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The Healthcare Investor Insights on Issues & Trends that Impact Investments in Healthcare & Life Science Businesses

Will Increased Consolidation in the Insurance Industry Yield Opportunities or Challenges for Investors?

Posted in Healthcare Services Investing

A recent flurry of activity in the health insurance industry would seem to indicate that investors can expect significant consolidation in the managed care sector.

As The Health Care M&A Information Source reports, it began in May, with Humana announcing it was exploring a sale. The Wall Street Journal reported that Aetna and Cigna had held preliminary discussions with Humana, with Aetna recently making a takeover proposal.

There were also reports that UnitedHealth Group was exploring a possible merger with Aetna, and that Anthem was pursuing a takeover of Cigna. Cigna rejected Anthem’s initial offer.

As it is, in many states there remains just one or two dominant payors, with resulting dramatic impacts on the local market. It will be interesting to see how further consolidation in the managed care sector will impact these states as well as those states that could see their higher number of payors quickly decline.

In future posts and in our Law360 column we intend to examine the impact this consolidation trend may have on investors and their portfolio companies.

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