Payers Diversifying for Pharma Dollars, Among Others

Among payers, uncertainty – mostly around the impact of the Affordable Care Act — has bred diversification. And much of that diversification has involved information businesses.

Humana’s acquisition of San Diego-based Anvita Health is just the latest example of a payer looking for new revenue sources. This year alone, Aetna, for instance, has purchased Continental Life Insurance and PayFlex Holdings, deals that bolster the insurer’s footprint in the Medicare Supplement and consumer products businesses, while Cigna ponied up $3.8 billion for HealthSpring to deepen its ability to sell Medicare plans.

Why this uptick in deal making? Assume the existing version of the Affordable Care Act isn’t radically transformed by the Supremes. That new legislation mandates insurers must offer a basic level of healthcare via electronic exchanges where it will be easy for consumers to shop for services by price. As Steve Wunker at New Markets Blog notes, such transparency rapidly commoditizes private insurers’ core product. In this scenario –even with the millions of new customers mandated by healthcare reform — profits to payers will fall.

To thrive in this new environment, payers must build new, adjacent businesses that take advantage of the existing wealth of claims’ data and physician networks they’ve already amassed. Even better if these new opportunities also help payers differentiate themselves from competitors where it matters most – by providing high quality insurance that also generates improved health outcomes to contracting participants.

Theoretically, that’s what Anvita does for Humana, transforming “enormous volumes of clinical data into actionable intelligence … as well as across the health care system,” said the company’s press release.  It’s not immediately clear what new capabilities Anvita provides that weren’t already available at Competitive Health Analytics, a division within the Kentucky-based payer designed to provide outcomes focused data to external parties.  (We’ve asked Humana for clarification.)

Presumably the capabilities housed within Anvita will make Humana even more attractive to pharmaceutical companies looking to partner with payers around comparative effectiveness and real world data.  That’s been an area of active interest in 2011, as drug makers like Sanofi and AstraZeneca set up broad, multi-year contracts with payers to conduct real world studies that may help drug makers bolster their case to the wider payer audience about the utility of certain medicines. (Sorry to be so vague, but to date neither payers nor drug makers are actually outlining what drugs are being studied in these collaborations.)

And Humana is clearly interested in inking these kinds of deals. In October it signed a 5-year partnership of undisclosed financial value with Pfizer to use its medical claims data base to study ways to improve the quality, outcomes, and costs of health care for seniors in three therapeutic areas: pain management, cardiovascular disease, and Alzheimer’s disease.

We’ll have more to say on what’s driving tie-ups like Humana/Pfizer in the future.  Certainly, the increased revenue that comes courtesy of Pfizer’s need to demonstrate reimbursable value is part of the allure for Humana. For now, the purchase of Anvita serves as a reminder that there’s a land grab for analytics capabilities underway as payers look to solidify their expertise in an arena that may help stem the revenue bleeding as their core function –paying for health care – gets commoditized.

Image courtesy of travelskerricks via Creative Commons.