The bargaining power of major health insurers will grow in the near future.
Healthcare investors may see it as a challenge because they will have to negotiate prices with the insurers, but the fact remains: health insurers choose the path of acquisitions for their further business activities. For example, health insurer Anthem decided to sue one of its dealers, Express Scripts Holdings, which is the pharmacy-benefit-management company. This decision demonstrates the new trend in the financial market – the desire to become more powerful and influential. It started during last summer when the above-mentioned Anthem decided to purchase Cigna and Aetna took a similar decision for Humana. If the deals costing almost $90 billion close as planned, it will change the balance of powers in the insurance and healthcare segment of the economy because it will benefit insurers making them more influential and give them an opportunity to have an impact on setting prices within the healthcare system in general.
I think that by taking such steps health insurers decided to provide the background for building their welfare in the future. It is not a secret that the bigger the company, the easier it is to operate in the market and the more robust impact on the system it has. For me, it sounds logical to purchase smaller companies and gain more power. Moreover, it is beneficial for both smaller companies and the purchaser because the first may find it difficult to compete while the latter gain a level of additional influence. The only challenge that may arise here is that the continuous process of such purchases will inevitably lead to the establishment of a couple of influential companies in the market that will become too big to fail, so it may have dangerous consequences for the economy as the whole.