CVS Health's New Plans With Aetna May Improve Health Outcomes

CVS Health (NYSE:CVS) , with its newly-acquired Aetna (NYSE:AET) business, developed a Social Isolation Index to assess each Medicare beneficiary’s risk of social isolation. The mentioned index is based on claims data and multifaceted data on social determinants of health, and will help in identifying high-risk candidates.

The company’s outreach program, Resources For Living, which is accessible to all members of Aetna Medicare Advantage and their caregivers, will provide further support to the high-risk candidates. The specially-trained consultants of Resources For Living will reach out to the candidates, who are potentially at a higher risk of facing social isolation.

While amplifying the customer base for Aetna’s products, the current offering aims to strengthen its newly-introduced Health Care Benefits segment. The segment came into effect after CVS Health acquired Aetna in November 2018.

Rationale Behind the Program

Per the company, social connection is an important determinant of health for most people, but especially for the Medicare population. The company believes that with its help, this population will be able to care for themselves or have reliable support, be safe in their homes, and will be able to lead fulfilling lives. This will likely delay the development and progression of chronic health conditions.

As part of this program, consultants will work directly with members to understand their needs and identify local resources. This serves as an early point of intervention for issues that are not health related and might affect members’ health.

The company believes that personal connections are more important for beneficiaries aged 65 or more instead of digital solutions. A study conducted by CVS Health revealed that 24% of members did not have any immediate support system in the form of a friend or family and 27% did not know where to visit to meet new people.

How Does This Work?

The Resources For Living program and the social isolation index (both part of Aetna's overall Medicare social connectedness strategy) will work toward the improvent of the holistic well-being of the members. The program will customize its support per individual requirement.

Plans in Focus

In 2020, Aetna will offer a new companionship benefit in partnership with Papa to reduce social isolation and provide the required support to the elderly population in select plans in Florida. Aetna will also continue offering SilverSneakers (a fitness program) at over 15,000 locations across the country through most of its Individual Medicare Advantage plans in 2020.

Industry Prospects

Per a report by Verified Market Research, the global health insurance market was valued at $99 million in 2018 and is expected to reach $1.30 billion by 2026, witnessing a CAGR of 3.5% between 2019 and 2026. The key factors driving the insurance market are increasing health expenses and rising elderly population along with rapidly growing chronic diseases among the general population globally.

Given the current trend in the insurance market as well as increasing incidents of loneliness and social isolation (resulting from adverse health behaviors and illnesses), the isolation index as part of the Resources For Living program has been developed at the right time.

Price Performance

The company’s shares have risen 37.9% in the past six months compared with the industry’s growth of 27.3%.

Zacks Rank & Key Picks

Currently, CVS Health carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the broader medical space are Haemonetics Corporation (NYSE:HAE) , NuVasive, Inc (NASDAQ:NUVA) and GW Pharmaceuticals plc (NASDAQ:GWPH) .

Haemonetics, currently carrying a Zacks Rank #2 (Buy), has a projected long-term earnings growth rate at 13.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NuVasive estimates long-term earnings growth of 10.9%. The stock currently has a Zacks Rank #2.

GW Pharmaceuticals estimates fourth-quarter earnings growth rate at 69.6%. It currently carries a Zacks Rank #2.

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