Signs of Disruption Continue In Healthcare
In the wake of the just announced deal for CVS to buy Aetna, UnitedHealth has news that is more evidence of significant, and possibly disruptive, changes to the traditional healthcare model.
The New York Times reports that “UnitedHealth’s $4.9 billion takeover of a physician group from DaVita may not be as big as CVS’s deal for Aetna. But it highlights how fast traditional boundaries in health care are dissolving.”
The article raises the question that the existing business model for insurance, doctors, pharmacies, and all players in healthcare may be rapidly approaching obsolescence.
“UnitedHealth has been disrupting the industry for a long time. It already owns a pharmacy benefit manager and an outpatient services provider. Now the DaVita division will give it a doctor network. Reed Abelson of the NYT quoted Craig Garthwaite, a health economist at Northwestern’s Kellogg School of Management, on integration:
‘There’s no chance that the existing companies, be they hospital or insurers, have the right configuration of assets to be successful’ at turning health care into a business where the parties are able to produce better outcomes at a lower cost,’ he said.”
- Brooke Sutherland and Max Nisen write, “Steady diversification with small deals is the kind of strategy that can win this race.” (Gadfly)
- Charley Grant writes, “With cheap credit readily available and UnitedHealth’s sparkling long-term returns as an inducement, the recipe for succeeding in health care is pretty clear.” (Heard on the Street)