Aetna’s board has accepted a $69 billion acquisition offer from CVS, a cross-category integration play that, if completed, will fundamentally reshape the healthcare industry. It’s hard to believe that only a couple of years ago, insurance M&A was simply playing for scale, with both Aetna and Anthem lining up big insurance acquisitions that ultimately failed to clear regulatory hurdles. 

Now the health insurance mega-deal M&A is back, but it’s not purely a scale play. This time around the M&A moves (what we are calling insurance integration plays) will be much bigger in scope, promising to reconfigure the complex and fragile healthcare payer/provider/patient ecosystem. 

While massive in scale and ambition, CVS/Aetna wasn’t a complete surprise. CVS has been in the benefits management business for over a decade, having acquired Caremark, the PBM, in 2006. Integrating insurance via Aetna closes this loop, creating a seamless connection between buying the drug (retail), paying for the drug (Aetna) and managing the process (PBM). 

The benefits of this deal to CVS are numerous: new sources of revenue, cost-management across the prescription revenue cycle, deeper customer data sets and stickier customer relationships. It means significant value to consumers too through lower drug prices, more personalized offers, and a more seamless experience. The new sources of value it unlocks across the ecosystem should mollify antitrust hawks and delight shareholders. 

Competitive responses are likely to follow quickly. Similar to Aetna, Humana and Express Scripts have shed assets, and speculation is circulating about a counter-move from Walmart or Walgreens. And, of course, Amazon may still make a big push into health insurance. 

While this is all good news for consumers, it is more bad news for insurers. Whether it’s UPMC or UCSF Health launching their own plans to compete with the big insurers or employers pursuing their own self-insured plans, the role of the traditional health insurer is shrinking, which will only drive further consolidation and integration going forward.

If everything goes to plan, the CVS/Aetna combination will delight its customers and force its competitors to make significant counter moves. Here are three concepts healthcare companies should focus on if they want to capture share-of-customer and drive growth in the context of insurance integration M&A. 

Customer Experience (CX): New benchmarks for CX will create unfair comparisons. Eighty-one percent of consumers are dissatisfied with their current healthcare experience, and this has to change. In our research, we have identified a set of shifts healthcare organizations need to make to be more consumer-centric. A CVS/Aetna ecosystem or an Amazon Prime Health offer (insurance, PBM, clinics, etc.) would elevate customer expectations for a seamless experience across the healthcare system. 

This will immediately put pressure on less integrated payers and providers, as CX expectations always default to the highest common denominator. Which is to say: consumers don’t care if you are an airline, a mobile phone company, a drug store, or an insurance company. They want everything to work as seamlessly as their favorite digital service provider. It may be an unfair comparison in the minds of traditional payers, but it will nonetheless be a comparison that consumers will make.

Brand Strategy: Blurring industry roles will place a premium on purpose. Most of the fastest-growing companies in the world are technology ecosystems – and ecosystems are difficult to categorize. Is Google a search engine or a GPS company? Is YouTube a TV channel or a music studio? Is Amazon a book retailer or the industry-leading B2B cloud computing provider? The answer to these questions is “yes.” Category distinctions and traditional roles no longer apply, which increases the need for a clearly defined purpose. 

Several years ago, we were working with a major national drug retailer to identify opportunities to use their extensive retail footprint to drive new sources of revenue. It was surprising to us to hear this team speak about CVS with a sense of jealous admiration, simply because CVS had the word “pharmacy” in its logo. “If only our logo said ‘pharmacy’ we would drive more foot traffic,” they’d say.

While CVS would be unwise to remove “pharmacy” from their stores going forward, they will have to significantly expand what the term means. This line-blurring will have an immediate impact on everyone else. 

Innovation: It is officially time to shift to a Minimum Viable Product approach. The healthcare industry struggles with innovation due to its crippling aversion to risk, the difficulties of proving long-term ROI, and the lack of structure for rewarding successful innovation. However, insurance integration will force competitors to embrace more agile innovation strategies. 

Insurance is ripe for customer-obsessed innovation. We are currently working with insurance companies around the world to build new products and services using a Minimum Viable Product (MVP) approach. By paring down the timeline (typically 45 to 90 days) and working in cross-functional teams, companies can link unmet consumer needs with existing product capabilities. These new products and services are designed around use cases, not existing product or distribution parameters, and are presented in terms of consumer benefit, not industry definitions. 

The MVP process launches pilots quickly, learning and adapting in iterative loops. While the process at times can feel foreign to large insurance companies, the results are compelling. 

Josh Feldmeth is senior partner, global M&A practice and Paul Schrimpf is partner, healthcare practice at Prophet.