Why Health Care Mergers Are Being Likened to ‘Game of Thrones’

The stakes are growing higher in impending health insurance mergers. Much like the popularized book series turned TV show ‘Game of Thrones’, there is a lot at stake and everyone is racing to take control. Mergers are never easy, there are winners and losers, and managed care is no different. It is now a game of bids and counter-bids, where there is a lot to gain but a whole lot to lose and industry leaders are bracing their assets for the high stakes competition. The current mix of high price-earnings multiples and low cost of money makes these mergers and acquisitions very enticing and everyone wants a piece.  

 

Several companies including Aetna, Cigna, and Anthem are potentially interested in buying Humana. A merger between any of these insurers shows considerable potential growth from baseline assumptions. The ROIC in year 1 from a merger between Anthem and Humana is 4.8%, which is the highest of alternative mergers. This merger would also steadily increase earnings per share. In seeking a buyer, Humana is increasingly becoming the prized pony on the chopping block as their stock prices soar and more buyers approach them. The question remains as to who will win this game of mergers and acquisitions. But more, whether these mergers will benefit health care consumers by helping to lower costs and increase the quality of care.

Written by Alison Killian

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Alison Killian is a recent graduate of Grove City College who majored in Business Management and minored in Biology Studies. She is a contributor to Medical Groups and passionate about all facets of healthcare. She plans on continuing work in the healthcare field especially in management. She is very interested in healthcare innovation and finding ways to improve the current system. She hopes to go back to school in a few years to earn a degree in medicine.