MCO and healthcare insurance company business trends
Healthcare Medical Pharmaceutical
Health Insurance - MCOs
Market Trends...
  • Managed care organizations ( MCOs) / health insurance companies making significant investments in IT systems, clinical and revenue analytics to assess care / cost outcomes while continuing to consolidate
  • Piloting accountable care organization (ACO) partnership ventures with provider organizations
  • Aetna / Humana and Anthem / Cigna merger deals fail to close; moving forward CVS acquires Aetna, Cigna acquires Express Scripts and United Healthcare continues a strategic line of provider and insurer acquisitions

Assisted Liv
Data Firms
Health Sys
Nursing Fac
Surgery Ctrs

BCBS Affiliations:

*Plans operated by CareFirst

**Plans operated by Highmark

***Plans operated by Health Care Service Corp.

****Plans operated by Premera

*****Plans operated by Regence Group 

******Plans operate by Wellmark

*******Plans operated by Anthem
... A list of Blue Cross Blue Shield plans...
Two Mega Mergers Which Failed

Two major health insurance company mergers fell apart due to regulatory / antitrust approval issues.  Each deal featured sizable break up fees now being contested in the courts.

  • Anthem, seeking to buy Cigna for $54 billion, is likely obligated to pay Cigna a $1.85 billion breakup fee
  • Aetna, seeking to buy Humana for $37 billion, is likely obligated to pay Humana a $1 billion breakup fee

Following the meltdown of their deal with Anthem, Cigna moved forward and acquired PBM Express Scripts for $54 billion and combined it with their existing PBM "Tel-Drug" while CVS acquired Aetna. Moving forward, it is certain any such mergers between health insurance companies and managed care organizations will go through exhaustive internal vetting processes prior to even introductory conversations between organizational leaders. While an emphasis on finances is important, the regulatory / antitrust components of such arrangements will be more deeply scrutinized and closely calculated.

Evolution of Obamacare

The ongoing exodus of health plans from Obamacare state exchanges is creating issues.The exchanges are costly to operate and as plans left there was less funding from them to support their ongoing operation. Consumers have less access to care and less options to choose from. From the start, insurers and managed care plans were hesitant to move forward in the state exchanges based on high numbers of high risk members which are not offset by enough low risk members.  This creates funding issues for the exchanges as time progressed. In many cases in which there is only one plan remaining, the lone health plan offerings are from a Blue Cross Blue Shield affiliated program. Smaller sponsors are sometimes featured but quite often there plans are not as robust as a BCBS program or cost considerably more which is very challenging as the purpose of the exchanges was to provide low cost health insurance to a wider array of consumers.
The CVS Acquisition of Aetna Is Completed

In September, 2019, courts approved the CVS Health / Aetna acquisition for $69 billion dollars. CVS Health is seeking to acquire Aetna to widen its business model and fortify its position against Amazon who is laying groundwork to enter the pharmacy sector. The CVS Health / Aetna tandem will have wide impact across multiple healthcare sectors such as employee benefit consultants, PBMs, MCOs, physician practice groups, health systems and retail, mail order and specialty pharmacy. Read these articles to see how CVS, one of the nation's largest chain drugstores and pharmacy benefit managers transformed its business model and the healthcare insurance / managed care industry with its acquisition of Aetna:

Heath Insurance and Managed Care Organization Overview

The CVS Health acquisition of health insurer Aetna is the reverse approach of UHC's deal with SCA.  In January, 2017, UnitedHealthcare (UHC) announced it was acquiring surgical center chain Surgical Care Affiliates (SCA) for $2.3 billion. SCA operates over 200 surgical facilities with more than 7,500 physicians.  The facilities conduct about 1 million procedures annually.  This is part of UHC's ongoing initiatives to change its business model beyond being a healthcare plan to encompass being a healthcare provider organization; its Optum business unit plays a pivotal role. Recent investments overall include:

  • Surgical Care Associates ($2.3 billion)
  • DaVita Medical Group ($4.3 billion)
  • Reliant Medical Group ($28 million)
  • Equian, a healthcare billing firm ($2.3 billion)
  • Plus a hearing aid health insurance company and a sizable investment into a physician staffing firm

As other plans, such as Anthem and Aetna, have chosen to expand their covered lives, UHC has chosen a different route. By acquiring medical practices, UHC has more direct influence on providers, care protocols and costs associated with them. Through adding SCA to the combination of other medical practices they own, it provides different streams of revenue for UHC.  It also improves their position to negotiate rates with other health systems and care providers.  While United Healthcare has a long way to go to reach the scale Kaiser Permanente has in terms of being a healthcare provider, its investments in the provider sector seem to indicate they have a long term plan to strategically grow the provider side of their business.

The Humana / Kindred deal, at $810 million, is conservative in comparison to the Aetna and UHC deals but Humana needed a way to fortify their position and diversify following Aetna's failed acquisition of their company due to regulatory antitrust concerns.  Kindred also had to find a way to maintain commercial vitality against ever-growing healthcare system and specialty provider organizations.  The combination of Humana / Kindred will be lesser scale overall but sets the stage for them to regroup and grow organically --and perhaps acquire or be acquired by another commercial healthcare enterprise.
... A list of leading Healthcare Insurance Companies and Managed Care Organizations (MCOs)...
... The Health Insurance industry continues to evolve. Plan designs, digital marketing, ACA and other factors are changing the way health insurance is marketed.  Relationships with pharmaceutical manufacturers and the ongoing exploration of data to develop better treatment outcomes continues ... 
... See the article below to find out how Employers, Healthcare Insurance Companies, MCOs and PBMs are affected by Specialty Pharmacy Benefit Management ...
... Explore the presentations below to learn how the Healthcare Insurance industry continues to globalize and find out about a BCBS global partnership ... 
... Learn more about UHC's changing business model to take advantage of marketplace developments and growth opportunities; read the articles below ...
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... MCOs, health insurers and other payers are monitoring the EVALI 
e-cigarette and vaping healthcare crisis closely ...
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