Mergers and More
Insurers are increasingly moving to become providers. How will this affect consumers of health care?
UnitedHealth to Buy LHC Group
UnitedHealth Group plans to buy home healthcare provider LHC Group. The deal is reportedly worth about $5.4 billion.
• Demand for home health care has increased in the United States, especially during the COVID-19 pandemic as patients and caregivers increasingly prefer to access services from the safety of their homes.
♦ LHC Group is one of the largest home healthcare providers in the U.S. They provide at home services mainly for older patients dealing with chronic illness and injuries.
LHC Group is located in Lafayette, Louisiana. LHC Group provides home health care as well as hospice and facility-based care.
LHC Group has 964 locations across 37 states and the District of Columbia.
LHC Group had $2.22 billion in revenue in 2021.
UnitedHealth plans to combine LHC Group with their Optum unit, which manages drug benefits and provides healthcare data analytics services.
• The deal is one of the largest of its kind over the last five years in home-based care.
♦ UnitedHealth is one of the biggest payers in the U.S., while LHC Group is one of the three largest home health providers.
Last year, Optum acquired Landmark Health – an in-home medical care provider – for over $3 billion.
Optum has also quietly acquired Refresh Mental Health. The deal would give the UnitedHealth Group subsidiary a greater foothold in the behavioral health space, which has garnered greater interest under the pandemic.
Refresh provides outpatient mental and behavioral health services. It runs 300 locations across 37 states that offer a variety of services including psychiatry and substance abuse treatment.
UnitedHealth has been active in the merger and acquisition space, with many of its purchases joining the Optum fold.
♦ Humana Inc., a competitor of UnitedHealth, has been busy also. They acquired the remaining 60% interest in health provider Kindred at Home for a value over $5.7 billion last year.
♦ Insurers are now also providers. Is this good for consumers of health care?
A chorus of experts warn, “Expect to experience more value-based decisions when it comes to our health care.”
Around 2012, the big players started betting a lot of money is to be made on old folk.
• In 2012, UnitedHealthcare bought XLHealth Corporation. XLHealth promotes Medicare Advantage health plans. The price was not disclosed but Bloomberg valued the company at $1.5 to $2 billion.
• In 2012, Cigna bought HealthSrping, a Medicare Advantage provider, for $3.8 billion in cash.
• In 2012, Aetna purchased Coventry Health Care for about $5.7 billion in cash and stock. A move intended to help Aetna expand in to Medicaid and Medicare programs.
• In 2006, CVS acquired a company called MinuteClinic, which operates walk-in clinics. By 2017, CVS had more than 1,000 clinics including in its stores and also in some Target locations.
• At the end of 2017, to expand and steer more customers to their doctors and nurses CVS coughed up $69 billion and swallowed Aetna.
• Anthem tried to grab Cigna back in 2017. That marriage ended up in court with no one happy and each going their own way.
• In 2018, Cigna officially absorbed one of the largest pharmacy benefit managers in the country, Express Scripts, for $67 billion.
A couple years later Cigna sold off their group life and disability insurance unit to New York Life Insurance to help pay for this.
• In 2022, Cigna announced they planned to sell off their life, accident and supplemental benefits businesses in seven countries to Swiss insurance company Chubb. The intent they say is to focus on their health insurance business in the U.S.
•In 2018, there was talk of Walgreens and Humana merging but that did not happen. Instead, they formed a partnership. The goal being to bring together full-service primary care, pharmacy, nutrition and wellness support and other services for Medicare beneficiaries. A kind of scratch each other’s back.
• In 2021, AmerisourceBergen Corporation agreed to acquire the majority of Walgreens Alliance Healthcare businesses for approximately $6.5 billion. AmerisourceBergen Corporation is an American drug wholesale company that was formed by the merger of Bergen Brunswig and AmeriSource in 2001. The company is headquartered in Valley Forge, Pa. and has a presence in 50+ countries.
• In 2021, Microsoft shelling out $19.7 billion for Nuance Communication to bolster its ambitions in the healthcare market.
Nuance is considered a pioneer in speech recognition and artificial intelligence technology used in healthcare.
• In 2021, a consortium of private equity firms picked up medical supply company Medline for $30 billion.
Medline is one of the largest manufacturers and suppliers of health care products like sterile gloves, surgical blades, lab equipment, office supplies and wheelchairs, and reported $17.5 billion in revenue in 2020.
• In 2021, the German health group Siemens Healthineers agreed to buy Varian Medical Systems for $16.5 billion. Siemens’ goal is to become the global leader in cancer care solutions.
Varian is a developer of oncology care technologies and solutions while Siemens Healthineers is a medical technology company whose portfolio includes imaging and diagnostic systems and advanced therapy systems, including angiography and computed tomography (CT) systems.
• One of the most closely-watched deals in the market is UnitedHealth Group's $13 billion bid for tech company Change Healthcare. This is a controversial one, with critics such as the American Hospital Association arguing that it could lead to significant consolidation in healthcare data. The Department of Justice has been taking a close look into the potential ramifications of the acquisition.
Countless hospital mergers and physician practice consolidation are going on all the time. Very few have actually benefited the patients they serve.