Tag Archives: Market Consolidation

Aetna’s Bertolini counters accusation of power play against DOJ

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http://www.healthcaredive.com/news/aetnas-bertolini-counters-accusation-of-power-play-against-doj/426236/

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http://www.courant.com/news/connecticut/hc-bertolini-senators-20160912-story.html

  • Aetna CEO Mark Bertolini has responded to a letter from a group of senators who accused the company last week of exiting the majority of its ACA markets as a ploy against the federal government for challenging Aetna’s proposed merger with Humana.
  • Bertolini dismissed the senators’ arguments as”unfounded accusations,” the Hartford Courant reported.
  • Aetna spokesman T.J. Crawford told the Courant the company had not received a response from the senators.

Ascension’s expansion efforts pay off as operating surplus swells to $753M

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http://www.beckershospitalreview.com/finance/ascension-s-expansion-efforts-pay-off-as-operating-surplus-swells-to-753m.html

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Click to access ES819017-ES642670-.pdf

St. Louis-based Ascension reported $21.9 billion in revenue in fiscal year 2015, up 6.6 percent from revenue of $20.5 billion in the year prior, according to financial documents filed with bondholders.

The financial boost was partially attributable to an increase in patient volume due to Ascension’s expansion efforts in the past year. During the year ended June 30, 2016, Ascension acquired Glendale, Wis.-based Wheaton Franciscan Healthcare and added hospitals in Michigan and Tennessee as well.

Including these recently acquired facilities, the nonprofit system said inpatient admissions and inpatient surgeries increased 3.2 percent and 3.3 percent, respectively, as compared to the year prior. Ascension also said emergency room visits increased 3.7 percent year over year.

After accounting for a year-over-year increase in expenses of 6.1 percent, Ascension ended FY 2015 with an operating surplus of $753.2 million, up from $696.5 million in the year prior.

Surge in hospital-owned physician practices poised to increase healthcare costs

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http://www.healthcaredive.com/news/surge-in-hospital-owned-physician-practices-poised-to-increase-healthcare-c/425881/

  • Independent physicians and physician-owned practices could soon become a rare breed, suggests a new analysis by Avalere Health and the Physicians Advocacy Institute (PAI) released Wednesday.
  • The study found the percentage of physicians employed by hospitals or health systems rose 86% from 2012 to 2015, from 95,000 to more than 140,000.
  • As of mid-2015, 38% of all U.S. physicians were employed by hospitals and health systems, findings show.
  • Also from 2012 through 2015, hospitals acquired 31,000 physician practices, resulting in one in four medical practices being hospital-owned.

What 4 health system CEOs think of hospital consolidation

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http://www.beckershospitalreview.com/hospital-transactions-and-valuation/good-bad-or-too-tough-to-say-what-4-health-system-ceos-think-of-hospital-consolidation.html

Market Power

There is a great deal of consolidation occurring in the healthcare industry today, and whether that is good or bad news to health system CEOs depends on their organization’s market and M&A track record.

During a panel discussion at the Becker’s Hospital Review 4th Annual CEO Roundtable + CFO/CIO Roundtable in Chicago, Chuck Lauer, former publisher of Modern Healthcare, asked the speakers to offer their thoughts on provider consolidation.

Here’s how CEOs responded.

The rise of ‘super regional systems’ and what it means for healthcare

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http://www.beckershospitalreview.com/hospital-transactions-and-valuation/the-rise-of-super-regional-systems-and-what-it-means-for-healthcare.html

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Consolidation has touched all facets of healthcare, including hospitals of all sizes, medical groups and insurers, and this trend will significantly affect the industry as a whole.

Mergers, acquisitions and other types of partnerships are critical as hospitals focus on providing coordinated, cost-effective care. There has been an increase in hospital M&A in recent years, with transactions rising 18 percent in 2015 compared to the year prior, according to an analysis by Kaufman, Hall & Associates.

Through consolidation, hospitals become more efficient and, many times, improve care quality. However, consolidation also increases leverage and causes revenue to rise. This has led to the creation of “super regional systems,” says Gregory F. Hagood, senior managing director and president of SOLIC Capital. This trend is noted in almost every major market, but it is most visible in metro areas like Chicago.

Rise Of The Megamergers: Inside The Record Year For Healthcare M&A

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http://www.forbes.com/sites/baininsights/2016/08/22/rise-of-the-megamergers-inside-the-record-year-for-healthcare-ma-infographic/#660b429b5a8b

Healthcare M&A Is Growing Fast [Infographic]

http://www.bain.com/publications/articles/global-healthcare-private-equity-and-corporate-ma-report-2016.aspx

 

42 hospital transactions and partnerships in August 2016

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http://www.beckershospitalreview.com/hospital-transactions-and-valuation/42-hospital-transactions-and-partnerships-in-august.html

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The following hospital mergers, acquisitions and general transactions took place or were announced in August.

