Healthcare M&A Activity Surges in Q2

Managed Care Deals
Managed care M&A's posted nine deals valued at $730 million during second quarter 2012. Monroe reports that the largest deal was Towers Watson's $435 million acquisition of Extend Health, which operates a private Medicare exchange. The deal positions Towers Watson, which primarily consults on employee benefits, to capitalize on the growing interest in private health plan exchanges.

Managed care M&A activity for the 2012 quarter lags well behind the second quarter of 2011 when there were seven managed care deals valued at $1.7 billion. That quarter included WellPoint's $800 million acquisition of CareMore and Aetna's acquisition of Prodigy Health for $600 million.

Insurers have not been shy about moving into the M&A market to meet their needs for Medicare and Medicaid plans to meet anticipated enrollment increases. While several deals were completed in 2011, insurers are still on the hunt for acquisitions that will position them to capitalize on new enrollment opportunities presented as part of healthcare reform.