Crap Game (Don Rickles): Ya make a DEAL!
Big Joe (Telly Savalas): What kind of a deal?
Crap Game: A DEAL DEAL.
—Kelly’s Heroes (1970), on getting the German Tiger tank and commander to help them in their bank heist
A $37 bn deal, that is. Announced on the Friday before the US Independence Day holiday (a day which may define media ‘black hole’), Aetna and Humana announced either their merger or the acquisition by the former of the latter, depending on what account you read. If approved by the Feds, the combination of #3 and #4 insurers (by revenue) respectively will exceed 33 million insured, making the combined entity #3 in insured individuals (after UHG and Anthem) and #2 in revenue. The announcement also stated that Louisville, Kentucky, Humana’s current headquarters, will continue to manage the Medicare, Medicaid and military Tricare businesses. Both are in Medicare Advantage, which is problematic due to market share and anti-trust considerations in at least four states, according to Reuters. (Humana has about 20 percent of national Medicare Advantage private policies.) We’ve previously noted the unfavorable comparison to the end stages of airline deregulation–consolidation reducing competition and consumer-favorable pricing. No word on the future of the Humana brand and marketing, which has always been executed well.
As to the outlook for digital health support–the prognosis by this Editor of this combination is, in the Magic 8 Ball’s answer, ‘reply hazy, ask later’.
- Humana was known in the industry for being fairly open to opportunities and backed them with funding (Healthsense, Vitality, what remained of Healthrageous) under business such as Humana Cares. Humana at Home also owns a home care management company, SeniorBridge. Will this be of interest to Aetna in population health management, or an early ‘For Sale’?
- Aetna, by contrast, has pivoted several times. CarePass consumer apps was a patient engagement experiment that proved the point that policyholders don’t want apps from insurers. Healthagen (an acquisition) was first positioned as an ’emerging businesses’ skunkworks of sorts umbrella-ing over iTriage (now integrated into the parent), ActiveHealth, Medicity and other digital health/analytics related businesses, then scaled back in early 2014 [TTA 28 Feb 14]. Repositioned as ‘population health management, the ACO business dominates.
Various reports: Daily Mail, Forbes (which likes it not at all and sees none of the touted ‘economies of scale’) and the WSJ.
Rumors now mainstreamed into press surround Aetna’s apparent interest in fellow insurers Humana and Cigna. Forbes last Friday started the ball rolling with an article last Friday focusing on the main event driving insurance payer consolidation: the transition of Medicare from fee-for-service to value-based bundled payments and accountable care organization (ACO) models. Humana has substantial Medicare business and a foot in home care (SeniorBridge), but has innovated in digital health: partnerships (Healthsense, TTA 20 Dec 13), purchases (what remained of Healthrageous, TTA 16 Oct 13), employee wellness (Vitality) and app development. Cigna is a major insurer with corporate business, but has struggled a bit in the digital health arena with the flashy-but-flopped patient engagement platform GoYou. It’s piloted telehealth to reduce readmissions with Care Innovations [TTA 7 Oct 14] and Coach by Cigna, a mobile health platform in conjunction with Samsung for the Galaxy S5 and S6 phones.
Aetna has had some success with working with ACOs, with 62 contracts covering about 1 million lives, but this Editor counts over 400 practice-based ACOs in the Medicare Shared Savings incentive program alone. Their experiment in consumer app aggregation, CarePass, came to a quiet end last August and Healthagen, their ’emerging businesses’ unit, has had some swerves in rationale including iTriage and even ActiveHealth Management, their long-time population health analytics arm. While digital health is part of it (see Mobihealthnews), (more…)
Recent rumors predicted changes at Healthagen, the rebranded ‘Emerging Businesses’ unit of health payer giant Aetna, and that these would be apparent at HIMSS14. Mobihealthnews attempts to ‘Sovietologize’ Aetna chairman Mark Bertolini’s appearance (sponsored by Healthagen, not Aetna) and what products were included in the Healthagen (not Aetna) show floor display. First, the booth: only Accountable Care Solutions and health info exchange Medicity were featured. Former star iTriage (the original Healthagen product) was relegated to a distant booth. The much-touted CarePass consumer wellness platform? Absent. InvolveCare, the Healthagen caregiver app introduced last fall? Announced to be discontinued 28 April. In the true tradition of Sovietology, omissions are as apparent as inclusions. Second, the keynote: oddly, there are no content points cited from Mr. Bertolini’s speech in Mobihealthnews. We turn then to the Dan Munro in Forbes article, where Mr. Bertolini calls for the ‘creative destruction of healthcare’, a stock rallying point since 2009 (Yes, it doesn’t work. No, it’s not sustainable. It’s an iron triangle. Etc.) The bottom line was his announcing that Aetna’s business going forward would be ACOs and “driving a consumer healthcare experience.” Hopefully that will mean access and quality for the rest of us. Will Healthagen CEO Charles Saunders be part of leading the charge? Not a mention. One could say that the Magic 8 Ball says ‘cloudy’ for the present situation at Healthagen. Perhaps more changes will be revealed in coming weeks.