Mergers and Acquisitions Will Change the Future of Health Care
In the last few years the health care industry has witnessed a significant increase in mergers, acquisitions and mega-mergers. However, an unusual proposal by CVS Health Corp. has made a bid to purchase Aetna, Inc. for more than $66 billion. The giant drugstore corporation is fighting to compete against a changing industry and potentially new competition from Amazon.com.
CVS has been making efforts to delve deeper into healthcare by developing new services such as on-site urgent care clinics that expand the hours of availability for patients. By expanding its service-base, CVS will be able to propose a unified, seamless benefits package to large corporations and other major employers.
Rising competition from Amazon provided CVS with an incentive to move forward with the bid for Aetna. Amazon has received approval for wholesale pharmacy licenses in several U.S. states. Shares of CVS and competitors have performed poorly recently, while prescription drugs continue to grow as a percentage of CVS’s retail revenue.
According to the Wall Street Journal, the acquisition of Aetna will allow CVS more control of its healthcare business and allow it to better compete against insurer United Health, which has a pharmacy benefit manager. Lacking similar integration, Walgreens and Express Scripts may have a tougher time competing. Recently, however, there have been reports of potential antitrust issues, and that the proposed CVS and Aetna merger might violate consumer protections, and adversely impact industry competition.
In a recent New York Times article, it was reported that Walmart is looking at a new Humana alliance in response to the consolidation taking place in the health care industry. The two companies are exploring ways to strengthen their ties.
While financial reasons drive such acquisitions and partnerships, the value of data analytics further offers a stronghold for diversified health care companies. The acquisition-merger process is going to continue to grow in the future in order for health care organizations and companies to keep up with the trends. They need each other to adapt to changing health care accommodations as seamlessly as possible.
Being able to scale health care services can better prepare health care organizations for the inevitable changes to the health care system that are looming in the near future. Such mega-mergers will help companies prepare for political policy changes, expected reimbursement cuts, rising labor costs and changes driven by technology and new payment models. Combined information technology and data analytics have the potential of improving patient care as long as they are able to transform big data into actionable insights.
Many industry experts expect to see large tech giants such as Google and Amazon to penetrate the healthcare insurance industry marketplace through mergers and acquisitions in the future.
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