The pace of health care mergers and acquisitions likely will cool slightly in 2020, some industry experts tell AIS Health. Still, insurers are likely to seek out companies with assets such as care management or information technology solutions, while provider consolidation will continue in certain markets, AIS Health reported.
"We expect that payer M&A will continue into 2020, with a bias toward vertical rather than horizontal deals," says Michael Abrams, managing partner of Numerof & Associates, Inc. "Payers will use such deals to expand into adjacent market spaces to differentiate their offerings as integrated platforms that can deliver superior value, customer experience and innovation."
Dan Mendelson, the founder of consulting firm Avalere Health, says he still sees plenty of potential targets for horizontal mergers, along with more targets for vertical deals.
"Health plans are in a transformative phase right now. There are three major areas of focus: government markets, care management, and the information technology needed to support quality improvement and cost reduction," says Mendelson.
"In government markets, there are a range of quality assets that the larger plans could still acquire," he adds. "There are also some non-profits that could engage in collaboration with for-profit organizations to expand their scope and reach."
Medicare Advantage plans will be "a very strong target for M&A" in 2020, says Ashraf Shehata, KPMG's national sector leader for health care and life sciences.
Shehata says he also expects insurers to "amass capabilities around their PBMs." This, he says, could include bolstering their specialty pharmacy capabilities and building out technology.