Can Joint Ventures and Acquisitions Create More Value?

From Health Plan Weekly

Industry experts are split on whether health insurers' diversification moves are the best ways to improve quality and control costs.

Tufts Health Plan and Hartford HealthCare recently formed a new joint venture, CarePartners of Connecticut, to offer Medicare Advantage plans. One of their major goals is to engage in robust data-sharing to design interventions that improve outcomes. Similarly, Centene Corp. said it agreed to acquire Community Medical Group on March 5.

Jayanth Godla at PwC's Strategy& suggests that changes in the health care system are requiring payers to rethink their business strategy.

"[T]he days of you contracting with providers, getting a discount and paying claims and making money by charging more than what you pay for the providers are gone. You've got to have a different way of controlling medical costs," Godla tells AIS Health.

But Rita Numerof at the consulting firm Numerof & Associates is skeptical of joint ventures and acquisitions. She notes that the assumption that vertical integration can erase the competing business interests inherent between payers and providers is not true. Ownership is also not the only way to have data shared between payers and providers or among providers.

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