Rumors are circulating that Cigna Group (NYSE: CI) and Humana Inc. (NYSE: HUM) are in discussions to merge, although nothing has been confirmed yet. The potential combination of these two major insurers could have significant implications for the home health industry for various reasons.
In a report dated Nov. 6, Reuters initially revealed that Cigna was considering selling its Medicare Advantage (MA) business. At that time, there was speculation that this decision was influenced by either heightened government scrutiny of MA plans or the business’s own performance in the MA sector.
Cigna did not provide a comment to Reuters regarding the potential sale of its MA business at that time. However, a new reason for divestment has emerged since then: the possibility of joining forces with Humana. The divestment of the MA business could, in theory, help alleviate antitrust concerns related to such a combination. Scott Fidel, managing director at investment banking company Stephens, noted in a recent communication with Home Health Care News that “We would see this action being one component of a potential pursuit of Humana as an acquisition target, with the divestiture being a proactive move to reduce antitrust risk.”
Cigna has approximately 600,000 MA enrollees within its network. In contrast, Humana annually incorporates more than that number into its portfolio.
While Cigna holds approximately 2% of the Medicare Advantage (MA) market share, Humana commands nearly 20%. Leading the MA sector are Humana and UnitedHealth Group’s UnitedHealthcare.
Following closely behind are BCBS plans and CVS Health’s Aetna. Both Cigna and Humana are payviders, indicating that, in addition to serving as major insurers, they possess substantial healthcare service capabilities. Humana boasts Center Well, encompassing home health care, primary care, and pharmacy services, while Cigna operates Evernorth Health Services, offering pharmacy and behavioral health services. The potential overlap in pharmacy benefits has raised antitrust concerns, as highlighted by STAT News. “A combined Cigna-Humana entity would still exhibit significant overlap in their pharmacy benefit management,” STAT noted earlier this month.
According to Adam Fein of Drug Channels, Cigna owns the second-largest PBM, Express Scripts, while Humana owns the fourth-largest PBM. With Lina Khan’s Federal Trade Commission already scrutinizing PBM market power, such a deal appears likely to be promptly blocked.
Currently, there is significant speculation surrounding the rumors about Cigna and Humana.
Should Cigna acquire Humana, it would be a major development in the home health care sector, especially in light of Humana’s recent acquisition activity. In 2021, Humana completed the full acquisition of Kindred at Home, now known as CenterWell Home Health, after divesting its personal care and hospice assets.
CenterWell Home Health ranks among the leading home health care providers nationwide, alongside key industry players such as LHC Group, Amedisys Inc. (Nasdaq: AMED), and Enhabit Inc. (NYSE: EHAB).
Notably, United Health Group completed the acquisition of LHC Group earlier this year and is currently in the process of acquiring Amedisys. Meanwhile, Enhabit is undergoing a strategic review that is anticipated to culminate in a sale, as reported here.
Despite the historical challenges between home health providers and Medicare Advantage (MA) plans due to reimbursement rates, several major home health care entities are either integrated with or set to be integrated with organizations that have substantial MA plans.
Furthermore, if a Cigna-Humana deal were to materialize, CenterWell Home Health would become part of an even larger insurance conglomerate.
The implications of this acquisition for CenterWell, a leading home health provider in the country, remain uncertain as it strives to maintain its position among the top home health providers. Currently, CenterWell operates 352 home health locations and serves over 350,000 patients annually. During April, it completed the acquisition of Trilogy Home Health, based in Florida.
Home health care has been a notable area of growth for both CenterWell and Humana. Bruce Broussard, long-time CEO of Humana, who is set to step down from his role in 2024, recently discussed ongoing efforts to further enhance this segment.
“These efforts will be implemented across our 350 branches, incorporating automation, consolidation, technology, and AI solutions,” Broussard stated during the company’s third-quarter earnings call.
By implementing these measures, we aim to reduce administrative burdens and enhance clinician efficiency, including the optimization of their schedules. We anticipate that these efforts, some of which may require gradual investment, will ultimately streamline our operations, leading to greater clinician productivity and satisfaction.
Humana’s quarter revenue reached $26.4 billion, with CenterWell’s overall revenue amounting to $4.66 billion.
During Cigna’s recent third-quarter earnings call, the company revealed total revenues amounting to $49 billion.
For More Jobs In Canada www.thisjob.ca
For More News www.thisnews.ca
