m&A

The biggest deals of 2023

You’ll never know where you’re going if you don’t know where you’ve been. That’s probably the main reason why year-end recaps are useful. And in health care, looking at the deal-making is a good way to understand where the industry thinks it can make more money, or at least keep an advantage.

My colleague Tara Bannow and I looked at the different hospital, provider, and health insurance transactions that were announced in 2023. A few things became clear: Vertical consolidation remains in vogue (yes, CVS-Oak Street was still somehow in 2023). Hospital systems are still aiming for large-scale, cross-market mergers (but can’t always get them done). And sometimes, it’s the smaller deals that make the biggest difference in a given market, even though they fly under the radar nationally.

Read our rundown of 2023’s major health care transactions and what they say about the industry. Let us know what we may have missed, too.

medicare advantage

Some early MA enrollment tea leaves

Medicare’s annual open enrollment ended a couple weeks ago, and we’re starting to get our first glimpse of which Medicare Advantage plans and benefits gained the most traction and which ones fell off.

Health care analysts at the investment bank Leerink Partners held a call with the CEO of a large company that helps brokers sell Medicare Advantage plans. This CEO saw “outsized growth” in Centene’s and CVS Health’s MA plans and “underwhelming growth” for UnitedHealth Group and Cigna, according to a Leerink investor note. Companies that offered grocery benefits with their plans, like CVS’ Aetna plans, captured a lot of enrollees who were changing plans. 

But there is a major storm cloud on the horizon for MA insurers. Starting in 2025, the government is capping broker compensation for MA plans (read more about those changes here). “This could cause a seismic shift in the industry, altering the large carriers’ sales strategy,” Leerink analysts wrote. “Over the past several years, the larger plans have captured a significant amount of share with these ‘soft dollar’ incentives likely playing a role.” 

The federal government will release fully updated Medicare Advantage enrollment by plan that reflects the entire enrollment period in February. Stay tuned for that data.

lawsuits

North Carolina goes after HCA

North Carolina Attorney General Josh Stein sued HCA Healthcare last week, arguing the for-profit hospital system has violated its agreement by not providing high-quality care as the new owner of the formerly nonprofit Mission Health, Tara reports.

The lawsuit follows an investigation from Tara, in which she interviewed scores of current and former Mission clinicians who said the situation at the system has become unsafe for patients and miserable for workers. 

A Mission spokesperson insinuated the lawsuit was politically motivated, as Stein is running for governor. But the lawsuit, partially based on affidavits with former employees, includes details like how high nurse-to-patient ratios in Mission’s trauma program run afoul of state regulations. Read Tara’s story for more on the lawsuit.