In recent years, much of the payor industry has transitioned away from a medically underwritten model to a guaranteed-issue, community-rated, risk-adjusted model. As a result, managing the total cost of care has become the dominant imperative for achieving competitive advantage.
As payors have sought ways to develop effective managed-care approaches for this new environment, interest in vertical integration has increased considerably. In the four years between 2005 and 2008, payors announced just 12 vertical integration M&A deals. In the subsequent four years, the number jumped to 26, and recent targets have largely been physician groups and integrated care organizations. These deals have not just been attempts to create competitive advantage—they have also been defensive plays to counteract potential challenges from provider consolidation and the acquisition of physician practices by hospital systems interested in vertical integration of their own.
Read the full report here.
Contact Steven Cosby with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.
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