Wellpoint Archives - Recon Strategy

The “weaponization” of ACO narrow networks: Strategic destabilizers which compel their own replication?

Tory Wolff October 1, 2014

In theory, narrow networks built around a single provider or a network of aligned providers (“provider-orchestrated narrow networks” or “ACO networks”) can pose a much higher stakes threat to non-participating providers than ones assembled solely by payers (i.e., where the payer picks who is in based on cost and rates): They are more likely to achieve broad utilization reduction because participating providers can align on principles, build shared capabilities and coordinate management of specific patients consistently. As a result, discounts can play a smaller role in creating a compelling value

Strategic “crowd-out” via narrow networks: an emerging case study in Wisconsin

Tory Wolff September 16, 2013

Last week, I argued that, if payers want to secure competitive advantage from improved provider care, they would need tighter, more exclusive alignments with these providers to “crowd out” the free riders (the “free riders” in this case are the other payers who have members being treated by the same providers and who can therefore share in any improvements). Two deals last week suggest a case study of the concept may be developing in southeastern Wisconsin: On September 9, Anthem announced that it will be teaming up with highly ranked

The Blues system and PHIXs: not standardizing on a single utility

Tory Wolff May 29, 2012

BCBSMN has licensed the platform for its private health insurance exchange (PHIX) and defined contribution product from eHealth (original announcement April 30). For eHealth, which has seen its government systems revenue fall off by $2M year-over-year in the most recent quarter (per Q1 2012 analyst call), the deal will be a welcome addition to its non-commission revenue stream. It also represents a significant in-road into the Blues system (the previous deal with Blues I could uncover was in mid-2010 for licensing the technology behind Premera’s online Medsupp sales). It appears

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 —

XL Health in play: what do the three suitors see?

Tory Wolff November 18, 2011

UPDATE: United buys XL Health! Here’s what we surmised in the original post on this topic: “That leaves United. A leadership position in C-SNPs would fit well with United’s leading position in Medicare Advantage overall, #1 position in D-SNPs and #2 position in I-SNPs. The capabilities would also seem to be readily applicable to the broader Medicare population (given, for example, the potential transfers back and forth across between C-SNP and regular Medicare Advantage). The curious thing is that United dramatically reduced its C-SNP business last year (went from about

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

Private health insurance exchanges and defined contribution: thoughts on Wellpoint’s acquisition of Bloom Health

Tory Wolff September 23, 2011

Why would a health plan want to buy an exchange? Isn’t the only synergy if the owning plan tilts the exchange in their products favor? And won’t that damage the value proposition of the exchange for buyers and see them flock elsewhere? To understand the Bloom Health acquisition, it is important to recognize that the private health insurance exchange (PHIX) space is quite fluid, consisting of three or four distinct market opportunities. (The fourth — capabilities resell — might not really qualify as a PHIX specific opportunity, it is more

Did Wellpoint overpay for Caremore? No….not yet anyway

Tory Wolff June 28, 2011

Summary Wellpoint probably paid full value for Caremore (if that company’s performance is as powerful as limited data suggests) but did not overpay. In addition, Caremore offers several powerful upsides if Wellpoint can continue to grow the model. However, Wellpoint will need to tread carefully to avoid damaging its purchase, given an uncertain record with vertical models (NextRx) and the inherent challenges in integrating fast-growing, PE-fueled innovators into large, mature businesses. Some indicator of Wellpoint’s strategy for Caremore will be given by its approach to Arizona — a key market

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: Wellpoint

Recon takes an analytical look behind select developments in healthcare

The “weaponization” of ACO narrow networks: Strategic destabilizers which compel their own replication?

Strategic “crowd-out” via narrow networks: an emerging case study in Wisconsin

The Blues system and PHIXs: not standardizing on a single utility

Bubble in acquisition pricing of Medicare Advantage lives?

XL Health in play: what do the three suitors see?

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

Private health insurance exchanges and defined contribution: thoughts on Wellpoint’s acquisition of Bloom Health

Did Wellpoint overpay for Caremore? No….not yet anyway

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

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