Dive Brief:
- With providers consolidating and taking on risk, it's increasingly making sense for them to consider buying out payers. Meanwhile, payers themselves are merging.
- Analysts point to Centene, Health Net, Molina and WellCare as particularly attractive acquisition targets for both providers and other payers. At one point, for example, analysts predicted that Centene and WellCare might be acquired by the nation's largest nonprofit Catholic health system, Missouri's Ascension Health.
- Over the near term, however, it seems more likely that Centene and its brethren will be targeted by large publicly-traded health plans, including Aetna, CIGNA, Humana or UnitedHealthcare, analysts suggest.
Dive Insight:
Not everyone believes that intense payer M&A activity is likely to happen soon. Brian Kane, Humana's new CFO, contends that national health and consolidation may not take place until 2017 and beyond. He argues that the political and regulatory climate will have to settle down more, and that payers will want to see what happens under the new presidential administration.
Also, payers are still working through issues created by prior mergers, such as Aetna-Coventry, CIGNA-HealthSpring and WellPoint-Amerigroup,all multibillion-dollar deals requiring a great deal of integration. While such large players may be looking for technology and service companies to support these deals, they're less likely to do more M&A in the payer space, analysts believe.
However, plans like Centene and WellCare, which both have a large presence in Medicaid managed care, may see M&A interest sooner, as Medicaid is expanding in many states. Centene would fit especially well with Ascension's business, which overlaps with Centene's in 12 state markets.
Bottom line, it does seem likely that M&A in the payer space will speed up as payers figure out the ACA business landscape and better understand how to work with providers in structures such as ACO relationships. Once the big health payers feel comfortable in this way, look for some significant market restructuring.