In a move that would combine two of the top five health insurance companies in the U.S., Anthem reportedly made an offer on Monday to buy Cigna which was said to be swiftly rebuffed.
The news came just days after rumors swirled around Humana, which entered a corporate quiet period that could be a prelude to a deal. Several research and consulting firms predicted increased health insurance M&A this year.
Also See: Insurance Merger Mania Catches On
While key drivers include gaining market share and responding to the Affordable Care Act which already required a lot of technology updates to comply with product design mandates and integrate with health insurance exchanges insurers IT platforms also play a role, according to industry experts.
Because of the Accountable Care Act, theres going to be a lot of consolidation that takes place, says Joseph Smith, CEO at HITvision, a health insurance IT consultancy, and the former CIO of Arkansas Blue Cross and Blue Shield. He says that as regulation streamlines the kinds of products health insurers can offer, companies will be looking to differentiate themselves from their peers in the marketplace in other ways. Effectively leveraging technology for customer service and interaction is one way to do that, as is leveraging claims and clinical data on the back end to improve outcomes. Acquisition is also a way to get access to more data and, potentially, better analytics.
The ACA has led to more individual buyers for health insurance, Smith says, but at the same time, products are increasingly standardized. With products largely similar among companies, and more pressure from regulators and customers to deliver in new ways, huge IT implications come from the changing business model, he says.
Were moving down the road of a uniform payer so now the players have to compete on customer service, he adds.
That means that the capabilities that [Cigna is] offering to the consumer, in terms of how to access and use the information around your health care products are notable, Smith says. For example, Cigna has made a big move into digital health coaching this year with its multiplatform Cigna Health Matters initiative, and leveraged a partnership with Samsung to develop the Coach by Cigna mobile app.
Anthem and Cigna did not immediately respond to requests for comment.
However, IT strategy has driven insurance deals in the past. When Allstate bought Esurance in 2011, CEO Tom Wilson told reporters the acquiring company was interested in reaching self-directed customers who were used to self-service capabilities.
And technology is seen as a driver of future deals. Deloitte, in its 2015 Insurance Industry M&A Outlook, wrote that practiced acquirers have identified the strategic needs that lend themselves to an M&A-driven solution, which could include obtaining an efficient operating platform with regard to technology and processes.
Indeed, health insurers are racing to enhance their analytics, population health management, and payments technologies. And there are still huge IT implications to any move, Smith says, as companies look to share best practices and combine operating platforms.
Im sure theres going to be some integration taking place on the data analytics, especially on the back end, he says. As far as the claims engine goes, maybe not, but the data is key.
Register or login for access to this item and much more
All Health Data Management content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access