Top 10 Medicaid insurers represent over half of U.S. managed care market

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http://www.beckershospitalreview.com/payer-issues/top-10-medicaid-insurers-represent-over-half-of-u-s-managed-care-market.html

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Fifty-seven percent of the U.S.’s managed Medicaid market is held by the top 10 Medicaid insurers, an analysis from a Washington, D.C., publishing and information company Atlantic Information Services found.

AIS’ Medicare and Medicaid market data found four of the top 10 payers are involved in mergers and acquisitions that may allow them to gain more market share. Specifically, Hartford, Conn.-based Aenta’s proposed acquisition of Louisville, Ky.-based Humana would allocate more than 400,000 Medicaid beneficiaries to Aetna, if the deal is not blocked by the U.S. Department of Justice. In addition, the third ranked insurer, St. Louis-based Centene, acquired Woodland Hills, Calif.-based Health Net in July, leaving the resulting entity with the highest market share.

Here are the top 10 insurers with the most Medicaid beneficiaries and market share.

Why A Single-Payer Healthcare System Is Inevitable

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http://www.huffingtonpost.com/entry/why-a-single-payer-healthcare-system-is-inevitable_us_57bb38d0e4b0b51733a4e665?&utm_campaign=KHN%3A+Daily+Health+Policy+Report&utm_source=hs_email&utm_medium=email&utm_content=33278487&_hsenc=p2ANqtz–pFhM1yVmgKE5kBJSkJqgzGm6EX86cVbU_jxP8glbnNrQH2CY9ktk8qbzIisOdLEgV0JX5fgsxqoDwrFym5ZxmTnCJOw&_hsmi=33278487

The best argument for a single-payer health plan is the recent decision by giant health insurer Aetna to bail out next year from 11 of the 15 states where it sells Obamacare plans.Aetna’s decision follows similar moves by UnitedHealth Group, the nation’s largest health insurer, and by Humana, another one of the giants.

All claim they’re not making enough money because too many people with serious health problems are using the Obamacare exchanges, and not enough healthy people are signing up.

The problem isn’t Obamacare per se. It lies in the structure of private markets for health insurance – which creates powerful incentives to avoid sick people and attract healthy ones. Obamacare is just making this structural problem more obvious.

In a nutshell, the more sick people and the fewer healthy people a private for-profit insurer attracts, the less competitive that insurer becomes relative to other insurers that don’t attract as high a percentage of the sick but a higher percentage of the healthy.

Eventually, insurers that take in too many sick and too few healthy people are driven out of business.

If insurers had no idea who’d be sick and who’d be healthy when they sign up for insurance (and keep them insured at the same price even after they become sick), this wouldn’t be a problem. But they do know – and they’re developing more and more sophisticated ways of finding out.

Aetna CEO’s $131 Million Parachute Biggest Among Health Targets

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http://www.bloomberg.com/news/articles/2015-06-17/aetna-ceo-s-131-million-parachute-biggest-among-health-targets

 

Aetna Inc. CEO Mark Bertolini has the most to gain among top executives at the three U.S. health insurers seen as targets in a potential wave of industry consolidation. Bertolini could receive $131.3 million should he lose his job in a takeover, according to data compiled by Bloomberg. Cigna Corp. Chief Executive Officer David Cordani would get $58.7 million, while Humana Inc. CEO Bruce Broussard’s so-called golden parachute is valued at $26.1 million.

The five biggest publicly traded insurers are all eyeing potential combinations after a two-year lull in big managed-care deals. Anthem Inc. has explored a takeover of Cigna and Humana, and Aetna and Cigna have considered buying Humana, Bloomberg has reported. The Wall Street Journal has said UnitedHealth Group Inc. might be interested in Aetna or Cigna.

We “expect this merger frenzy will culminate in a ‘Big Three’ that is a more efficient industry landscape,” Ana Gupte, an analyst at Leerink Partners, said Tuesday. Humana is likely to be acquired by Aetna or Anthem for $200 to $225 a share, she wrote.

The change-in-control payouts are meant to keep investor interests in mind.

“These protections provide a certain level of comfort for executives to put aside their personal issues and think, ‘What’s in the best interest of shareholders?’” said Yonat Assayag, a partner at ClearBridge Compensation Group, an executive pay consulting firm. “The amounts may seem large, but the cost compared to the value that’s created for shareholders is usually a very small percentage.”