Full story in the Wall Street Journal (Subscription). You can find a related story at NPR, as well. Almost a year ago, I began talking about this as a possible future trend (see my blog post on Humana’s Concentra acquisition).
I think the vertical integration trend is pretty clear now. The WSJ notes several other examples. Additionally, I’m seeing consolidation in the Medicare advantage space. Not sure if this is directly related to Health Care Reform, but I’m not a big believer in coincidences! It appears that the large health insurers are scaling up massively for diversification and economies of scale.
Is it possible that smaller insurers may find it tough to compete not only due to higher admin, but also due to lack of network?
What are your thoughts on this trend? Post in comments below!
[...] I’ve noted the vertical expansion into the health care space by managed care companies in prior posts, for example, Humana and United Healthcare. [...]
Denise,
Good points. Wellpoint, Humana, Coventry UnitedHealthcare will dominate the Medicare Advantage market in 5 years. The smaller companies like Healthspring.Bravo, Molina, Universal, Wellcare, Universal American will probably get swallowed up by the big boys. That is why I like writing for UHC and Coventry. They have reasonably good products plus they are now paying renewals for 10 years instead of 6.
When Wellpoint bought CareMore, a Medicare Advantage company, for $800 million, I thought, “Wellpoint must know something the rest of us don’t know.”
Everybody keeps saying Medicare Advantage is doomed and yet Wellpoint spent nearly a billion dollars on CareMore, which has a managed-care model that has been very successful, and very lucrative (with a 70% MLR).
You’ve got to figure that the biggest insurance companies, like Wellpoint and United, know something the rest of us don’t know – or maybe they are shaping the future of health insurance and health care that keeps them right in the middle of the action.
I have always wondered why hospitals and doctors didn’t organize and charge a monthly premium directly to individuals and groups. Talk about accountability. It could be part of the solution.