Increased M&A Activity in the Health Insurance Sector Is on the Horizon, Industry Observers Tell AIS Newsletter

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High valuations and health systems offering health insurance products are among the reasons merger and acquisition activity is expected to rise in 2015, reports Atlantic Information Services’s Health Plan Week.

An increase in health plans acquiring smaller providers and issuers, and IT and data analytics firms; the strength of the insurance industry in the post-Affordable Care Act era; and the desire by carriers to set long-term strategies are all factors that point to merger and acquisition (M&A) activity growing impressively in the near term, according to industry observers interviewed in the March 23 issue of Atlantic Information Services, Inc.’s Health Plan Week (HPW).

“Last year we saw 22 announced deals in the managed care sector, and already this year we have had 10 announcements of deals between insurance companies,” Lisa Phillips, editor of Health Care M&A News, tells HPW. “It looks like activity is picking up for 2015 for sure,” she continues.

In addition to these mergers between carriers, “I think right now one of the dynamics that certainly is impacting the private sector is the [price] that people are willing to pay for managed care plans, for data analytics companies, for health care IT services,” Bill Baker, partner-in-charge, health care transaction services, for audit, tax and advisory firm KPMG LLP, tells HPW, saying that the industry is currently at a “high valuation peak.” “You are seeing a lot of people today who six months ago said ‘we’re not for sale,’ but now you’d have to be an idiot to at least not consider it,” he says.

“We are doing a lot of transactions for your large established managed care companies who are out there buying provider networks,” Baker says.

Another factor spurring M&A activity is the trend of providers offering their own health insurance products. “Every health system over $1 billion or $2 billion in revenue, I can tell you with an unbelievably high degree of confidence those guys have a group of people in that health system trying to figure out how they are going to roll out a health plan,” Baker tells HPW.

Visit http://aishealth.com/archive/nhpw032315-01 to read the article in its entirety, including a table ranking the top ten provider-sponsored health plans by membership, featuring data from the recently published AIS’s Directory of Health Plans: 2015, the 12th edition of an annual resource of enrollment data and contact information for all health plans operating in the U.S.

About Health Plan Week
Published since 1991, the 8-page weekly newsletter Health Plan Week provides timely, objective business, financial and regulatory news of the health insurance industry. Coverage includes new benefit designs and underwriting practices, new products and marketing strategies, mergers and alliances, financial performance and results, Medicare and Medicaid opportunities, disease management, and the flood of reform-driven regulatory initiatives including medical loss ratios, exchanges, ACOs and myriad benefit design changes that are mandated. Visit http://aishealth.com/marketplace/health-plan-week for more information.

About Atlantic Information Services
Atlantic Information Services, Inc. (AIS) is a publishing and information company that has been serving the health care industry for more than 25 years. It develops highly targeted news, data and strategic information for managers in hospitals, health plans, medical group practices, pharmaceutical companies and other health care organizations. AIS products include print and electronic newsletters, websites, looseleafs, books, strategic reports, databases, webinars and conferences. Learn more at http://AISHealth.com.

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