Healthcare’s new order
April 24, 2018 5:22 AM
Healthcare’s new order
The healthcare and benefits industry is undergoing a radical sea change as the private sector appears to have run out patience with the high cost of medical coverage. In response to rampant inefficiencies, inscrutable business practices and soaring costs, leading employers, insurers and brokerages are forming new alliances at a furious rate. Here we look at some of the major reshufflings that have taken place over the past 12 months and their potential impact.
Aaron M. Sprecher/Bloomberg
CVS Health buys Aetna for $69 billion
Cigna buys Express Scripts for $54 billion
In the view of many advisers, Cigna’s $54 billion bid for pharmaceutical benefits manager Express Scripts may do little to lower drug costs for employers and their employees. But it could help the giant insurer gain greater control over its pharma spend, leading to more flexibility in its health plans.
Walmart and Humana eye major consolidation
Long rumored, Walmart’s potential purchase of health insurer Humana could give the nation’s largest employer control over the healthcare received by its 1.5 million employees. The acquisition could allow the mega-retailer to lower its benefits costs while improving medical outcomes for its workforce.
The Hartford buys Aetna’s life, disability business
In October 2017, The Hartford purchased Aetna’s life and disability insurance business for $1.45 billion, making it the second largest group life and disability insurer with approximately $5 billion in expected premium. Under the deal, The Hartford would have access to Aetna’s mid-to large-sized employer client base, which brought in $2 billion in premiums in 2016, and would bring an estimated 20 million new customers into the fold. But the deal was not all about the money: It also gives The Hartford has access to Aetna’s data analytics and integrated absence management platform.
Craig Hartley/Bloomberg News
Albertsons buys Rite Aid
While pharmaceutical retail giants CVS and Walgreens both made headlines with pricey acquisitions last year, grocery chain operator Albertsons Cos . bought runner-up drugstore chain Rite Aid for an undisclosed sum. The new combined company now has an estimated value of $24 billion and nearly 4,900 stores, including 4,350 pharmacy locations, in 38 states. The deal allows Rite Aid to sell pharmaceuticals and goods inside Albertson’s grocery stories without opening new standalone Rite Aid outlets.
Court blocks Aetna-Humana, Anthem-Cigna deals
Not all megadeals go through in the healthcare sector. After months of legal wrangling, Aetna dropped its proposed $37 billion takeover of Humana in February 2017, the same month that a judge ruled against Anthem’s proposed $48 billion merger with Cigna. According to media reports, Aetna and Anthem were looking to buy Humana and Cigna respectively to fortify themselves in the wake of regulatory changes that were the result of the Affordable Care Act.
