M&A outlook for payers and providers
A glimpse into the present and future of healthcare industry mergers and acquisitions
The merging of large companies and corporations has been fairly common practice in modern America's business landscape. In fact, mergers (successful and unsuccessful) between giants like AOL and Time Warner, Exxon and Mobil, as well as AT&T and BellSouth denote how almost all major industries have participated in and have been affected by grandiose mergers and acquisitions.
Although there have been some mergers related to healthcare, such as the merger between Pfizer and Warner-Lambert in 2000, a recent and potentially game changing industry merger occurred when health insurance juggernaut Aetna announced its $37 billion acquisition of Humana in 2015.
Even though the interested parties optimistically deem that the deal will be approved and finalized by the end of 2016, serious questions remain about how such a sweeping combination will affect industry executives, insurance economics, and possibly the overall quality and affordability of healthcare.
Other noteworthy healthcare industry mergers announced in 2015 include
Consolidation drivers
GelineauMany experts agree that mergers and acquisitions are likely to continue across the entire healthcare landscape. Steve Gelineau, executive vice president with GE Healthcare Camden Group explains, "We have been in a long period of consolidation in healthcare for a number of years now, and have a way to go before we reach a period of higher stabilization."
He says that many healthcare organizations are increasingly in pursuit of the following business objectives:
- A more substantial market footprint;
- Increased access to a broader population;
- Economies of scale;
- Increased operating efficiency;
- A stronger defensive position against competitors; and
- Revenue growth ahead of past experience.