As we approach the end of 2017, several high-profile industry mergers have raised heightened awareness among traditional healthcare providers with new, market-disrupting entrants making large scale investments and inroads into sectors previously deemed immune to systemic change. Most recently, UnitedHealth Group has shaken the industry for the third time this year with the most recent announcement of its OptumCare subsidiary acquiring DaVita Medical Group (DMG), a strategic move that will add a cadre of physicians and related services to their existing national platform of 30,000 physicians. This falls on the heels of OptumCare’s purchase of Advisory Board last month, and the acquisition of Surgical Care Affiliates earlier in the year. It is apparent that UnitedHealth Group seeks to align its strong capital position with expansive patient care capabilities across a national ambulatory network. Not enough excitement for one week? Aetna and CVS revealed plans to merge as a combined organization, positioning itself for local, retail-oriented care with greater convenience and better management of chronic conditions for its members.
An Industry Coping with Change
A fusion of health care companies and services providers is just the latest turmoil in a domestic health care industry coping with large scale change. UnitedHealth Group’s acquisition of DMG will enable the organization to blur the lines between payors and providers even further, while establishing itself as the leading physician platform for the transformed health care system of the future. So what does the future hold for a health care industry in which change remains the only constant? While that question is simple to ask, it is much more difficult to answer. At a minimum, providers should prepare for continued volatility in the market as well-funded new entrants look to address the health care needs of even broader patient populations. Organizations with large populations, technological platforms, and distribution networks will leverage their inherent advantages to deliver more cost-effective healthcare services. Let’s not be surprised as we hear more announcements from companies such as Amazon, Walmart, Apple and others as new opportunities emerge to transform the healthcare delivery system.
How Will New Entrants Transform the Landscape?
The US healthcare delivery system has long been chided for producing a suboptimal experience and mediocre outcomes at great cost. While there are pockets of excellence, this caricature is undeniably true in many cases. These new entrants will certainly focus on the shortcomings of the current system, and seek to draw patients away from acute-care-focused health systems. Providers need to ensure they revisit their strategy, relationships, operational efficiency, and financial performance in order to address this new reality. There has never been a better time for healthcare executives to focus on a better experience and lower costs for patients and communities.