Paul Smith.jpgBy Paul Smith, NetApp

This summer, the healthcare market witnessed massive consolidation. First, Centene acquired Health Net for $6.7 billion. Then Aetna followed by announcing a $37 billion acquisition of Humana. And finally, Anthem made a $54.2 billion play for Cigna.

These acquisitions reshaped the overall healthcare marketplace, but what does this have to do with the cloud?

Well historically speaking, data centers for healthcare insurers have always been large but siloed entities, mainly because they really didn’t have to share their data outside of their data center. With these recent acquisitions, healthcare insurers are now going to have to easily distribute their data, no matter where their customers are. This will lead to new decentralized structures with remote data centers spread across the country.
It gives wider berth for private cloud infrastructures, an opportunity for NetApp and our service provider partnerships. For example, as payers acquire, partner, and interact with providers, there is provider-side data that must be stored and instantly accessed. This includes clinical software, Picture Archiving and Communication Systems (PACS), and Electronic Health Records (EHR).
Thanks in part to the Affordable Care Act, the science of Population Health Management, which is the aggregation and analysis of patient data, now has even greater significance as there is more data available and shared across healthcare organizations.  Population Health Management platforms also contribute to shifting illness to wellness requiring robust data repositories and sophisticated analytics.  For example, large insurers commonly write custom analytics using Hadoop to identify gaps in care and to predict future disease states, while many others utilize COTS analytics from software vendors like Splunk, Information Builders, Truven, and Inovalon.?


Here’s a look back at these acquisitions:

  • Centene – Health Net – This was the case of a smaller company buying the bigger one, and it centered around Medicaid dynamics.  Centene has long been a dominant player in the Medicaid market, while Health Net enjoys significant share.  The primary driver of this deal was the synergy of greater Medicaid coverage, and the secondary driver was Health Net’s California coverage. Molina is arguably Centene’s fiercest competitor, and this merger is the perfect opportunity to battle Molina’s west coast turf.
  • Aetna – Humana – Medicare Advantage!  With Humana’s top position in the world of “Medi Gap” coverage, this is both an offensive and defensive deal. Changing demographics and the aging of America means Medicare is a growing and strategically important space to be in. In addition, the deal helps Aetna close the gap with Anthem.
  • Anthem – Cigna – Most people are more familiar with the brand WellPoint.  In December of 2014, WellPoint elected to formally change corporate monikers to become Anthem, the nation’s largest BlueCross Blue Shield insurer.  Anthem bought an independent insurer increasing its total market share and economy-of-scale.  This brings Anthem to the top of healthcare insurance and shakes the hierarchy once dominated by United Healthcare.

What Does This Mean for Patients?
Although acquisitions and consolidations can lead to concerns of reduced competition, there are still plenty of insurance providers out there that will help keep the market honest. We are far from the ‘single payer’ concern that has been brandied about for the last two decades, Personally, I view these acquisitions as a healthy market-driven dynamic, and am looking forward to the personal benefits to come.

Paul Smith is a National Healthcare Practice Leader in Healthcare Insurance at NetApp. Follow him on Twitter.

NetApp Staff