Healthcare Merger Mania Continues

Posted by Ken Sawka on Jul 29, 2015 11:55:01 AM

Anthem last week agreed to acquire Cigna for $48.3 billion, according to multiple press reports. The deal, if approved, would create the nation’s largest insurer in terms of enrollment, and reduce the number of large health insurers from five to three. Coming on the heels of the announced tie-up of Aetna and Humana – a $37 billion dollar transaction itself – the deal is almost certain to raise antitrust concerns.

AetnaHumanaMerger

The Risks and Drama of Merger Mania - Can We Learn from Experience?
By: Diane Borska

The Anthem – Cigna deal is further evidence of the shifting healthcare landscape and the opportunity that faces large healthcare payers and providers. While this merger will cite the anticipated “synergies” and “efficiencies” that the merged company will realize, there are more meaningful implications to patients and other market participants, as Fuld + Co's Jacob Golblitz noted in a previous post.

AetnaHumanaMerger

Aetna's Medicare Advantage Bet
By: Jacob Golbitz

Most notably, these mergers underscore the bet insurers are making on Medicare, and their efforts to bolster their membership ranks with Medicare Advantage enrollees. “Quite frankly, from a governmental perspective, we think we will continue to deliver, if not accelerate, best-in-class solutions for Medicare, Medicaid and the dual-eligible population,” said Joseph R. Swedish, Anthem’s chief executive, according to the New York Times. Of a combined Anthem-Cigna’s 53 million members, 15% would be Medicaid or Medicare beneficiaries.

The mergers are also no doubt an effort by health plans to counterbalance the growing market power of health care providers, which have been through their own flurry of M&A activity. Indeed, we expect consolidation among providers to continue, if not accelerate, in the months ahead due to concerns among physicians about whether the growing market power of health plans will put providers at a disadvantage in negotiations over reimbursements and coverage for the services that they provide.

Of course, the chance remains that the mergers will bog down due to a variety of obstacles in the months ahead. As Fuld + Co Senior Vice President Diane Borska discussed in a post following the Aetna – Humana announcement, the degree of regulatory oversight healthcare companies must contend with, as well as integration challenges, could well dampen the market impact that many expect this wave of consolidation to have.

Topics: Competitive Intelligence, Events, Brand Insights, Market Analysis, Pharma, Healthcare, Industry Convergence, Life Sciences, Merger and Acquisition

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