Cigna Archives - Recon Strategy

Cigna and Samsung: assembling a “global account”-based business model for mobile

Tory Wolff November 30, 2013

Samsung and Cigna have agreed to a multi-year development alliance for health applications for the Samsung smartphone. The partners will initially focus on content (access to the health-related tips and articles Cigna already offers its customer base). Ultimately, the partnership will “connect individuals with caregivers, doctors and hospitals to improve health and wellness globally.” So far, the announcements have been silent on any exclusivity. In our view, the content deal is a sideshow: health and wellness tips are highly commoditized and an insurer an undifferentiated supplier for this content. I

CIGNA fills in its Medicare portfolio with Great American acquisition

Tory Wolff May 15, 2012

Last week, CIGNA acquired the Great American Supplemental Benefits from American Financial Group (AFG) for $295M in cash. Per press releases, the key financials for the acquired business are: A few observations on the acquired business: ~90% of the acquired revenue is driven by MedSupp. Public reports suggest 100K-125K MedSupp lives (250K lives total for the acquired business). Historically, AG’s MedSupp lives have been well distributed in the US with the exception of a sizeable position in Texas (the acquired business is Austin-based). The other 10% includes a variety of

The ASO escape hatch for small group: California says “not so fast”

Tory Wolff March 31, 2012

Next week, the California insurance commissioner will propose legislation to deter small employers from exiting the traditional health insurance market and going self-insured. The legislation will put a floor on the amount of losses an employer must incur with any one employee before the stop-loss coverage is triggered (“attachment point”). This won’t affect larger employers which benefit from the balancing impact of their large numbers and so only need to protect themselves from the most catastrophic risks. The bottom lines of self-insured smaller employers are much more vulnerable to even

Bubble in acquisition pricing of Medicare Advantage lives?

Tory Wolff December 7, 2011

Several recent acquisitions suggest a rapidly growing valuation on Medicare Advantage (MA) lives. Last August, Healthspring paid about $3.6K per adjusted MA life with its acquisition of Bravo. (My adjustments extract the value of the PDP lives using the CVS acquisition of Universal American PDP lives as a benchmark and for the share of Special Needs Plan or SNP lives which typically have higher utilization levels and higher reimbursement). This past November, there were two major MA acquisitions, both with sharply higher prices. Cigna (CI) bought Healthspring for $3.8B —

The CIGNA-Healthspring deal: local share key to top-line synergies but still missing from the equation

Tory Wolff November 10, 2011

Summary Provider discounts are a key priority for national accounts – which puts CIGNA (CI) and Aetna at a disadvantage; CI responding in part by trying to get closer to providers A provider collaboration strategy requires a critical mass of patients and provider mindshare. CI does not have it; nor will the Healthspring (HS) acquisition provide it given the limited geographic overlap between the two companies CI must therefore grow share in key markets to capture the deal’s potential provider collaboration synergies (though other synergies are certainly accessible) If CI

Rise of self-insurance in smaller groups: opportunity and threat

Tory Wolff May 26, 2011

Summary Self-insurance is growing among smaller groups (including those sized 50-250) From a competitive point of view, it will be hard for insurers holding attractive groups in risk products to respond given the enormous profit cannibalization of converting from risk to an ASO offering But they will need to find some solution: risk products today are expensive for many groups given continuing low levels of utilization; “peanut-butter” share nationals at the forefront of these products (Cigna and now Aetna) won’t have cannibalization worries to stop them from pushing the model

Major health plan Q1 earnings: Profit surprise in commercial risk; multiple reasons why business prospects look good

Tory Wolff May 21, 2011

Public health insurers startled the market with earnings ~25% above consensus expectations. A key driver was lower-than-expected utilization (particularly in the under 65 commercial lives) which kept medical costs down. Management teams offered two theories in the analyst calls: bad weather and the beginning-of-the-year reset of consumer directed (CD) deductibles; neither is compelling: A lot of discretionary care has already been squeezed out of the system by the bad economy; it is hard to imagine that bad weather would drive out a lot more. Also the utilization decline was concentrated

Tag: Cigna

Recon takes an analytical look behind select developments in healthcare

Cigna and Samsung: assembling a “global account”-based business model for mobile

CIGNA fills in its Medicare portfolio with Great American acquisition

The ASO escape hatch for small group: California says “not so fast”

Bubble in acquisition pricing of Medicare Advantage lives?

The CIGNA-Healthspring deal: local share key to top-line synergies but still missing from the equation

Rise of self-insurance in smaller groups: opportunity and threat

Major health plan Q1 earnings: Profit surprise in commercial risk; multiple reasons why business prospects look good

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