Payer M&A Drives Industry Progress
The healthcare industry has witnessed a flurry of merger and acquisition (M&A) activities in 2023, with major payers making strategic moves to expand their reach and enhance service offerings. This article highlights 10 significant payer M&A updates reported since May 22, focusing on the latest developments involving industry giants like UnitedHealth Group, Elevance Health, Humana, Centene, and more.
UnitedHealth Group’s Acquisition Moves
UnitedHealth and Surgery Partners
UnitedHealth Group, a dominant player in the healthcare industry, is reportedly eyeing the acquisition of Surgery Partners, the third-largest ambulatory surgical center (ASC) operator in the United States. According to Bloomberg, UnitedHealth is among the potential buyers considering this strategic acquisition, which could significantly boost its presence in the ASC market. Surgery Partners operates a vast network of facilities, providing a range of outpatient surgical services, making it an attractive target for UnitedHealth as it seeks to diversify its service portfolio.
UnitedHealth’s Proposed Acquisition of Amedisys
In addition to its interest in Surgery Partners, UnitedHealth Group has set its sights on acquiring Amedisys, a leading home health provider. The proposed $3.3 billion deal was announced in June 2023, but it is currently under review by the U.S. Department of Justice. As part of the merger process, UnitedHealth and Amedisys have agreed to sell an unspecified number of care centers to VitalCaring Group. This divestiture aims to address potential antitrust concerns and smooth the path for the merger’s approval later this year.
Elevance Health’s Strategic Expansion
Elevance Health’s Primary Care Venture: Mosaic Health
Elevance Health, formerly known as Anthem, is making significant strides in the provider space with the launch of Mosaic Health, a joint venture in primary care. This initiative, in collaboration with private equity firm Clayton, Dubilier & Rice, reflects Elevance Health’s commitment to expanding its healthcare services. While the financial terms of this partnership have not been disclosed, the venture is expected to enhance access to primary care and improve patient outcomes through innovative care models.
Elevance Health’s Bid Withdrawal for Evolent Health
In a surprising move, Elevance Health recently withdrew from the bidding process for healthcare software company Evolent Health. Although the reasons for this decision have not been made public, it indicates a strategic shift in Elevance’s M&A approach. The withdrawal suggests that Elevance may be focusing on other opportunities or reassessing its priorities in the rapidly evolving healthcare technology landscape.
Humana’s New Primary Care Clinics
Humana is also expanding its footprint in the primary care sector by opening clinics in 23 former Walmart Health sites. This strategic move involves Walmart leasing the locations to Humana, enabling the insurer to provide accessible primary care services across multiple communities. Although the financial details of the deal have not been disclosed, this initiative underscores Humana’s commitment to enhancing healthcare delivery and increasing its market presence.
Centene’s Sale of Collaborative Health Systems
Centene Corporation, a major player in the managed care industry, has decided to sell its management services subsidiary, Collaborative Health Systems, to Astrana Health. The financial terms of the transaction remain undisclosed, but this divestiture aligns with Centene’s broader strategy to streamline operations and focus on its core businesses. Collaborative Health Systems has been instrumental in managing value-based care arrangements, and its acquisition by Astrana Health is expected to bolster the latter’s capabilities in this space.
Molina Healthcare’s Acquisition of ConnectiCare
Molina Healthcare has announced its plans to acquire ConnectiCare, a subsidiary of EmblemHealth, for $350 million. This acquisition will add approximately 140,000 members to Molina’s portfolio, encompassing Medicare, marketplace, and commercial products. The deal is part of Molina’s ongoing efforts to expand its footprint in the Northeastern United States, particularly in Connecticut, where ConnectiCare has a strong presence.
Priority Health’s Expansion Plans
Priority Health, a Michigan-based health plan, is set to acquire Physicians Health Plan of Northern Indiana, a Fort Wayne-based payer with more than 52,000 members across Indiana and Ohio. This acquisition, expected to close in 2024, will enhance Priority Health’s reach in the Midwest and strengthen its position as a leading regional health insurer. The merger is anticipated to provide members with greater access to care and a broader range of healthcare services.
Optum’s Strategic Moves
Optum’s Acquisition of Amedisys
Optum, a subsidiary of UnitedHealth Group, has announced its intent to acquire Amedisys for $3.3 billion. This acquisition is part of Optum’s broader strategy to expand its home health services and strengthen its position in the post-acute care market. The deal is currently under review by federal regulators, and its approval will depend on the successful resolution of any antitrust concerns.
Optum’s Sale of Workers’ Compensation Settlement Solutions
In another strategic move, Optum has sold its workers’ compensation Settlement Solutions business to ExamWorks Compliance Solutions. This divestiture is part of Optum’s ongoing efforts to streamline its operations and focus on its core healthcare services. The sale is expected to allow Optum to concentrate more resources on expanding its healthcare delivery capabilities and innovative care models.
Lifetime Healthcare and Capital District Physicians Health Plan Merger
The Lifetime Healthcare Companies, parent company of Excellus Blue Cross Blue Shield and Univera, has announced plans to merge with Capital District Physicians Health Plan (CDPHP). If approved, this merger will create a healthcare organization with nearly 2 million members and 6,000 employees. The combined entity will have a stronger presence in the upstate New York region, offering enhanced healthcare services to its members.
Conclusion
The recent M&A activities among major payers like UnitedHealth Group, Elevance Health, Humana, Centene, and others reflect the dynamic nature of the healthcare industry. These strategic moves are driven by the need to expand service offerings, enhance patient care, and achieve greater efficiencies in a competitive market. As these deals progress, they will likely have a significant impact on the healthcare landscape, influencing everything from patient access to care to the overall quality of healthcare services.
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FAQs
Q1: What is the significance of UnitedHealth’s potential acquisition of Surgery Partners?
A1: UnitedHealth’s acquisition of Surgery Partners would enhance its presence in the ambulatory surgical center market, allowing it to expand its outpatient services and diversify its healthcare offerings.
Q2: Why did Elevance Health withdraw from bidding for Evolent Health?
A2: The reasons for Elevance Health’s withdrawal from the bidding process have not been publicly disclosed, but it may indicate a shift in the company’s strategic priorities or focus on other opportunities.
Q3: How will Molina Healthcare’s acquisition of ConnectiCare impact its operations?
A3: The acquisition of ConnectiCare will add approximately 140,000 members to Molina’s portfolio, strengthening its presence in the Northeastern U.S. and expanding its Medicare and commercial product offerings.
