New Kids on the Block

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U.S. District Judge Carl Nichols ruled last Monday against a Justice Department (DOJ) antitrust challenge to UnitedHealth Group’s $13 billion acquisition of Change Healthcare.?

The wave of vertical integration in healthcare continues, with deep pocketed companies such as Amazon, CVS, UnitedHealth Group, Walgreens, and Humana investing in the big business of healthcare.

The historically siloed financing and delivery of healthcare is being integrated by companies that have concluded that healthcare is ripe with opportunity.?

In addition to having deeper pockets, they view themselves as having more experience at providing services to (and marketing to) consumers, more incentive for efficiency, and as being infinitely faster moving than traditional players.???

The federal government has become the largest payer for healthcare with strong growth forecasted.?For example, the Centers for Medicare and Medicaid Services (CMS) projects Medicare to grow by 7.2% annually from 2021-2030, while Medicaid is projected to grow by 5.6%.??

Health systems have notable brand names which is particularly important for inpatient care.?The new entrants are focusing on primary, ambulatory, home care and assisted living/rehabilitation care, where health systems have arguably less brand cachet and consumers have more decision influence.???

The new players with their outsized balance sheets, growing rosters of employed physicians, and strategies targeting non-hospital care, are a growing force to be reckoned with by traditional players.

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