Aetna Acquires Humana for $37B to Moderate Healthcare Costs
By - Aetna has agreed to acquire its undersized competitor, Humana Inc, for $37 billion in cash and stock. The possible unifying together of two of the nation’s largest health insurers may generate an anticipated operating revenue this year of $115 billion. This vital expected act of healthcare singularity signifies the birth of a massive financial melting pot.
The healthcare industry is apparently riding another hearty consolidation wave. Such news of Aetna and Humana’s anticipated definitive agreement follows last month’s rejection from Cigna Corporation of Anthem Inc’s $53.8 billion proposal for $184 per share in cash and stock.
This time around, a primary objective of the planned merger between Aetna and Humana is cost reduction. Both companies confirm the proposed merger will enhance operational efficiency and negotiation with many large health systems also open to consolidation opportunities.
The projected acquisition will dramatically progress the ability to efficiently serve members within a healthcare industry that is expediently evolving, states Mark T. Bertolini, Aetna Chairman and Chief Executive, in a news release.
“The acquisition of Humana aligns two great companies and will significantly advance our strategy of more effectively serving members in a rapidly changing health care industry,” Bertolini explains. “This combination will allow us to continue to invest in excellent service for our members and strengthen our partnerships with providers to deliver high quality care at an affordable price. We have great respect for Humana, their talented team, their culture and their strong medical management capabilities,” Bertolini adds.
As EHRIntelligence.com reported, Bertolini confirmed over a year ago that Aetna made serious investments in technology to develop an underlying infrastructure and therefore shape the foundational design of health insurance plans.
According to Bruce D. Broussard, Humana’s President and CEO, “Aetna and Humana share a strong commitment to improving the health and well-being of consumers, whatever their needs and wherever they are on their lifelong health journey.”
As RevCycleIntelligence.com reported, Broussard confirmed strong advocacy for the healthcare industry’s needed upcoming focus on financial outcomes to advance quality care at this year’s HIMSS15 conference back in April.
“Through the use of technology and integrated services to simplify the consumer experience, the combined entity will be even more effective in meeting the health needs of many more people – especially people with chronic conditions, who will benefit from Humana’s home health, pharmacy management, and data analytics programs,” Broussard states.
“The transaction is a testament to the accomplishments of Humana associates and an outstanding outcome for our shareholders, who will receive an immediate premium and the opportunity to participate in the growth potential of the combined organization,” he adds.
Additionally weighing in on the potential combination of Aetna and Humana is Shawn M. Guertin, Aetna’s Executive Vice President and CFO. Says Guertin, “The complementary nature of our two companies provides us with a significant synergy opportunity, furthering Aetna’s efforts to increase its operating efficiency. We expect synergies from the transaction to be $1.25 billion annually in 2018. These cost efficiencies will support our efforts to drive costs out of the system and offer more affordable products.”
Healthcare mergers may continue to gain even more industry-wide dominance following last month’s Supreme Court King v. Burwell ruling to uphold subsidies within part of the Affordable Care Act (ACA). As the ripple effects of King v. Burwell continue to make sizable waves across the far-reaching spectrum of the healthcare industry as speculation about what’s next swirls, the healthcare industry continues to ride the consolidation wave onwards.
