deliver on their promises.

The False Promise of Healthcare Consolidation

One of the primary justifications for healthcare consolidation is the belief that larger entities can create economies of scale, which, theoretically, should lead to lower costs and higher-quality care.

In practice, however, consolidation tends to have the opposite effect.

The CVS-Aetna merger is a prime example. Despite the massive price tag, the merger has not lowered healthcare costs or improved patient outcomes as intended. What it has accomplished is increased scrutiny from regulators, frustrated shareholders, and, most importantly, a diminished patient experience.

When one entity controls everything from insurance to pharmacy benefits to retail healthcare, conflicts of interest inevitably arise. CVS profits from drug sales while simultaneously trying to manage drug costs as an insurer, creating a situation where incentives are misaligned.

Patients suffer the consequences, paying more for services that become less transparent and more difficult to navigate. The intended integration of services does not materialize in a meaningful way for those who need care, which undermines the argument that consolidation leads to improved efficiency.

Impact on Physicians and Patient Care

Consolidation’s biggest, and most negative, impact lies in the erosion of physician autonomy.

When independent practices are absorbed into larger healthcare systems, physicians lose their ability to make decisions that prioritize patient well-being. Instead, they must operate within corporate guidelines designed to maximize profits.

The CVS-Aetna merger illustrates this trend. Physicians become employees rather than independent caregivers, subject to policies that stifle their ability to innovate or respond to individual patient needs.

Doctors working within consolidated systems are often pressured to adhere to cost-saving strategies that may not align with what’s best for their patients. They become part of a system where their clinical judgment is subordinated to corporate interests, leaving them with less flexibility to tailor care to the specific needs of their patients.

At the same time, patients face fewer choices as smaller, independent practices vanish. In many cases, they are left with limited provider options and less transparency regarding the costs of their care.

The result is a healthcare system that is more bureaucratic, less transparent, and increasingly driven by corporate bottom lines rather than patient outcomes.

The Broader Impact of Healthcare Industry Consolidation

The CVS-Aetna merger is not an isolated case. Rather, it is part of a broader trend within the healthcare industry. Over the past 30 years, there has been a dramatic shift toward consolidation in virtually every aspect of healthcare, from hospitals and physician practices to insurance companies and PBMs.

According to data from Families USA, 95% of metropolitan areas in the U.S. have highly concentrated hospital markets, and nearly 80% have similarly concentrated markets for specialist physicians .

This consolidation has driven up prices across the board.

Hospital care, which represents the largest share of national healthcare spending, has seen particularly sharp price increases due to the lack of competition. Americans pay significantly more for hospital services than their counterparts in other industrialized countries, spending an estimated 1.2 trillion annually on hospital care. This is a sum equal to one-third of total national healthcare expenditures.

The AMA has taken a strong stance against these mergers, arguing that the benefits of such deals are speculative at best, while the anti-competitive impacts are well-documented.

In the CVS-Aetna case, the AMA pointed out that the merger would lead to higher premiums in the Medicare Part D market and a further reduction in competition among PBMs . These outcomes not only hurt consumers but also contribute to the broader problem of rising healthcare costs across the country.

Physician-Led Care as the Solution

The way forward is through physician-led, patient-centric care models, where independent practices are supported, not swallowed up by corporate behemoths.

This is an arena where good public policy is crucial.

Policymakers should take action to reverse the trend of consolidation through enacting regulations that promote competition and incentivize the preservation of independent practices. Such financial incentives should be designed to encourage physicians to remain autonomous and to provide the personalized care their patients deserve.

Physician-led care not only preserves the doctor-patient relationship, it also fosters a more nimble practice environment, allowing doctors to craft treatment plans that meet the unique needs of their patient populations. This lies in direct contrast to larger, more bureaucratic entities that are bogged down by corporate policies and profit motives.

Conclusion: Charting a New Course for Healthcare

The CVS-Aetna merger, once heralded as a transformative force in healthcare, now stands as a testament to the failures of consolidation. As CVS considers dismantling its healthcare empire, the broader industry must take heed: consolidation does not benefit patients, physicians, or the healthcare system as a whole.

It is time to rethink how healthcare is structured and delivered. Rather than pursuing mergers, we need to put patients first. Independent, physician-led practices should be at the heart of this new paradigm, ensuring that healthcare remains a public good, not a corporate commodity.

By resisting further consolidation and restoring the primacy of the doctor-patient relationship, we can begin to repair the healthcare system and ensure it serves the best interests of patients, healthcare professionals, and communities. The lessons from the CVS-Aetna merger are clear: healthcare cannot be effectively consolidated, and it is time to return to models that prioritize quality care, physician independence, and patient choice.