McGrigor Insights:
Health Services

What’s happening with the rise in Health Services acquisition activity, globally?

In Summary
  • Private health insurers are shifting from passive payers to proactive partners. They are investing in health services to emphasize prevention, early diagnosis, and personalized care to combat rising healthcare costs.
  • Technology is driving innovation in health services. This includes AI-powered self-diagnosis, at-home testing, and personalized health management apps, making healthcare more accessible and convenient.
  • Insurance companies are actively acquiring or partnering with health service providers. This trend is driven by the need to manage costs, improve outcomes, and offer a seamless customer experience. Examples include the integration of pharmacy benefit managers and the rise of “managed care” models.

Are health services essential to Private Medical Insurers?

YES! With surging medical cost inflation, ageing populations and the rise of chronic diseases, private health insurers face a significantly more challenging landscape, with the likely result that prices just keep rising, and that’s a self-defeating outcome. So, they must evolve from being passive payors to much more proactive partners for both their customers and suppliers. Emphasizing prevention and early diagnosis, directing patients to the best type of care, at the right time and learning from shared data have all become paramount in this transformation. Consequently, insurers are increasing their investments in selective customer well-being offers and in service supplier partnerships which emphasise a genuine ROI at the same time.

What are some key trends and innovations in health services?

Health services are evolving very fast, becoming increasingly personalized and accessible. One notable trend is the rise of “self-diagnosing,” which eliminates the inconvenience of booking consultations, visiting testing labs, and waiting for results. Now, users can simply upload pictures of concerning wounds or moles, and an AI system will offer a preliminary diagnosis. Additionally, some health service companies provide “At home testing kits,” delivering, collecting, and analyzing samples swiftly. If needed, medications can be delivered directly to the individual or they may be referred to a specialist. These advancements empower individuals to proactively manage their health and seek timely interventions with enhanced convenience.

Another notable trend is the emphasis on prevention, aiming to address potential health issues before they escalate and promoting healthier lifestyles. For instance, there are addiction management and weight loss apps that help users track their sobriety or calorie intake, connect them with others in the recovery community, and offer informative content. Additionally, health service companies offer personalized diet and lifestyle recommendations based on users’ DNA, enabling them to make informed choices to optimize their health and well-being.

How are Insurers and Health Service Companies working together?

Given the terrifying growth in drug costs, many insurers and pharmacy benefit managers (PBMs) have integrated services to create big savings. The models of well-established US players such as Cigna and Express Scripts, United Healthcare and Optum, Aetna and CVS are, excitingly, being copied in other regions. We also see insurers using new logistics and tech solutions (eg, drone deliveries in UAE).

China has historically lagged behind, but they are rapidly advancing. Ping An is developing a “Managed Care + Family Doctor Memberships + O2O Healthcare Services” model, linking insurers, providers, and health service institutions. This model integrates online doctors with offline medical institutions through the Ping An Good Doctor health platform, offering daily health management during and after diagnosis. In 2022, Ping An acquired Ping An Smart Healthcare. This includes a smart medical assistant called AskBob Medical Think-tank, which encompasses entries for 12,000 diseases and 180,000 drugs. It supports over 3000 triage types and 20 medical specialties, thereby empowering doctors and increasing consultation efficiency by 20%.

Across all costs categories we see frantic activity in the purchase of TPA’s globally for example, both Allianz and Cigna acquired Nextcare and NAS-Neuron in the ME. In Asia, there is an arms race going on for TPAs and physical clinics to combine with digital/virtual health services to achieve the necessary winning scale and image. Vitality and Dacadoo have been the partners of choice globally in the wellness space but achieving the link between better behaviours and lower claims is a long-term game. But as recent times have taught us, not all that glitters is gold. Digital health unicorn, Babylon Health, once valued at $4.2b, filed for bankruptcy and sold its UK assets for just $620k. With competition increasing for top-notch assets, insurers are in a race and face potentially unrealistic deal values. They must be highly selective where and how they invest or partner.

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How can McGrigor support this challenge?

McGrigor Group has a strong 20-year track record of consulting and M&A in this part of the health industry. Many of its 70-strong global network of associates are experts in a particular service e.g. Colin Bullen, Prof Ron Goetzel (the ROI of wellness); Mark Attridge and David Levine (in EAP and mental health); David Axtell, Brigitte Chemla, and Phil Tyson (in TPA); Lola May Coker and Marie Christine Exxon Galle (in Assistance); Nir Kaminer (in clinical cost management); Casper de Clercq (obesity). James McGrigor authored the publication The Global Market for Population Health Management, 2016, which remains an authoritative guide to the ROI of over 40 cutting-edge health services.

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