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Insurers Eye Medicare Advantage Acquisitions

Margaret Dick Tocknell, for HealthLeaders Media, September 2, 2011

Also, the coding changes that will be implemented for hospital reimbursements beginning in 2013 will require costly investments in IT that will be challenging for smaller firms to afford. Almost half (46%) of healthcare leaders surveyed by HealthLeaders Media anticipate revenue loss as a result of implementing the ICD-10 coding directive.

Here's a look at three recent Medicare Advantage acquisitions and what they mean for the healthcare market:

Humana and Arcadian Management Services

Humana announced on August 25 that it will acquire Arcadian Management Services, an Oakland, Calif.-based Medicare Advantage HMO with members in 15 states. James explained that the acquisition will help Humana expand its geographic footprint in states like Arkansas where it has only a small Medicare Advantage presence and strengthen Humana's position in Texas, which has a large Medicare market.

A Bernstein Research report on the acquisition revealed that Humana was one of 10 health plans and private equity firms, including UnitedHealthcare, HealthSpring and Universal American Corp., that made a bid for Arcadia and its 64,000 Medicare Advantage members. Humana already has 1.6 million individual Medicare Advantage members.

No financial details were disclosed, but Bernstein values the deal at $150 million. The transaction is subject to federal and state regulatory approvals and is expected to close late in 2011.

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