Insurance consolidation drives vendor concern

Anthem plans to acquire Cigna for $48.3 billion; Aetna announces plans to purchase Humana for $37 billion. Is this good news or bad? While market consolidation can improve efficiencies and drive competition that benefits vendors and consumers, too much consolidation can lead to disaster for everyone

History is rife with examples of over-consolidation and virtual monopolies gone bad, but we only need to look to Univita Health in Florida for a recent example. Univita Health gained control of the entire Florida Medicaid home-care market a year ago. On July 28th the Florida Agency for Health Care Administration pulled all of their HMO contracts. The AHCA didn’t comment on why the contracts were pulled, nor has Univita. However, “whether instigated by the plans, by Medicaid officials who were tired of complaints, or the company itself deciding it could not make ends meet”, as outlined in Univita Health Losing Medicad Contracts by Carol Gentry of Health News Florida, it is clear that this virtual monopoly benefited no one, least of all Florida patients.

In this and other examples it is clear that when choice is eliminated, despite best efforts, accountability is eliminated. Without accountability, as enforced by consumer choice, service and value decline.

The proposed acquisitions by Anthem and Aetna would effectively leave the market with 3 major insurance players. My inner economist wants to believe that efficiencies will occur, spurring increased competition between insurance providers that produce better products and services at lower costs. However, the pragmatist and historian in me know that lower rates and increased vendor competition are on the horizon.

How would these acquisitions impact your company and what are you doing to prepare?

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Prior to founding Right Way Medical, Prati held various roles with Apria Healthcare, B. Braun Medical, and Medical Technology Resources, where his final role was Sr. Vice President of Sales and Operations. During his time serving at Medical Technology Resources he was influential in assisting in its acquisition to Medical Specialties Distributor, a company that has since been acquired by McKesson in 2018.

Prati has been involved in various philanthropic organizations including The Make-A-Wish Foundation, A Kid Again, Orphan’s Promise and has served in various board and volunteer roles at Cypress Wesleyan Church (Alton Darby and Dublin campuses) and the Vineyard Church of Columbus.

Josh Prati resides in Powell, Ohio with his wife Christa and two cats, Remey and Molly. He enjoys working out, developing relationships over a home cooked meal, great wine, and is an avid Ohio State Buckeye and Pittsburgh Steeler fan.