Healthcare Survivor: Tribes Beginning To Form Alliances
As the healthcare industry feels a key wave of competition, major for-profit health insurance companies are beginning to fight for their immunity within the healthcare industry, avoiding ultimate elimination. Aetna recently announced their acquisition of health insurer, Humana, strengthening their survival skills for this competition. This $37 billion deal is the first of many expected mergers amongst United States healthcare giants.
Aetna and Humana have projected combined revenue of about $115 billion for 2015, which is a product of the company’s business with Medicare, Medicaid, Tricare, and other lucrative federal programs. The companies expect this deal to close in the second half of 2016, making them the second largest insurance company by sales, after UnitedHealth Group Inc. The CEOs of both Aetna and Humana explained how the merger makes sense within today’s healthcare market, considering Aetna and Humana have ‘complimentary customers’. Aetna handles a large and diverse commercial business while Humana handles an ever growing Medicare Advantage business.
While these acquisitions take place, there is worry for lack of innovation for new healthcare plans, along with questions of effectiveness when working with hospitals and doctors in order to deliver the most viable ways of health care. Bruce D. Broussard, president and chief executive of Humana, stated, “These are the two most innovative companies in the health care sector today”. Aetna and Humana plan to pursue the manner in which insurers are cooperating with providers. Mr. Bertolini also looks towards directing the company’s policy sales towards individuals, in addition to their traditional insurance provided for employers, as a direct result of the recent shift in the Medicare and Medicaid market.
Of course, the Securities and Exchange Commission, as well as the companies’ shareholders, must approve this acquisition, which can take several months. Aetna shareholders are projected to own about 74 percent of the combined company, while Humana shareholders would own 26 percent. Aetna plans to base their headquarters in Louisville, Ky., the current home of Humana, where they continue business with Medicare, Medicaid, and Tricare operations. Industry insiders are watching for the next merger partners to image.