Report Finds Lack Of Competition Among Medicare Advantage Plans
The study by the Commonwealth Fund finds that in 97 percent of markets a small number of insurers dominate, which could raise concerns about some high-level insurance company mergers. Also in industry news, health analytics company Inovalon is acquiring the consulting firm Avalere Health and two large kidney-care providers plan consolidations.
The New York Times:
With Mergers, Concerns Grow About Private Medicare
As some of the nation’s largest health insurers plan to merge, a new report raises fresh concern over the lack of competition in the private Medicare market. The analysis, released on Tuesday, concludes “there is little competition anywhere in the nation.” The report from the Commonwealth Fund, a research group, looked at the market share of insurance companies offering private Medicare Advantage plans in 2012. The authors found that 97 percent of markets in United States counties were “highly concentrated,” in which a small number of insurers dominated. The lack of competition was worse in rural markets. (Abelson, 8/25)
Modern Healthcare:
Robust Medicare Advantage Competition Almost Nonexistent
Competition among Medicare Advantage plans more closely resembles local oligopolies instead of a buzzing market overflowing with options for seniors, a new study from the Commonwealth Fund shows. The lack of competition is especially relevant as the U.S. health insurance market teeters on the precipice of further consolidation. Aetna and Anthem are undergoing federal scrutiny over their deals that would drastically enlarge their Medicare Advantage memberships. (Herman, 8/25)
The Wall Street Journal:
Gauge Shows Trader Unease On Merger Outcomes
The gap between the price offered and the trading price of a number of companies that are subject to pending takeover bids widened dramatically last week, a sign of investor nervousness about deals whose outcome could help determine whether the merger boom continues. ... For patient, steel-nerved investors, though, there could still be big profits to be made. A wager placed Friday that Aetna Inc. will complete its $34 billion takeover of rival health insurer Humana Inc., for example, is set to return some 22% should the deal close on schedule in late 2016. The spread, which largely reflects nervousness that regulators will reject the deal and possibly an accompanying tie-up between Anthem Inc. and Cigna Corp., rose from 21.2% a week earlier. That is a relatively modest move showing that not all spreads widened dramatically last week. (Raice and Hoffman, 8/24)
Modern Healthcare:
Inovalon To Acquire Avalere For $140M
Inovalon, a publicly traded healthcare analytics company, has entered into a definitive agreement to acquire healthcare consulting firm Avalere Health. The purchase price is $140 million, which is composed of $135 million of cash and $5 million of restricted stock. Inovalon said the deal would significantly expand its footprint in the pharma/life sciences market, which it estimates could be worth $30 billion or more. (Aguilar and Conn, 8/24)
Modern Healthcare:
Kidney-Care Providers Consolidate To Manage Costs, Patient Care
The largely consolidated dialysis sector has been quiet on the M&A front of late, but the transition to value-based payment models could be renewing the drive for scale. Two large kidney-care providers announced transactions Monday that will increase their footprints, provide more leverage with payers and allow them to gain access to additional patient data. The deals are expected to close by the end of 2015. (Kutscher and Rice, 8/24)
