In the wake of the healthcare M&A craze, consumers await changes
If you thought 2017 was a sleepy year for mergers and acquisitions in the healthcare arena, you’re mistaken. It was a record-breaking year for deals. And so far in 2018, there were 115 transactions announced; that’s a 13% increase over the previous 12 months.
The surge of healthcare acquisitions signals the industry’s race to capitalize on innovation and deliver a better consumer experience. Just as other industries have used technology to drive operational efficiency and added-value, market movers are working to create a healthcare system that ultimately reduces costs and inevitably causes disruption. New market entrants are driving incumbent healthcare companies to adjust their strategies to keep up with consumer demand and ensure they deliver a next-level experience.
For many patients, treatment doesn’t end at a provider’s office, hospital, or medical facility. Instead, they require outpatient care, which oftentimes includes the need for prescription medications. CVS, one of the country’s top pharmacies, identified this market need for consumer-driven change. The company’s recent move to offer same-day, one-day, and two-day delivery tells us that they are paying close attention to consumer needs and are working adamantly to ensure top-notch patient satisfaction.
This additional service will not only level-up the company’s offering through added convenience, but it will also help ensure better patient outcomes (as many cannot physically get to a store to pick up their medications) and set a new standard across the industry.
Most of the recent market consolidations have included just two of the three pillars required for true market efficiency: insurance coverage and care delivery.
For example, the other major CVS move this year was its merger with Aetna. The end-goal of the deal is to allow consumers to purchase insurance coverage, seek urgent care, and fill prescriptions all in one place. With the knowledge Aetna will have of the consumer, we can expect this new partnership to deliver highly-personalized messages and treatments that are tailored to the individual consumer.
Mergers like Cigna and Express Scripts use technology to help consumers get the right prescription at the right price, whether it is filled online or at a retail location. Partnerships, such as this, that leverage technology to create more ways to buy will deliver higher quality of care, more purchase options, a broader cost structure, and greater access to the information that consumers needs to make better decisions for their care.
We hear this same type of potential consolidation from entities like Humana and Walmart who aim to streamline their offerings. Specifically, as it relates to Medicare and the senior citizen market, this merger would steer Humana participants to visit Walmart as a one-stop shop for onsite care, to fill their prescription, and to buy their durable medical equipment, such as a walker or breathing machine.
In another round of announcements, the third pillar required for true market efficiency has been introduced: consumer healthcare funding.
The Amazon, Berkshire Hathaway, and JP Morgan Chase conglomerate is an early example of a collaboration that has all the tools to make a true impact on the industry; however, its success will depend on how they execute their vision, which it appears to still be solidifying. An initial glimmer of what’s to come is Amazon’s recent acquisition of online pharmacy, PillPack, and its newly-appointed CEO, Dr. Atul Gawande, is another step in the right direction.
Gawande reaffirmed the goal of the venture by stating that he hopes to build scalable solutions for better healthcare delivery and eliminate wasteful spending in the U.S. and around the globe. To realize this unprecedented integration and simplification within the healthcare industry, each consumer touchpoint the giant has must deliver incremental valuable by supporting and guiding consumers to better healthcare outcomes.
The healthcare market has lagged other industries in the way that it leverages technology. The recent uptick of partnerships that aim to find their niche in the healthcare industry is a response to the demand for increased efficiency and scale. If we were to anticipate how this trend will develop in the coming weeks, months, and years, I envision even more investment into changing the way consumers engage their personal healthcare.