Healthy Dose Podcast: Unlikely Mergers, Acquisitions And Strategic Affiliations In Health Care (Video)

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My name is Beth Scarola, and welcome to a "Healthy Dose."

This is the first episode of what will be a bi-monthly podcast during which I will discuss trends and current events in the health care industry. Whether you are a health care provider, health care administrator, medical device manufacturer, or even an interest patient/consumer, I thank you for joining.

On today's episode we are going to take a look at the market conditions that are causing the previously unthinkable. The unlikely mergers, acquisitions, and other strategic affiliations in health care.

Humana-Walmart. CVS-Aetna. Cigna-Lyft.

Why the urge to merge? Why the new market entrants? And why the previously unthinkable is happening now?

I have a solid hypothesis. The caveat is that it is my opinion alone. Judge for yourself whether you agree.

Here it is. There are three reasons for the recent activity in the health care arena.

The cost of health care is too high. Federal, commercial, private and individual payers are demanding cost reduction. Not only are they demanding cost reduction, they are demanding price transparency as the cost of health care continues to outpace our economic ability to pay. And, you have to remember, baby boomers inevitably are aging into demanding more health care. The Affordable Care Act shifted what used to be a fee-for-service heath care industry into a value-based health care model. This topic is a little complicated, and we'll discuss throughout this episode. But suffice to say that health care providers and payers are now forced to better manage financial risk and look to larger patient and beneficiary panels. As consumers - you and me - have more control over our health care spending, we're simply demanding better quality care, and improvements in patient experience. I don't want to wait in a doctor's office for two hours. I want to be seen when I want to be seen, and I want the place to be clean, and I want to feel better. As consumer choice continues to drive health care spending, delivering the type of patient experience that consumers will choose becomes essential to health care providers. Let's discuss each of these topics one by one.

The first - health care costs are too high. The U.S. government, employers, and consumers are demanding a reduction in health care costs. Here are the stats. There has been an exponential increase in U.S. health care expenditures as a percentage of GDP from 1965 (the year Medicare and Medicaid came out) to 2018. CMS projects that by the year 2020, U.S. health care expenditures will reach 20% of GDP if this trajectory does not change. Meanwhile, as I mentioned before, the elderly population in the U.S. is growing rapidly and living longer. Baby boomers are aging into demanding more health care, and as they are expected to live longer it does not bode well for the health care...

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