Major payers like Cigna are overlapping finalizing of previous mergers and acquisitions deals with new partnership announcements that aim to strengthen payer identity.
Payers are pairing the news of finalized 2019 mergers and acquisitions with new partnership announcements, like Cigna which announced three new partnerships in its recent fourth quarter 2019 earnings call.
Cigna is using this year to finalize its Express Scripts acquisition, but the company already has plans in place to pick up three strategic partnerships.
“At a philosophical level, we view that the notion of partnering and beyond partnering, striving to be the undisputed partner choice is a competitive advantage and something we want to build on,” said David Cordani, president and chief executive officer at Cigna, on the recent fourth quarter of 2019 earnings call.
“Why? It accelerates pace of innovation, it accelerates value creation, whether it be around affordability, predictability, simplicity, it could broaden speed and absolute reach within the marketplace.”
The Cigna executive outlined three partnerships that the company looks forward to initiating this year.
The company’s new partnerships will expand its pharmaceutical network through Prime Therapeutics. This year the company gained 2.7 million pharmacy customers. With the Prime Therapeutics partnership, the company anticipates a 20 to 23 percent year-over-year growth.
Could a variety of partnerships in one sector with different breadths—such as combining the narrowly focused Prime Therapeutics with the broad customer base of Express Scripts under the Cigna umbrella—lead to the dilution of a payer’s relationship with its customers? Cigna executives did not express concern that the payer would be limited by the Prime Therapeutics partnership at all.
“This further broadens our reach and our opportunity to serve more lives, both individual customers and patients and a broader portfolio of health plans as we go forward,” Cordani explained. “So we're delighted by securing this and we look forward to beginning to serve that relationship in the second quarter of this year.”
Cigna has already agreed to offer solutions to small businesses with Oscar Health.
Until now, Cigna has not created offerings for very small businesses that have under 100 employees. Oscar Health is the ideal partner with which to shift into that territory for two reasons, according to Cordani.
First, Oscar and Cigna’s philosophies overlap. Oscar’s digital infrastructure on a small business level matched Cigna’s technological focus on middle and national markets.
Second, Oscar exhibited strengths in areas that Cigna had not yet explored. Whereas Cigna can offer the value-based provider networks, patient engagement, and clinical behavioral healthcare capabilities, Oscar provided access to the smaller business markets with which Cigna had not yet connected.
Cigna also intends to join forces with healthcare professionals, particularly Medicare Advantage preferred provider organizations. The company is looking at a 13 to 16 percent increase in Medicare Advantage customer base, so bringing in more healthcare professionals for this population will be a critical step for 2020.
Cordani explained that the company intends to expand its footprint into new counties adjacent to existing markets.
To handle these new markets and the new patients coming resulting from theESRD proposed rule, Cigna will be broadening its preferred provider organization (PPO) platform, building on their individual health maintenance organizations (HMOs).
The company draws confidence in its ability to manage the larger footprint from its high Medicare Advantage Star Ratings. In 2021, Cigna expects to cover 87 percent of its Medicare Advantage customers in plans with four stars or higher.
“Our value-based provider relationships and our high engagement programs are well-positioned to coordinate the care of the services as reinforced by the stars rating and as reinforced by our overall performance,” Cordani said.
Between these new partnerships, Cigna expects to expand its footprint of customer growth by ten to fifteen percent each year for the next five years.
“Each of these examples gives a clear view of how diverse healthcare stakeholders view Cigna as their best partner for future success and how being the partner of choice in healthcare marketplace will contribute to our sustained differentiated growth over time,” Cordani stated.
Cigna’s moves in pharmaceutical manufacturing, small business, and Medicare Advantage highlight the 2020 trend of payers using their partnerships to underscore or establish a company identity. For Cigna, these partnerships will largely reinforce the company’s image as a technology leader.